Edited version of private ruling

Authorisation Number: 1011645723250

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Ruling

Subject Fringe Benefits Tax - exempt residual benefit

Issue

Provision of a 4 x 4 camper van (motor vehicle, non-car) to employees for transport to and accommodation in remote mine site areas

Question 1

Does the provision of a motor vehicle to employees for transport to and accommodation in remote mine site areas by the employer constitutes a residual benefit as defined in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

Advice/Answers

Yes.

Question 2

If the answer to question 1 is yes, is the provision of the above motor vehicle an exempt residual benefit under subsection 47(6) of the FBTAA?

Yes

This ruling applies for the following period

1 April 2009 to 31 March 2012

The scheme commenced on

1 April 2009

Relevant facts

The employer paid by instalments to purchase a 4 x 4 camper van (motor vehicle).

The motor vehicle is not a car under section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997) as its carrying capacity is greater than 1 tonne and is primarily designed for human occupation that includes sleeping facilities.

The motor vehicle is provided to employees for use while working away from their main residence, at remote mine sites across Australia.

The motor vehicle is used by employees for transportation and carry heavy equipment (not able to be transported by plane) to mine sites and as temporary accommodation at remote mine sites and also as mobile office. It may be stationary for a period from a day to couple of weeks at mine sites.

When the motor vehicle is not being used by employees, it is parked at the employer's premises and not available to employees for private purposes. The employer's premises and the employees' main residence are of the same address.

The employee has a separate motor vehicle for private activities.

The private use of the motor vehicle is limited to travel between home and work and other private use which is minor, infrequent and irregular.

When the employees use the motor vehicle for accommodation whilst travelling in the course of performing their employment duties, they are not considered to be living away from home.

Assumptions

It is assumed that the vehicle is provided on a fully maintained basis, including fuel.

Relevant legislative provisions

subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986

section 45 of the Fringe Benefits Tax Assessment Act 1986

subsection 47(6) of the Fringe Benefits Tax Assessment Act 1986

subsection 995-1(1) of the Income Tax Assessment Act 1997

Reasons for decision

Issue 1

Question 1

Summary

The provision of a motor vehicle to employees for transport to and accommodation in remote mine site areas by the employer constitutes a residual benefit as defined in subsection 136(1) of FBTAA.

Detailed reasoning

Subsection 136(1) of the FBTAA defines a residual benefit to mean a benefit that is a residual benefit by virtue of section 45.

Section 45 of the FBTAA states:

A benefit is a residual benefit for the purposes of this Act if the benefit is not a benefit by virtue of a provision of Subdivision A of Divisions 2 to 11 (inclusive).

Divisions 2 to 11 of subdivision A of Pt III of the FBTAA deal with the following types of benefits:

§ Div 2 car benefits,

§ Div 3 debt waver benefits,

§ Div 4 loan benefits,

§ Div 5 expense payment benefits,

§ Div 6 housing benefits,

§ Div 7 living-away-from-home allowance benefits,

§ Div 8 airline transport benefits,

§ Div 9 board benefits,

§ Div 9A meal entertainment benefits,

§ Div 10 tax-exempt body entertainment benefits,

§ Div 10A car parking benefits and

§ Div 11 property benefits.

The only one of these types of benefits that might apply in this situation is car fringe benefits. This will apply if the motor vehicle is a car.

Subsection 995-1(1) of the ITAA 1997 defines a car as a motor vehicle (except a motor cycle or similar vehicle) designed to carry a load of less than 1 tonne and fewer than 9 passengers.

Subsection 136(1) of the FBTAA defines a car to have the same meaning as given by subsection 995-1(1) of the ITAA 1997.

Subsection 995-1(1) of the ITAA 1997 defines a motor vehicle as any motor powered road vehicle (including a 4 wheel drive vehicle).

The motor vehicle is a commercially proven 4x4 truck capable of loads up to 6000Kg GVM, yet transformed into a motor vehicle, the all up weight is under 4500kg allowing superb power to weight ratio and economical fuel consumption.

The GVM of the motor vehicle is 4.5 tonnes vs kerbside (unladen weight) of approximately 3 tonnes. Therefore, the designed load carrying capacity is (4.5-3) tonnes = 1.5 tonnes.

The vehicle is primarily designed for human occupation that includes sleeping facilities, not with the designed seating capacity of 8 or more passengers.

From the above information obtained from the website provided, the vehicle fits the definition of a motor vehicle but as it is designed to carry more than 1 tonne, it is not a car.

As the vehicle is not a car, the benefit is not a car benefit within Division 2 of the FBTAA.

The provision of travel services to remote mine site areas and transportation of heavy equipment is a provision of general services - transport, not covered by any of the other Divisions in Pt III, 2 of the FBTAA, therefore, a residual benefit within section 45 of the FBTAA.

Note: also, the use of the motor vehicle for accommodation whilst the employees are travelling in the course of their employment is not a housing benefit as the accommodation is not the employees' usual place of residence.

Question 2

Summary

The provision of a motor vehicle constitutes an exempt residual benefit under subsection 47(6) of the FBTAA.

Detailed reasoning

Subsection 47(6) of the FBTAA states:

Where:

a residual benefit consisting of the provision or use of a motor vehicle is provided in a year of tax in respect of the employment of a current employee;

(aa) the motor vehicle is not:


(i) a taxi let on hire to the provider; or


(ii) a car, not being:


(A) a panel van or utility truck; or

(B) any other road vehicle designed to carry a load of less than 1 tonne (other than a vehicle designed for the principal purpose of carrying passengers); and

(b) there was no private use of the motor vehicle during the year of tax and at a time when the benefit was provided other than:


(i) work-related travel of the employee; and


(ii) other private use of the motor vehicle by the employee or an associate of the employee, being other use that was minor, infrequent and irregular;

the benefit is an exempt benefit in relation to the year of tax.

For the exemption under section 47(6) of the FBTAA to apply, the benefit consisting of the use of a motor vehicle must be provided in respect of the employment of a current employee in relation to a year of tax.

In your circumstances, the benefit is provided to employees by the employer in respect of their employment in relation to a year of tax.

The exemption is only relevant where the benefit is not a car benefit within Division 2 of the FBTAA. The motor vehicle is not a car.

The exemption under subsection 47(6) of the FBTAA will apply when the private use of the motor vehicle is restricted to:

§ travel to and from work;

§ use which is incidental to travel in the course of employment; and

§ non-work related use that is minor, infrequent and irregular.

The sole purpose of the motor vehicle is to enable employees to perform duties of their employment to work away from their main residence at remote mine sites.

The private use of the motor vehicle is limited to travel between home and work and other private use which is minor, infrequent and irregular.

The provision of the motor vehicle constitutes exempt residual benefits under subsection 47(6) of the FBTAA.

Furthermore, by the definition under paragraph 136(1)(g) of the FBTAA, a benefit that is an exempt benefit in relation to the year of tax is not a fringe benefit.