ATO Interpretative Decision
ATO ID 2001/253
Fringe benefits tax
Fringe benefits tax: waiver of a levy payable by a unit owner/employeeFOI status: may be released
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This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Whether the waiver of a levy payable by the owner of a unit in a strata titled complex is a fringe benefit in a situation where the owner is employed as a caretaker by the owners corporation.
Decision
Yes. The waiving of the levy will be either a debt waiver fringe benefit under section 14 or a residual fringe benefit under section 45 of the Fringe Benefits Tax Assessment Act 1986 (FBTAA).
Facts
The owner of one of the units in a strata titled complex of residential units has been employed by the owners corporation as its part-time caretaker.
The caretaker is paid a wage by the owners corporation.
The operating expenses of the owners corporation are met by periodic levies collected from unit owners.
The owners corporation has decided not to collect these levies from the owner who is the part-time caretaker.
The minutes of a meeting of the owners corporation record that as an employee of the owners corporation, the caretaker enjoyed privileges that were not given to other unit owners. Specific mention was made to the waiving of levies applicable to the duration of employment of the caretaker.
Reasons for decision
A 'fringe benefit' is defined in subsection 136(1) of the FBTAA as a benefit provided to an employee (or their associate) by the employer (or their associate) in respect of the employment of the employee, but does not include certain benefits (such as salary or wage payments, specifically exempted benefits, and payments to complying superannuation funds).
The meaning of 'in respect of employment' was considered by the Full Federal Court in J & G Knowles v. Federal Commissioner of Taxation (2000) 96 FCR 402; 2000 ATC 4151; (2000) 45 ATR 1101. The Full Federal Court held that it is not sufficient for the purposes of the FBTAA to conclude that there was a causal connection between the benefit and the employment. It must be established that there was a sufficient and material connection or relationship between the benefit and the employment.
The agreement between the caretaker and the owners corporation shows sufficient and material connection between the non-payment of the levies and the employment duties of the caretaker. The caretaker would not have received the benefit had he not been an employee and the Minutes confirmed that the levies were only waived because the caretaker was an employee of the owners corporation. The levies were only waived during the period of the caretaker's employment.
The waiving of the unit owners levy by the owners corporation is a benefit provided in respect of the employment of the unit owner in the role of caretaker and satisfies the definition of a 'fringe benefit' in subsection 136(1) of the FBTAA.
The levy waiver is either a debt waiver fringe benefit under section 14 or a residual fringe benefit under section 45 of the FBTAA.
Amendment History
| Date of Amendment | Part | Comment |
|---|---|---|
| 22 April 2016 | Throughout | Updated to clarify reasoning, update references, and for other minor grammatical amendments. |
Legislative References:
Fringe Benefits Tax Assessment Act 1986
section 14
section 45
section 136(1)
Case References:
J & G Knowles & Associates Pty Ltd v Federal Commissioner of Taxation
(2000) 96 FCR 402
2000 ATC 4151
(2000) 44 ATR 22
Keywords
Fringe Benefits
Debt Waiver Fringe Benefits
Residual Fringe Benefits
Date reviewed: 12 September 2018
ISSN: 1445-2782
| Date: | Version: | |
| 22 May 2001 | Original statement | |
| You are here | 22 April 2016 | Updated statement |