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Edited version of private ruling
Authorisation Number: 1011737308107
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Ruling
Subject: Rental allowance
Question
Is an allowance paid to you for rent when you own and live in your own property assessable?
Answer: Yes.
This ruling applies for the following period
Year ended 30 June 2010
Year ending 30 June 2011
Year ending 30 June 2012
Year ending 30 June 2013
The scheme commenced on
1 July 2009
Relevant facts
You live and work in a remote location.
Your employer paid you a rental allowance.
You decided to take up permanent residence in the location and purchased a property in which you live with your spouse.
You no longer have to pay rent.
You continue to receive the allowance.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 15-2
Income Tax Assessment Act 1936 Section 23L
Fringe Benefits Tax Assessment Act 1986 Subsection 30(1)
Reasons for decision
Section 15-2 of the Income Tax Assessment Act 1997 (ITAA 1997) states that your assessable income includes the value to you of all allowances, gratuities, compensation, benefits, bonuses and premiums provided to you in respect of, or for or in relation directly or indirectly to, any employment of or services rendered by you.
Section 23L of the Income Tax Assessment Act 1936 states that income derived by a taxpayer by way of provision of a fringe benefit within the meaning of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) is not assessable income and is not exempt income of the taxpayer.
An allowance will constitute a living-away-from-home allowance benefit under subsection 30(1) of the FBTAA if all of the following conditions are met:
(a) an allowance is paid by the employer to the employee in respect of the employment of the employee;
(b) the whole or part of the allowance is to compensate the employee for additional (non-deductible) expenses incurred by the employee or for additional (non-deductible) expenses and other disadvantages (if any) to which the employee is subject because the employee is required to live away from the employees usual place of residence in order to perform the duties of that employment.
In your case, you purchased and live in your own home. Therefore, you are not living away from your usual residence. The conditions for an exempt fringe benefit are not met. Consequently, the allowance you received after you purchased and moved into your own home is assessable under section 15-2 of the ITAA 1997.