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Edited version of your written advice
Authorisation Number: 1051461611644
Date of advice: 04 December 2018
Ruling
Subject: Fringe benefits tax – reportable fringe benefits amount
Question 1
Will paragraph 160(1)(c) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) apply in relation to the benefits that were provided by the former employer for the relevant period?
Answer
Yes
Question 2
Where required, will you need to include those benefits in the reportable fringe benefits amount on the payment summaries that you issue for the year ended 30 June 20XX?
Answer
Yes
This ruling applies for the following period:
Year ended 30 June 20XX
The scheme commences on:
20XX
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
Entity A will be merging with you and you are both public benevolent institutions.
The employment of all of the employees from Entity A will terminate on a particular day and commence with you on the following day.
The operations, rights and assets of Entity A will transfer to you.
You will continue to provide expense payment benefits to the former employees of Entity A.
Relevant legislative provisions
Taxation Administration Act 1953 section 16-155 of Schedule 1
Fringe Benefits Tax Assessment Act 1986 section 135P
Fringe Benefits Tax Assessment Act 1986 subsection 136(1)
Fringe Benefits Tax Assessment Act 1986 section 160
Reasons for decision
While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.
Summary
Paragraph 160(1)(c) of the FBTAA will apply in relation to the benefits provided by Entity A for the relevant period. They are considered as having been provided to those employees in respect of their employment with you. As a result, you will need to include them in the reportable fringe benefits amount on the payment summaries you issue to those employees for the year ended 30 June 20XX.
Detailed reasoning
You are required to provide a payment summary to your employees, under paragraph 16-155(1)(c) of the Taxation Administration Act 1953 (TAA) if your employees have a reportable fringe benefits amount in respect of their employment with you.
Section 135P of the FBTAA defines reportable fringe benefits amount as follows:
An employee has a reportable fringe benefits amount for a year of income in respect of the employee’s employment by an employer if the employee’s individual fringe benefits amount for the year of tax ending on 31 March in the year of income in respect of the employee’s employment by the employer is more than $2,000.
Under subsection 160(1) of the FBTAA:
Where:
(a) a person (in this subsection referred to as the ``former employer'') disposes of the whole or a part of a business or undertaking to another person (in this subsection referred to as the ``new employer''); and
(b) an arrangement relating to the disposal provides for the new employer or an associate of the new employer to provide or to continue to provide, or to arrange for the provision or continued provision of, benefits in respect of the employment of a person (in this subsection referred to as the ``former employee'') by the former employer;
the following provisions have effect:
(c) this Act applies, in relation to any benefit so provided or continued to be provided, as if the employment of the former employee by the former employer were, instead, employment by the new employer;
....
Where paragraphs 160(1)(a) and (b) of the FBTAA are satisfied, paragraph 160(1)(c) has the effect that the liability to tax for the new employer is to be determined as though benefits provided in respect of the employment of a person with the old employer were provided in respect of employment with the new employer.
Arrangement is defined in subsection 136(1) of the FBTAA to mean:
(a) any agreement, arrangement, understanding, promise or undertaking, whether express or implied, and whether or not enforceable, or intended to be enforceable, by legal proceedings; and
(b) any scheme, plan, proposal, action, course of action or course of conduct, whether unilateral or otherwise.
You satisfy paragraphs 160(1)(a) and (b) of the FBTAA as:
● Entity A is disposing of its business or undertaking to you under the merger
● Entity A will transfer of all the operations, rights and assets to you, and
● you will continue to provide expense payment benefits to the former employees of Entity A.
Therefore the FBTAA will apply such that the benefits provided by Entity A for the relevant period are considered as having been provided to the employees in respect of their employment with you.
Consequently, where required, you should include those benefits in the reportable fringe benefits amount on the payment summaries that you issue for the year ended 30 June 20XX.
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