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Subject: Fringe benefits tax: living-away-from-home accommodation

Question 1

Will the Commissioner allow a declaration date later than the lodgement of the relevant fringe benefits tax (FBT) return as required by subparagraph 47(5)(d)(ii) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

Answer: Yes.

Question 2

Subject to your employee providing you with a living-away-from-home declaration, is the accommodation you provide him an exempt benefit pursuant to subsection 47(5) of the FBTAA?

Answer: Yes.

This ruling applies for the following periods:

Year ended 31 March 2008

Year ended 31 March 2009

Year ended 31 March 2010

Year ended 31 March 2011

Year ended 31 March 2012

The scheme commenced on:

1 April 2007

Relevant facts and circumstances

You provide boarding facilities which are supervised by various staff.

There is an employee position that requires the incumbent to reside at the boarding facilities to perform their duties of employment. For this purpose, you provide them with accommodation. It is a prerequisite condition of employment that the employee must reside in this accommodation. They must vacate the accommodation upon termination of their employment with you.

The position is of fixed duration with the option to renew the employment contract.

The employee lived at their private residence prior to commencing employment with you and intends to return there upon completion of their employment contract.

The employee has not provided you with a living-away-from-home declaration although you have lodged FBT returns for some of the periods to which this ruling applies.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 Section 25

Fringe Benefits Tax Assessment Act 1986 Section 45

Fringe Benefits Tax Assessment Act 1986 Subsection 47(5)

Fringe Benefits Tax Assessment Act 1986 Subparagraph 47(5)(d)(ii)

Fringe Benefits Tax Assessment Act 1986 Subsection 136(1)

Reasons for decision

Question 1

Will the Commissioner allow a declaration date later than the lodgement of the relevant FBT return as required by subparagraph 47(5)(d)(ii) of the FBTAA?

You have provided your employee with accommodation as his employment duties require him to reside at your facility. However, you have not obtained a living-away-from-home declaration as is required by subparagraph 47(5)(d)(ii) of the FBTAA which is one of the conditions that must be met for the provision of the accommodation to be an exempt benefit.

Subsection 136(1) of the FBTAA states:

declaration date, in relation to an employer in relation to a year of tax, means the date of lodgement of the return of the fringe benefits taxable amount of the employer of the year of tax, or such later date as the Commissioner allows.

This definition provides the Commissioner with the discretion to extend the declaration date.

The Commissioner will grant an extension where circumstances indicate that it is fair and reasonable to do so.

In your situation:

· you were unaware the accommodation you provided would have been an exempt benefit had the employee provided you with a living-away-from-home declaration

· you notified the Commissioner as soon as you became aware that the benefit could be exempt

· you lodged FBT returns including the taxable value of the accommodation

· the benefit would not be considered exempt from FBT unless the declarations had been received

· the taxable value of the accommodation was the only benefit included in the FBT returns for each of the years lodged

· there would be no prejudice to the Commissioner in allowing a later declaration date, and

· lodging the FBT returns triggered the declaration date for the employee to provide you with a living-away-from-home declaration.

In these circumstances it is considered fair and reasonable for the Commissioner to allow a later date for the employee to provide you with a living-away-from-home declaration.

Accordingly the Commissioner will allow a declaration date later than the lodgement of the relevant FBT returns to enable you to obtain the living-away-from-home declarations.

Question 2

Subject to your employee providing you with a living-away-from-home declaration, is the accommodation you provide him an exempt benefit pursuant to subsection 47(5) of the FBTAA?

Subsection 47(5) of the FBTAA provides that accommodation provided by an employer to an employee can be an exempt benefit where certain conditions are met.

Subsection 47(5) states:

Where:

(a) a residual benefit consisting of the subsistence, during a year of tax, of a lease or licence in respect of a unit of accommodation is provided to an employee of an employer in respect of his or her employment;

(b) the unit of accommodation is for the accommodation of eligible family members and is provided solely by reason that the employee is required to live away from his or her usual place of residence in order to perform the duties of that employment

(c) the accommodation is not provided while the employee is undertaking travel in the course of performing the duties of that employment; and

(d) either of the following conditions is satisfied:

(i) subsection (7) applies in relation to the provision of transport for the employee in connection with travel in the period in the year of tax, when the lease of licence subsisted, being travel between the employee's usual place of residence and the employee's usual place of employment;

(ii) the employee gives to the employer, before the declaration date, a declaration in a form approve by the Commissioner, purporting to set out:

(A) the employee's usual place of residence and

(B) the place at which the employee actually resided while living away from his or her usual place of residence;

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

Therefore the provision of accommodation will be an exempt benefit where the following conditions are met:

· the benefit is a residual benefit consisting of the provision of accommodation

· the accommodation is provided as the employee is required to live away from their usual place of residence

· the employee is not travelling while performing their employment duties, and

· the employee provides a declaration in the approved form.

1. Will the benefit be a residual benefit consisting of the provision of accommodation?

As the provision of accommodation may be a housing benefit it is necessary to determine whether the accommodation is a housing benefit.

What is a housing benefit?

Section 25 of the FBTAA sets out the circumstances in which a housing benefit will be provided. It states:

The subsistence during the whole or a part of a year of tax of a housing right granted by a person (in this section referred to as the "provider") to another person (in this section referred to as the "recipient") shall be taken to constitute a benefit provided by the provider to the recipient in respect of the year of tax.

'Housing right' is defined under subsection 136(1) of the FBTAA to mean:

a lease or licence granted to the person to occupy or use a unit of accommodation insofar as that lease or licence subsists at a time when the unit of accommodation is the person's usual place of residence.

Therefore a housing benefit will be provided where the accommodation is the employee's usual place of residence. Where the accommodation is not the employee's usual place of residence the benefit will be a residual benefit.

2. Is the accommodation the employee's usual place of residence?

The FBTAA does not define 'usual place of residence'. However, in subsection 136(1) it does define a 'place of residence' to mean:

(a) a place at which the person resides; or

(b) a place at which the person has sleeping accommodation;

whether on a permanent or temporary basis and whether or not on a shared basis.

In the absence of a legislative reference it is relevant to refer to the ordinary meaning of 'usual'. The Macquarie Dictionary defines 'usual' to mean:

1. habitual or customary: his usual skill.
2. such as is commonly met with or observed in experience; ordinary: the usual January weather.
3. in common use; common: say the usual things.

noun

4. that which is usual or habitual.

phrase

5. as usual, as is (or was) usual; in the customary or ordinary manner: he will come as usual.

Guidelines for determining an employee's usual place of residence are provided by Miscellaneous Taxation Ruling MT 2030 Fringe benefits tax: living-away-from-home allowance benefits.

Paragraphs 15 to 18 refer to various decisions of Taxation Boards of Review relating to the former 51A of the Income Tax Assessment Act 1936. In referring to these decisions paragraph 14 of MT 2030 states:

As the decisions illustrate, the question whether an employee is living away from his or her usual place of residence normally involves a choice between two places of residence, i.e., the place where the employee is living at the time or some other place. A person is regarded as living away from a usual place of residence if, but for having to change residence in order to work temporarily for his employer at another locality, the employee would have continued to live at the former place. It would be relevant in reaching that view that there is an intention or expectation of the employee returning to live at the former place of residence on cessation of work at the temporary job locality. This would be relevant even if the employee is living in temporary quarters close to a temporary job site.

Further discussion occurs at paragraphs 19 to 25. Paragraph 20 provides the following general rule:

Employees who move to a new locality to take up a position of limited duration with an intention to return to the old locality at the end of the appointment would generally be treated as living away from their usual place of residence. For example, a construction worker having to travel to a construction site to live and work would be in this category unless he had abandoned the former place of residence upon moving to the locality of the site. A case of the latter situation would be where the employee decided to permanently leave the former home, e.g., if a resident of Sydney, on obtaining a job for two years on a construction site in a remote part of Western Australia, decided to "sell up" in Sydney and move permanently to Western Australia to live.

As an example of the application of this general rule paragraph 22 states:

Examples of employees on appointments of finite duration who will generally be living away from their usual place of residence are foreign nationals employed in Australia on a temporary basis and Australian residents (e.g., export consultants, diplomats, immigration officials, etc.) stationed in a foreign country for a time. Provided the appointment is for a limited period and the employee can be expected in the normal course to return to the same city or district of the home country to live, the employee may be treated as living away from his or her usual place of residence.

These principles and the various cases that have considered usual place of abode or usual place of residence were discussed by the Administrative Appeals Tribunal in Compass Group (Vic) Pty Ltd (as trustee for White Roche & Associates Hybrid Trust) v FC of T [2008] AATA 845; 2008 ATC 10-051. At paragraphs 55 and 56 Deputy President S A Forgie said:

55. There are several principles that can be gleaned from these cases. The first is that the fact that s 30 and, before it, s 51A, are concerned with what is described as a living-away-from-home allowance. That allowance is paid by an employer to an employee in respect of the employee's employment. It is a payment in the nature of compensation. The compensation is to meet additional expenses the employee incurs during a particular period and for other additional disadvantages he or she faces in that period but only if the expenses are incurred because he or she is required to live away from his or her usual place of residence in order to perform the duties of employment. As Mr Cotes alluded to in Case B47, it necessarily assumes that the taxpayer has two places that could be described as his or her place of residence before one or the other needs to be identified as the "usual place of residence".

56. Putting to one side the case of Case 50, all cases looked to the taxpayer's place of residence before he or she acquired another place of residence. Each looked to the taxpayer's continuing connection with the first place of residence including matters such as whether his or her family continued to live there, the frequency of the taxpayer's visits there and whether or not that was a place to which the taxpayer could return at will if he or she so wished. Also relevant was the nature of the employment and whether the move to another place was a temporary or permanent move.

In considering the factors referred to by the AAT it is relevant to note that to be living away your usual place of residence there is a choice between two places of residence. The following factors indicate that your employee is living away from his usual place of residence:

· the employee resided in his private residence prior to accepting employment with you

· it is condition of employment that you require the employee to reside in the accommodation you provide

· the employee's tenure is a fixed term contract and is therefore temporary in nature, and

· the employee intends to return to his private residence upon completion of his employment contract.

We consider that the accommodation provided to your employee is not his usual place of residence. The employee has maintained a continuing connection with his private residence which we consider to be his usual place of residence.

Therefore the benefit is a residual benefit.

3. Is the employee travelling while performing their employment duties?

The employee is not travelling in the course of his employment duties.

4. Has the employee provided a declaration in the approved form?

The employee has not provided you with a living-away-from-home declaration in the approved form as required by paragraph 47(5)(d)(ii) of the FBTAA.

Conclusion

The conditions listed above have been met apart from receiving a declaration in the approved form.

Should the employee provide you with a living-away-from-home declaration as required by subparagraph 47(5)(d)(ii) of the FBTAA, the provision of accommodation to the employee would be an exempt benefit pursuant to subsection 47(5) of the FBTAA.