Edited version of private advice

Authorisation Number: 1052024467245

Date of advice: 30 August 2022

Ruling

Subject: Remote area housing

Question 1

The employer pays the rent on behalf of the employee as part of a salary sacrifice arrangement. Is this arrangement an exempt remote area housing benefit under section 58ZC of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

Answer

No

Question 2

If the answer to question 1 is no, does subsection 60(2A) of the FBTAA apply to reduce the taxable value of the benefit provided by 50%?

Answer

Yes

Question 3

Upon the cessation of the lease between the employee and the landlord, can the employer enter into a new lease with the landlord subsequently not invoke the application of subparagraph 58ZC(2)(e)(ii) of the FBTAA?

Answer

Yes

Question 4

If the employer is the lessee of a residential property and provides the property to an employee, is the cost of the rent paid by the employer direct to the landlord of the property an exempt area housing benefit under section 58ZC of the FBTAA?

Answer

Yes

This ruling applies for the following periods:

FBT year ending 31 March 20XX

FBT year ending 31 March 20XX

FBT year ending 31 March 20XX

FBT year ending 31 March 20XX

FBT year ending 31 March 20XX

FBT year ending 31 March 20XX

FBT year ending 31 March 20XX

The scheme commences on:

1 April 20XX

Relevant facts and circumstances

•         The location is listed as a remote area on the ATO website. Being in a remote area means that the employer has difficulty attracting qualified staff from the local area.

•         The employer has struggled to fill some of its roles within the organisation for some time. Many roles require specialist skills or qualifications. Because of this issue they have been offering a remote housing benefit to attract staff to the area.

•         The employer offers staff a salary sacrifice option where 100% of the employee's rental payment is deducted pre-tax and the employer pays the rent on the employees' behalf.

•         The employer believes that the payment for the rent was for the purpose of providing an exempt housing benefit to encourage employees to relocate to their remote area.

•         As leases come up for renewal, and for future staff relocation, the employer is considering taking out the leases in the employer's name and then providing the accommodation to the employee. The employer would pay the rent to the landlord directly as the lessee and the staff would be provided the accommodation as part of a salary packaging arrangement.

•         It is customary for employers in this industry in remote areas to provide incentives including subsidised accommodation to attract employees to the region.

•         This matter was also raised with recruitment/salary packaging agents who have advised they could list 100 employers nationally in this industry that provide housing benefits.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 Section 20

Fringe Benefits Tax Assessment Act 1986 Section 25

Fringe Benefits Tax Assessment Act 1986 Section 58ZC

Fringe Benefits Tax Assessment Act 1986 Subsection 58ZC(1)

Fringe Benefits Tax Assessment Act 1986 Subsection 58ZC(2)

Fringe Benefits Tax Assessment Act 1986 Section 60(2)

Fringe Benefits Tax Assessment Act 1986 Section 60(2A)

Fringe Benefits Tax Assessment Act 1986 Subsection 136(1)

Fringe Benefits Tax Assessment Act 1986 Subsection 140(1)

Fringe Benefits Tax Assessment Act 1986 Paragraph 142(1)(a)

Fringe Benefits Tax Assessment Act 1986 Paragraph 142(1)(E)

Reasons for decision

Question 1

The employer pays the rent on behalf of the employee as part of a salary sacrifice arrangement. Is this arrangement an exempt remote area housing benefit under section 58ZC of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

Answer

No

Summary

A housing benefit is not being provided by the employer to employees. The employer is providing expense payment benefits to its employees.

Detailed reasoning

Is a housing benefit provided by the employer?

Under subsection 58ZC(1) of the FBTAA, a housing benefit that is a 'remote area housing benefit' is exempt from FBT subject to satisfying conditions stipulated under subsection 58ZC(2) of the FBTAA. The following questions needs to be asked before determining whether the employer has provided an exempt remote area housing benefit pursuant to section 58ZC of the FBTAA

1.    What is a housing benefit?

2.    Who provided it?

3.    Who received it?

What is a housing benefit?

Section 25 of the FBTAA defines a 'housing benefit' as the subsistence during the whole or a part of a year of tax of a housing right granted by a person (in this section referred to as the provider) to another person (in this section referred to as the recipient) shall be taken to constitute a benefit provided by the provider to the recipient in respect of the year of tax.

A 'housing right' is defined by subsection 136(1) of the FBTAA to mean a lease or license granted to a person to occupy or use a unit of accommodation to the extent that the lease or license subsists at a time when the unit of accommodation is the person's usual place of residence.

Subsection 136(1) of the FBTAA defines a 'unit of accommodation' to include a house, flat or home unit, and accommodation in house, flat or home unit'. The terms 'lease' and 'licence' are not defined in the FBTAA. On their ordinary meaning, these terms would include the granting of a right to use the specified land for accommodation purposes.

The FBTAA does not define 'usual place of residence'. However, in subsection 136(1) of the FBTAA, it does define a 'place of residence' to mean:

(a)  a place at which the person resides; or

(b)  a place at which the person has sleeping accommodation;

whether on a permanent or temporary basis and whether or not on a shared basis.

In the absence of a legislative reference, it is relevant to refer to the ordinary meaning of 'usual'. The Macquarie Dictionary Online defines 'usual' to mean:

1. habitual or customary: his usual skill.

2. such as is commonly met with or observed in experience; ordinary: the usual January weather.

3. in common use; common: say the usual things.

noun

4. that which is usual or habitual.

phrase

5. as usual, as is (or was) usual; in the customary or ordinary manner: he will come as usual.

Who provided the housing benefit and who received it?

To answer the question of whether the employer provided the housing benefit, we need to establish who granted the housing right and who received the housing right. In other words, we need to confirm who the 'provider' and who the 'recipient' in respect of the housing benefits under section 25 of the FBTAA is.

The landlord (provider) granted the housing rights to the employees (recipients) as the lease agreements are executed directly between the landlord and the employees. In the current circumstances, although the employer paid the rent directly to the landlord due to the salary sacrifice arrangement with the employees, the contractual right to live in the property exists between the landlord and the employees.

Conclusion

As the employer does not provide the housing benefit to employees (the landlord does), the employer is not providing an exempt remote area housing benefit under section 58ZC of FBTAA in relation to the rent it pays to the landlord on behalf of employees as part of salary sacrifice arrangements where landlord and employees enter into the leasing agreements.

Question 2

If the answer to question 1 is no, does subsection 60(2A) of the FBTAA apply to reduce the taxable value of the benefit provided by 50%?

Answer

Yes

Summary

The provision of an expense payment benefit by the employer to an employee, where the employee's expenditure is in relation to rent, will be reducible in accordance with subsection 60(2A) of the FBTAA.

Detailed reasoning

1.    Is an expense payment benefit provided by the employer?

Expense payment benefits are defined in section 20 of the FBTAA as follows:

Where a person (in this section referred to as the "provider"):

(a)  makes a payment in discharge, in whole or in part, of an obligation of another person (in this section referred to as the "recipient") to pay an amount to a third person in respect of expenditure incurred by the recipient; or

(b)  reimburses another person (in this section also referred to as the "recipient"), in whole or in part, in respect of an amount of expenditure incurred by the recipient;

the making of the payment referred to in paragraph (a), or the reimbursement referred to in paragraph (b), shall be taken to constitute the provision of a benefit by the provider to the recipient.

The payment of the employees' (recipients) rent by the employer (provider) to the landlord (third person) under a salary sacrifice agreement constitutes an expense payment benefit pursuant to subsection 20(a) of the FBTAA.

2.    Is the taxable value of remote area housing reduced by 50%?

Subsection 60(2A) of the FBTAA provides that the taxable value of an expense payment benefit shall be reduced by 50% where the following conditions apply:

Where:

(a)  the recipient of an expense payment fringe benefit in relation to an employer in relation to a year of tax is an employee of the employer;

(b)  the recipient's expenditure is in respect of remote area housing rent connected with a unit of accommodation;

(c)   the recipient occupied or used the unit of accommodation as his or her usual place of residence during a period (in this subsection called the "occupation period") during which the rent accrued; and

(d)  the fringe benefit was not provided under:

(i)    a non-arm's length arrangement; or

(ii)   an arrangement that was entered into by any of the parties to the arrangement for the purpose, or for purposes that included the purpose, of enabling the employer to obtain the benefit of the application of this section;

the amount that, but for this subsection, would be the taxable value of the fringe benefit in relation to the year of tax shall be reduced by 50% of so much of the recipient's expenditure as relates to the occupation period.

In order to determine whether the payment of an employee's rent by the employer to an unrelated third party under a salary sacrifice agreement is reducible, a discussion is provided below in respect of whether each element or condition in subsection 60(2A) of the FBTAA is satisfied.

Paragraph 60(2A)(a) of the FBTAA

Based on the facts provided, the recipient of an expense payment benefit (as provided by the employer) is an employee of the employer.

Therefore, the condition in paragraph 60(2A)(a) of the FBTAA is satisfied.

Paragraph 60(2A)(b) of the FBTAA

In determining whether the payment of an employee's rent by the employer to an unrelated third party under a salary sacrifice agreement is 'in respect of a remote area housing rent', it is necessary to consider subsection 142(1A) of the FBTAA which sets out the conditions for a remote area housing rent.

Subsection 142(1A) of the FBTAA is set out below:

In this Act, a reference, in relation to a year of tax in relation to an employee of an employer, to remote area housing rent connected with a unit of accommodation is a reference to rent or other consideration payable in respect of the subsistence of a lease or licence in respect of the unit of accommodation where:

(a)  during the whole of the period (in this subsection referred to as the "occupation period"') in the year of tax when the employee occupied or used the unit of accommodation as his or her usual place of residence:

(i)    the unit of accommodation was situated in a State or internal Territory and was not at a location in, or adjacent to, an eligible urban area; and

(ii)   the employee was a current employee of the employer and the usual place of employment of the employee was not at a location in, or adjacent to, an eligible urban area;

(b)  the common conditions set out in subsection (2E) are satisfied in relation to the occupation period; and

(c)   (Omitted by No 95 of 1988)

(d)  the lease or licence was not granted under:

(i)    a non-arm's length arrangement; or

(ii)   an arrangement that was entered into by any of the parties to the arrangement for the purpose, or for purposes that included the purpose, of enabling the employer to obtain the benefit of the application of section 60.

Paragraph 142(1A)(a) of the FBTAA

Based on the facts provided, employees who rent their accommodation directly (which is their usual place of residence) via a third party - where rent to the unrelated third party is paid by the employer on the employee's behalf - are employees of the employer.

A unit of accommodation will be treated as being in a remote area if it is not located in, or adjacent to, an eligible urban area.

Pursuant to paragraph 140(1)(a) of the FBTAA, an 'eligible urban area' is an area that is either:

•         situated in Zone A or Zone B for income tax purposes (as described in Parts I and II respectively in Schedule 2 to the Income Tax Assessment Act 1936 (ITAA 1936)) and is an urban centre with a 1981 census population of not less than 28,000, or

•         not situated in Zone A or Zone B for income tax purposes and is an urban centre with a 1981 census population of not less than 14,000.

According to paragraph 140(1)(b) of the FBTAA, an area that is 'adjacent to an eligible urban area' is an area that is situated either:

•         less than 40 kilometres by the shortest practicable surface route from the centre of an eligible urban area with a 1981 census population of less than 130,000, or

•         less than 100 kilometres by the shortest practicable surface route from the centre of an eligible urban area with a 1981 census population of 130,000 or more.

To provide guidance on the application of subsections 58ZC(2) and 140(1) of the FBTAA, the ATO maintains a list of 'eligible urban areas', 'remote areas' and 'non-remote areas' on its website. That list specifically identifies the location a 'remote area', and not as an area situated in or adjacent to any of the eligible urban areas.

The employees of the employer who reside in the location do not reside in, or adjacent to, an eligible urban area and their usual place of employment is not at a location in, or adjacent to, an eligible urban area;

Therefore, the condition in paragraph 142(1A)(a) of the FBTAA is satisfied.

Paragraph 142(1A)(b) of the FBTAA

The 'common conditions' as set out in subsection 142(2E) of the FBTAA are iterated below:

For the purposes of the application of this section to a fringe benefit in relation to a year of tax in relation to an employee of an employer, the common conditions in relation to a particular period or in relation to a particular time are as follows:

(a)  it is customary for employers in the industry in which the employee was employed during that period or at that time, as the case may be, to provide housing assistance for their employees;

(b)  it would be concluded that it was necessary for the employer, during the year of tax, to provide or arrange for the provision of housing assistance for employees of the employer because:

(i)    the nature of the employer's business was such that employees of the employer were liable to be frequently required to change their places of residence;

(ii)   there was not, at or near the place or places at which the employees of the employer were employed, sufficient suitable residential accommodation for those employees (other than residential accommodation provided by or on behalf of the employer); or

(iii)  it is customary for employers in the industry in which the employee was employed during that period or at that time, as the case may be, to provide housing assistance for their employees.

Taxation Determination TD 94/97 Fringe benefits tax: what does the phrase 'customary for employers in the industry' mean in relation to the provision of fringe benefits to employees? explains what is meant by the phrase 'customary for employees in the industry' in subparagraph 142 (2)(E)(b)(iii).

Paragraph 2 of TD 94/97 states:

A benefit will be accepted as being customary where it is normal or common for Employees of that class or job description in that industry to be provided with the same or similar benefits. It is not necessary that all or even the majority of Employees in the industry receive the benefit. Where the provision of the benefit is unique, rare or unusual within an industry it would not be accepted as being customary.

The Commissioner does not have a current published list of industries in which it would be considered customary for employers to provide housing assistance.

However, the now withdrawn, Taxation Ruling IT 67 Subsidised housing benefits provided examples of classes of Employees whose Employers would meet this requirement. IT 67 provided guidance on the former section 26AAAB of the Income Tax Assessment Act 1936 which provided concessional treatment for subsidised housing in remote areas for Employees where it was customary for employers in the particular industry to provide Employees with free or subsidised accommodation.

The examples listed were as follows:

•         miners

•         sugar mill

•         bank

•         police

•         prison

•         school teachers

•         hospital

•         farm workers

•         hotel and motel staff, and

•         civil engineering workers, e.g. on bridge or dam works.

You have advised of the following:

•         It is customary for employers in the industry in remote areas to provide incentives including subsidised accommodation to attract employees to the region.

•         This matter was also raised with recruitment/salary packaging agents who have advised they could list 100 employers in the industry nationally that provide housing benefits.

Based on the above, we accept that it is customary in the employer's industry to provide remote area housing to employees.

Therefore, the 'common conditions' in subsection 142(2E) of the FBTAA are satisfied. As such, paragraph 142(1A)(b) of the FBTAA is satisfied.

Paragraph 142(1A)(d) of the FBTAA

You've advised that the arrangements are not provided under a non-arm's length arrangement, or an arrangement for the purpose or purposes of enabling the employers to obtain the benefit of any relevant section of the FBTAA.

It is therefore accepted for the purposes of this ruling that the benefit will be provided at arm's length and not for the purpose of enabling the employer to obtain a benefit, but rather to attract and retain employees in a remote area, the employees were not acting independently in relation to the housing assistance.

Based on the above discussion, the conditions in subsection 142(1A) of the FBTAA are satisfied, which means that the payment of an employee's rent by the employer to an unrelated third party under a salary sacrifice agreement is 'in respect of a remote area housing rent'. As such, the condition in paragraph 60(2A)(b) of the FBTAA is satisfied.

Paragraph 60(2A)(c) of the FBTAA

Subsection 136(1) of the FBTAA defines a 'unit of accommodation' to include a house, flat or home unit, and accommodation in house, flat or home unit.

The Commissioner's view on what is meant by 'usual place of residence' is considered in MT 2030, which provides that a person's 'usual place of residence':

•         must be a place of residence that they dwell permanently, and not temporarily, and

•         is presumed to be near where they are employed permanently.

Based on the facts provided, the employer provides a unit of accommodation to their employees as they have difficulty attracting qualified staff from the local area. They provide housing as an incentive to attract staff from other areas. The rented accommodation is their usual place of residence and therefore the condition in paragraph 60(2A)(c) of the FBTAA is satisfied.

Paragraph 60(2A)(d) of the FBTAA

The same principles/reasons underlying the conclusion formed above in respect of paragraph 142(1A)(d) of the FBTAA are also applicable to paragraph 60(2A)(d) of the FBTAA.

Therefore, the condition in paragraph 60(2A)(d) of the FBTAA is satisfied.

Conclusion

As per the discussion above,each of the conditions in subsection 60(2A) of the FBTAA - which assist in determining whether the payment of an employee's rent by the employer to an unrelated third party under a salary sacrifice agreement is reducible - are satisfied.

Therefore, the taxable value of the applicable expense payment benefit is reducible by 50% pursuant to subsection 60(2A) of the FBTAA.

Question 3

Upon the cessation of the lease between the employee and the landlord, can the employer enter into a new lease with the landlord subsequently not invoke the application of subparagraph 58ZC(2)(e)(ii) of the FBTAA?

Answer

Yes

Summary

You've advised that the arrangements are not provided under a non-arm's length arrangement, or an arrangement for the purpose or purposes of enabling the employer to obtain the benefit of any relevant section of the FBTAA. It is therefore accepted for the purposes of this ruling that the benefit will be provided at arm's length and not for the purpose of enabling the employer to obtain a benefit, but rather to attract and retain employees in a remote area. A same conclusion was made under ATO Interpretative Decision (ATO ID) 2002/412.

Conclusion

A housing benefit provided to an employee by the employer, because of the completion of an existing rental agreement between the employee and the landlord and entering into a new lease agreement between the employer and the same landlord on an arm's length basis on the same property, will not invoke the application of subparagraph 58ZC(2)(e)(ii) of the FBTAA.

Question 4

If the employer is the lessee of a residential property and provides the property to an employee, is the cost of the rent paid by the employer direct to the landlord of the property an exempt area housing benefit under section 58ZC of the FBTAA?

Answer

Yes

Summary

The cost of rent paid to the landlord by the employer in the capacity as a lessee and provides this property to the employee is an exempt area housing benefit under section 58ZC of FBTAA.

Detailed reasoning

1.    Will the Council provide housing benefit to the employees?

Under subsection 58ZC(1) of the FBTAA, a housing benefit that is a 'remote area housing benefit' is exempt from FBT.

Section 25 of the FBTAA defines a 'housing benefit' as being a housing right granted by a person to another person.

As discussed under question 1, similar questions need to be asked about the housing rights for the proposed arrangement of the employer such as:

1.    who will provide the housing right? and

2.    who will receive the housing right?

It is proposed that the lease agreement will be executed between the employer and the landlord and subsequently the employers provide the accommodation to the employees. The employer would pay the rent to the landlord directly as the lessee and the staff would be provided the accommodation as part of a salary packaging arrangement.

As a result, the housing right was granted by the landlord to the employer.

In question 1 we discussed whether the unit of accommodation is an employee's usual place of residence. It is a question of fact, based on all the circumstances.

Based on the facts provided, the employer will provide housing benefits to their employees as they have difficulty attracting qualified staff from the local area. They provide housing as an incentive to attract staff from other areas to work and reside in the area which becomes their usual place of residence.

2.    Is the housing benefit a remote area housing benefit?

A remote area housing benefit is defined in subsection 136(1) of the FBTAA as having the meaning given by subsection 58ZC(2).The conditions for a housing benefit to be a 'remote area housing benefit' are set out in subsection 58ZC(2) of the FBTAA, as stipulated below.

A housing benefit in relation to an employer for a year of tax and for a unit of accommodation, being a benefit provided to an employee of the employer in respect of the employee's employment, is a remote area housing benefit if:

(a)  during the whole of the tenancy period, the unit of accommodation was located in a State or internal Territory and was not at a location in, or adjacent to, an eligible urban area; and

(b)  during the whole of the tenancy period, the recipient was a current employee of the employer and the usual place of employment of the recipient was not at a location in, or adjacent to, an eligible urban area; and

(c)   (Repealed by No 77 of 2005)

(d)  it would be concluded that it was necessary for the employer, during the year of tax, to provide, or to arrange for the provision of, residential accommodation for an Employee of the Employer because:

(i)    the nature of the employer's business was such that Employee of the Employer were liable to be frequently required to change their places of residence; or

(ii)   there was not, at or near the place or places at which the Employee of the Employer were employed, sufficient suitable residential accommodation for those (other than residential accommodation provided by or on behalf of the employer); or

(iii)  it is customary for Employers in the industry in which the recipient was employed during the tenancy period to provide residential accommodation for their Employees free of charge or for a rent or other consideration that is less than the market value of the right to occupy or use the accommodation concerned; and

(e)  the recipient's overall housing right was not granted to the recipient under:

(i)    a non-arm's length arrangement; or

(ii)   an arrangement that was entered into by any of the parties to the arrangement for the purpose, or for purposes that included the purpose, of enabling the employer to obtain the benefit of the application of this section.

The term 'in respect of the employment of the employee' was considered in J & G Knowles & Associates Pty Ltd v Federal Commissioner of Taxation (2000) 96 FCR 402; 2000 ATC 4151; (2000) 44 ATR 22 (Knowles). The full Federal Court in Knowles - in examining the meaning of 'in respect of' an employee's employment - held that the phrase required a 'nexus, some discernible and rational link, between the benefit and employment', though noted that 'what must be established is whether there is a sufficient or material, rather than a causal, connection or relationship between the benefit and the employment'. A similar view was also held in Essenbourne Pty Ltd v FC of T 2002 ATC 5201 and Starrim Pty Ltd v FCT (2000) 102 FCR 194; [2000] FCA 952; 2000 ATC 4460; (2000) 44 ATR 487.

The full Federal Court in Knowles also suggested that it would be useful to ask 'whether the benefit is a product or incident of the employment'.

To establish whether a sufficient or material connection exists between the provision of the accommodation and the employment of the employee, it is necessary to consider the circumstances in which it has been provided.

Based on the facts, the employer provides housing benefits as they have difficulty attracting qualified staff from the local area. They provide housing to attract staff from other areas.

Therefore, the connection between the benefit received by the employee and the employee's employment is material and sufficient, and not merely causal. If it were not for the employee's employment, the employee would not have received the accommodation benefit.

Paragraph 58ZC(2)(a) of the FBTAA

A unit of accommodation will be treated as being in a remote area if it is not located in, or adjacent to, an eligible urban area.

Pursuant to paragraph 140(1)(a) of the FBTAA, an 'eligible urban area' is an area that is either:

•         situated in Zone A or Zone B for income tax purposes (as described in Parts I and II respectively in Schedule 2 to the Income Tax Assessment Act 1936 (ITAA 1936)) and is an urban centre with a 1981 census population of not less than 28,000, or

•         not situated in Zone A or Zone B for income tax purposes and is an urban centre with a 1981 census population of not less than 14,000.

According to paragraph 140(1)(b) of the FBTAA, an area that is 'adjacent to an eligible urban area' is an area that is situated either:

•         less than 40 kilometres by the shortest practicable surface route from the centre of an eligible urban area with a 1981 census population of less than 130,000, or

•         less than 100 kilometres by the shortest practicable surface route from the centre of an eligible urban area with a 1981 census population of 130,000 or more.

To provide guidance on the application of subsections 58ZC(2) and 140(1) of the FBTAA, the ATO maintains a list of 'eligible urban areas', 'remote areas' and 'non-remote areas' on its website. That list specifically identifies the location as a 'remote area', and not as an area situated in or adjacent to any of the eligible urban areas in Australia.

Therefore, as the employee resides in a location specifically designated by the ATO as a remote area - the condition in paragraph 58ZC(2)(a) of the FBTAA is satisfied.

Paragraph 58ZC(2)(b) of the FBTAA

Based on the facts provided, it is accepted that during the relevant period of the arrangement, the employee who has occupied/will continue to occupy the unit of accommodation is a current employee of the employer, and the usual place of employment is not, as concluded above, located within or adjacent to an eligible urban area.

Therefore, the condition in paragraph 58ZC(2)(b) of the FBTAA is satisfied.

Paragraph 58ZC(2)(d) of the FBTAA

From the facts provided, subparagraphs 58ZC(2)(d)(i) and 58ZC(2)(d)(ii) of the FBTAA are not required to be considered.

Taxation Determination TD 94/97 Fringe benefits tax: what does the phrase 'customary for employers in the industry' mean in relation to the provision of fringe benefits to employees explains what is meant by the phrase 'customary for employees in the industry' in subparagraph 58ZC(2)(d)(iii).

Paragraph 2 of TD 94/97 states:

A benefit will be accepted as being customary where it is normal or common for employees of that class or job description in that industry to be provided with the same or similar benefits. It is not necessary that all or even the majority of employees in the industry receive the benefit. Where the provision of the benefit is unique, rare or unusual within an industry it would not be accepted as being customary.

The Commissioner does not have a current published list of industries in which it would be considered customary for employers to provide housing assistance.

However, the now withdrawn, Taxation Ruling IT 67 Subsidised housing benefits provided examples of classes of employees whose employers would meet this requirement. IT 67 provided guidance on the former section 26AAAB of the Income Tax Assessment Act 1936 which provided concessional treatment for subsidised housing in remote areas for employees where it was customary for employers in the particular industry to provide employees with free or subsidised accommodation.

The examples listed were as follows:

•         miners

•         sugar mill

•         bank

•         police

•         prison

•         school teachers

•         hospital

•         farm workers

•         hotel and motel staff, and

•         civil engineering workers, e.g. on bridge or dam works.

You have advised of the following:

•         It is customary for employers in the industry in remote areas to provide incentives including subsidised accommodation to attract employees to the region.

•         This matter was also raised with recruitment/salary packaging agents in the industry who have advised they could list 100 employers in this industry nationally that provide housing benefits.

Therefore, it is accepted that it is necessary for the employer to provide residential accommodation for its employees, as it is customary for the employer in remote areas to provide housing benefits to attract qualified staff from other areas.

Paragraph 58ZC(2)(e) of the FBTAA

Under paragraph 58Z(2)(e), the arrangement under which the accommodation is provided must be an arm's length arrangement and must not be provided under an arrangement for the purposes of obtaining the concessions provided by section 58ZC.

You've advised that the arrangements are not provided under a non-arm's length arrangement, or an arrangement for the purpose or purposes of enabling the employer to obtain the benefit of any relevant section of the FBTAA. It is therefore accepted for the purposes of this ruling that the benefit will be provided at arm's length and not for the purpose of enabling the employer to obtain a benefit, but rather to attract and retain employees in a remote area.

Accordingly, the requirements of paragraph 58Z(2)(e) are satisfied.

Conclusion

As per the discussion above, each of the conditions for such housing benefits to constitute a 'remote area housing benefit' as set out in subsection 58ZC(2) of the FBTAA are satisfied. This includes that it is customary in the industry for the employer to provide residential accommodation to employees for the purposes of subparagraph 58ZC(2)(d)(iii).

Consequently, the proposed arrangement will be an exempt remote housing benefit pursuant to section 58ZC(1).

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