Edited version of private ruling

Authorisation Number: 1011721907770

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Ruling

Subject: FBT - housing fringe benefits

Question

Is the benefit an exempt benefit under section 58T of the Fringe Benefits Tax Assessment Act 1986, given the facts described below?

Answer: The benefit is an exempt benefit.

This ruling applies for the following period:

Year ended 31 March 2011

Relevant facts and circumstances

The Religious Institution provides a house rent-free to an employee. The employee is also paid a fortnightly wage.

The employee's key duties include housekeeping, cooking, washing, ironing, grocery shopping, gardening, cleaning of the church and the religious practitioner's residence, and, when required, minor sewing activities. Part of one day each week is allocated to cleaning the church.

The employee's house is next door to the religious practitioner's residence and is located on the same block of land as the religious practitioner's residence and the church. However, the ownership of the house is recorded on a separate land title.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 section 58T

Summary

The benefit is an exempt benefit.

Detailed reasoning

Ordinarily, the provision of free accommodation to an employee is a 'housing fringe benefit': see section 25 and subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (the FBTAA 1986).

However, section 58T of the FBTAA 1986 confers an exemption in the following terms:

Where, during a particular period:

(a) the employer of an employee is:

(i) a religious institution; or

(ii) a religious practitioner;

(b) the duties of the employment of the employee consist of, or consist principally of, rendering domestic services or personal services, or both, for:

(i) one or more religious practitioners who reside in one or more units of accommodation located on a particular parcel of land; and

(ii) any relatives of that religious practitioner, or of those religious practitioners, who reside in the unit of accommodation with the religious practitioner concerned;

(c) the employee resides in a unit of accommodation located on the same parcel of land; and

(d) the fact that the employee resides in the unit of accommodation is directly related to the rendering, in the course of the performance of the duties of the employment of the employee, of those domestic services or of those personal services;

any benefit arising from the provision, during that period, of:

(e) that accommodation to the employee or to the employee and a spouse or child of the employee who resides in that unit of accommodation with the employee;...

is an exempt benefit.

The term 'domestic services' is defined in subsection 136(1) of the FBTAA 1986 to include

(a) child care;

(b) gardening;

(c) home renovations, repairs or maintenance;

(d) house cleaning;

(e) nursing care; and

(f) preparation of meals.

The term 'personal services' is defined in subsection 136(1) to include 'services as a personal secretary or chauffeur'.

Paragraph (a)

The Religious Institution in the present case is clearly a religious institution.

Paragraph (b)

Except for vacuuming the church building, which is only carried out once a week, the duties which are regularly carried out by the employee constitute 'domestic services' or 'personal services' which are for the benefit of the religious practitioner who resides in the religious practitioner's residence. Accordingly, in the present circumstances, the employee will be regarded as principally carrying out 'domestic services' or 'personal services'.

Paragraph (c)

The employee resides in a house located on the church grounds which include a church and a religious practitioner's residence. The employee's accommodation is located immediately next door to the religious practitioner's residence.

The Explanatory Memorandum to the Taxation Laws Amendment (Fringe Benefits and Substantiation) Bill 1987 makes the following observation in relation to the provisions that are set out in paragraphs 58T(c) and (d):

...the employee lives in the house of the religious practitioner or in accommodation located within the same grounds, and lives in that particular accommodation through having to provide those services.

The above paragraph uses the loose term 'same grounds' as equating to the term 'same parcel of land'. The term 'same parcel of land' does not require a strict legalistic analysis of the title deeds. It is considered that it is sufficient that the accommodation is located on the 'same grounds'. Having regard to the fact that these two buildings are next door to each other and that visually both can be described as being on the church grounds, it is considered that the two buildings are on the same 'parcel of land'.

Paragraph (d) 

The employee's residence in the unit of accommodation is directly connected to the carrying out of the domestic or personal services.

Conclusion

As the relevant conditions have been met, the provision of the accommodation in the present case is an exempt benefit.

Other matters

This private ruling does not deal with the issue of whether the benefits might be reportable fringe benefits.