Edited version of private advice

Authorisation Number: 1051697479823

Date of advice: 7 September 2020

Ruling

Subject: Exempt fringe benefits

Question 1

Will a benefit provided to an employee be an exempt benefit under subsection 57A(3)(b) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) if the employee works within Division X of a state emergency operation?

Answer

Yes

Question 2

Will a benefit provided to an employee be an exempt benefit under subsection 57A(3)(b) of the FBTAA if the employee works within Division Y of a state emergency operation?

Answer

No

Question 3

Will a benefit provided to an employee be an exempt benefit under subsection 57A(3)(b) of the FBTAA if the employee works in an executive position overseeing both divisions of a state emergency operation, if it can be demonstrated that their employment activities (on a time basis) are 'predominantly' spent in connection with the provision of public ambulance services (or services that support public ambulance services)?

Answer

Yes

This ruling applies for the following periods

Year ended 31 March 2020

Year ending 31 March 2021

Year ending 31 March 2022

Year ending 31 March 2023

The scheme commenced on

1 April 2019

Relevant facts

The purpose of the state emergency operation is to provide strategic and corporate services to police, fire, and emergency and ambulance service agencies and has an operational section incorporating government and services.

The state emergency operation has two divisions which provide aeromedical, organ retrieval, passenger (including persons in custody) and cargo transport, and undertake search and rescue, disaster response and law enforcement operations.

The state emergency operation is a nominated State or Territory body under subsection 135S of the FBTAA.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 Subsection 57A(3)

Fringe Benefits Tax Assessment Act 1986 Subsection 135S

Reasons for decision

Question 1

Will a benefit provided to an employee be an exempt benefit under subsection 57A(3)(b) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) if the employee works within Division X of a state emergency operation?

Subsection 57A(3) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) provides an exemption under certain conditions, and states that:

A benefit provided in respect of the employment of an employee is an exempt benefit if:

(a) the employer of the employee is a public hospital; or

(b) the employer provides public ambulance services or services that support those services and the employee is predominantly involved in connection with the provision of those services.

The relevant paragraph is (b) which requires:

• the employer to provide public ambulance services or services that support those services; and
• the employee to be predominantly involved in connection with the provision of those services.

The employer is a state government emergency operation.

The purpose of the state government emergency operation is to provide strategic and corporate services to police, fire, and emergency and ambulance service agencies and has an operational section incorporating government and services.

The Explanatory Memorandum to the Tax Laws Amendments (2004 Measures No. 2) Bill 2004 (Explanatory Memorandum) provides an explanation to the change in legislation:

8.11 From 1 April 2004, where:

·         the employer provides public ambulance services or services that support those services; and

·         the employee is predominantly involved in connection with the provision of those services,

fringe benefits provided to an employee are FBT exempt, subject to a cap of $17,000 grossed-up taxable value per employee.

8.12 An employer would provide 'services that support those services' in circumstances such as where the employer operates a call centre which answers emergency telephone calls made to public ambulance services. This would be the case even in circumstances where the call centre operated calls for other emergency services.

8.13 An employer would not be providing 'services that support services' in circumstances where the service being provided has only an indirect connection with the provision of public ambulance services, or is merely similar to the provision of public ambulance services. For example, a commercial provider of transportation to hospitals would not be providing services that support public ambulance services.

8.14 An employee would be 'predominantly' involved if for at least half of the employment with the employer over the course of the relevant FBT year, they were involved in connection with the provision of those services. An employee would be 'involved in connection with the provision of those services' if they were working as a public ambulance officer. An employee would also be 'involved in connection with the provision of those services' if they were providing secretarial services for an employer who provides public ambulance services or services that support those services.

It is accepted that the state government emergency operation provides services that support public ambulance services, and also provides public ambulance services.

Division X of the state emergency operation provides aeromedical services, medical retrievals, search and rescue, emergency and counter disaster operations.

Division Y of the state emergency operation provides organ retrieval, disaster and rescue, dignitary transport, correctional and police operations.

The term 'predominantly' is defined in paragraph 8.14 in the Explanatory Memorandum above to mean at least half of the employment of the employee. There are numerous employees within a division including administration, operational flight crews and engineering staff operating as a supplement to normal ambulance services, providing the same service in situations where a normal ambulance service would be inadequate (e.g. emergency and non-emergency pre-hospital patient care and transport and inter-hospital transfers).

The employees operating within Division X provide either ambulance services (e.g. rescue crew officers, pilots) or support services (e.g. administration officers, engineers, safety officers, maintenance controllers, trainers), as well as other Government duties as directed.

It is accepted that, based on the time applied to each activity, the employees' duties are at least 50% involved in providing public ambulance services or services that support those services.

Therefore, the exemption in subsection 57A(3)(b) of the FBTAA applies to employees of Division X.

Question 2

Will a benefit provided to an employee be an exempt benefit under subsection 57A(3)(b) of the FBTAA if the employee works within Division Y of a state emergency operation?

The relevant employer is a state government emergency operation.

It is accepted that Division Y provides public ambulance services.

The term 'predominantly' is defined in paragraph 8.14 in the Explanatory Memorandum above to mean at least half of the employment of the employee. There are currently numerous employees within this division including administration, operational flight crews and engineering employees, and single pilot and multi-crew teams on organ, retrieval, dignitary transport, correctional, police and other government support tasks as directed.

There is no formal recording of time allocated to duties within Division Y. Employees within Division Y are unable to demonstrate that more than 50% of their employment duties, on a time basis, is spent in providing public ambulance services or support services for public ambulance services.

Therefore, the exemption in subsection 57A(3)(b) of the FBTAA will not apply to employees in Division Y.

Question 3

Will a benefit provided to an employee be an exempt benefit under subsection 57A(3)(b) of the FBTAA if the employee works in an executive position overseeing both divisions of a state emergency operation, if it can be demonstrated that their employment activities (on a time basis) are 'predominantly' spent in connection with the provision of public ambulance services (or services that support public ambulance services)?

The executive team of the state government emergency operation provide managerial, administrative and financial support to both Divisions X and Y.

It is accepted that the state government emergency operation provides both public ambulance services and services that support public ambulance services.

The executive team provide vital support to both divisions of the state government emergency operation, and spend time performing functions that support both divisions perform aeromedical tasks like hospital transfers and organ retrieval.

The term 'predominantly' is defined in paragraph 8.14 in the Explanatory Memorandum above to mean at least half of the employment of the employee.

Employees within the executive team are involved "in connection with these services" as stated in clause 8.14 of the Explanatory Memorandum as follows:

An employee would also be 'involved in connection with the provision of those services' if they were providing secretarial services for an employer who provides public ambulance services or services that support those services.

Although the first and main priority of both divisions is the provision of services to assist during emergencies, the exemption is determined by the actual allocation of time to public ambulance services.

The executive team within the state government emergency operation will spend varying amounts of time depending on their role providing ambulance services or support services for public ambulance services.

On the basis of the information provided in terms of employees, duties and aircraft, it is accepted that the executive team is involved predominantly in public ambulance services, or services that support those services.

Therefore, the exemption in subsection 57A(3)(b) of the FBTAA applies to employees in executive positions overseeing both divisions of a state emergency operation.

Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).