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Edited version of private ruling
Authorisation Number: 1011773936945
This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.
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Ruling
Subject: Remote town
Issue 1
Question:
Is the location considered a remote area under section 140 (1) (b) of the Fringe Benefits Assessment Act 1986 (FBTAA)?
Answer:
No.
Issue 2
Question:
Is the client liable for the fringe benefit provided to its employees over the past years?
Answer:
Yes.
The information below relates to the above two issues:
This ruling applies for the following period
Year ended 31 March 2008
Year ended 31 March 2009
Year ended 31 March 2010
Year ended 31 March 2011
The scheme commenced on:
1 April 2007
Relevant legislative provisions
Fringe Benefits Tax Assessment Act 1986 Subsection 104(1)(a)
Fringe Benefits Tax Assessment Act 1986 Subsection 104(1)(b)
Fringe Benefits Tax Assessment Act 1986 section 58ZC
Taxation Ruling
Practice Statement Law Administration PS LA 2000/6 - Fringe benefits tax: What is considered to be remote for the purposes of the remote area housing benefit (
Keywords
Remote town
Non-remote
Eligible urban town
Fringe benefits tax liabilities
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
Relevant facts
The taxpayer has provided the facts below describing the scheme or circumstances relevant to this Application
· To-date the client had not paid any housing fringe benefits tax. After a discussion with their auditors, the client realised that location is not listed on ATTACHMENT 1 - Remote and Non-remote towns as defined under paragraph 140(1)(b) of the Fringe Benefits Tax Assessment Act 1986, pursuant to Law Administration Practice Statement PS LA 2000/6.
· Instead the client noticed that its neighbouring towns like Location B and Location C are both listed as non-remote on ATTACHMENT 1. Both towns have the same exact distance from the Location E and Location A as the taxpayer which further confirms that location maybe classified as a non-remote area.
The scheme that is the subject of the ruling:
You, the client had been and still is providing accommodations to its employees, either at no cost or minimum cost. The type of accommodation provided are either properties which are own by you, or properties leased by your employees. You will pay the rent directly to the real estate agent or property owners. Your employees will then contribute the agreed amount (which will be the subsidised amount) and make the payment to you.
The employees are located in the location.
Employees who live in the location are not listed as being in a remote area pursuant to Law Administration Practice Statement PS LA 200/6. You have noticed that your neighbouring towns, Location B and Location C are also not listed under the remote list, and are within the same exact distance from the Location E and Location A as the location.
You are concerned because you have not been paying any FBT liabilities since it has provided housing benefits to its employees. Your query is whether the location falls into the category of Remote or Non-Remote housing for the purpose of determining whether you are liable to pay Fringe Benefits Tax on housing benefits provided to your staff.
Relevant facts:
'Whereis' website mapped out the shortest route as follows:
From: Location A
To: the location
Total distance: X km
To: Location B
Total distance: X km.
To: Location C
Total distance: X km
From: the location
To: Location B
Total distance: X km
To: Location C
Total distance: X km
Reasons for decision
Issue #1
Question:
Is the location considered a remote area under section 140 (1) (b) of the Fringe Benefits Assessment Act 1986 (FBTAA)?
Answer:
No.
Issue #2
Question:
Is the client liable for the fringe benefit provided to its employees over the past years?
Answer:
Yes.
Issue #1
The concept of an 'eligible urban area' is necessary for determining whether an area is a remote area.
Section 140 of the FBTAA sets out the criteria for determining an eligible urban.
Paragraph 140(1) (a) of the FBTAA, provides that an 'eligible urban area' is a reference to an area that is an urban centre with a census population of not less than 14,000 (or 28,000 for an urban centre located in Zone A or B for Income Tax Purposes).
Paragraph 140(1) (b) of the FBTAA, relates to housing benefits provided to most employees, and defines a location that is adjacent to an eligible urban area to be either:
(i) situated less than 40 kilometres, by the shortest practical surface route, from a centre point of an eligible urban area with less than a census population of less than 130,000; or
(ii) situated less than 100 kilometres, by the shortest practical surface route, from the centre point of an eligible urban area with a census population of at least 130,000.
Consequently, a location will be in a remote area (and not near an eligible Urban area) where it is at least 40 kilometres from a town with a census population of 14,000 (or 28,000 for an urban centre located in Zone A or B for Income Tax purposes), or at least 100 kilometres from a town with a census population of 130,000 or more.
How the law applies to your circumstances
Location A has a population in excess of 130,000 which is more than 14000 and is the closest eligible urban area to the location. Location A is neither in Zone A nor Zone B for Income Tax purposes.
WhereIs.com was used to measure the distance between the relevant location and Location A. The starting point for the calculation of the distance is the location and the eligible urban area (Location A) is more than 40 Kilometres but less than 100 kilometres. The shortest practical route journey starts from Location A and ends at the taxpayer with a distance of X kilometres
From the information above, the location within the meaning of paragraph 140(1)(b) of the FBTAA, is therefore a non-remote area.
The two closest towns (Location B and Location C) to Location D are listed as non-remote towns under Attachment 1 - Remote and Non-remote towns as defined under paragraph 140(1)(b) of the Fringe Benefits Tax Assessment Act 1986, pursuant to Law Administration Practice Statement PS LA 2000/6. Therefore, it can be concluded that the location will be under the same classification as Location B and Location C being non-remote towns.
Conclusion
The location is considered to be a non-remote area under paragraph 140(1)(b) of the FBTAA.
Issue 2
From the above conclusion, the location being regarded as non-remote town, the housing benefit provided by the taxpayer to its employees is subject to fringe benefits tax. Therefore, section 58ZC of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) is not applicable.