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Edited version of your private ruling
Authorisation Number: 1012042846544
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Ruling
Subject: offshore allowance
Question
Is your offshore allowance assessable income?
Answer
Yes.
This ruling applies for the following period
Year ended 30 June 2012
The scheme commenced on
1 July 2011
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.
You recently went offshore for work. You were offshore for several nights.
The offshore allowance is designed to compensate employees for special circumstances associated with offshore work that involves overnight stays and work over weekends and public holidays.
Your employer treats the allowance as a taxable allowance and has deducted tax from it.
The allowance is not a living-away-from-home allowance.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 15-2.
Reasons for decision
Assessable income
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.
Under section 6-15 of the ITAA 1997 if an amount is exempt income, it is not assessable income.
Where a person derives income that is a fringe benefit, the income is not assessable income (section 23L of the Income Tax Assessment Act 1936).
Under subsection 30(2) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) benefits are a fringe benefit if all the conditions listed are met.
Paragraph 30(2)(d) of the FBTAA requires that 'the allowance is expressed to be paid as a living-away-from-home allowance'.
Your allowance is an offshore allowance and is not expressed or stated as being a living away from home allowance. As paragraph 30(2)(d) is not satisfied, your allowance is not regarded as a fringe benefit.
There is no other provision in the legislation that makes your offshore allowance exempt income or not assessable.
We acknowledge that your meals and accommodation are provided when you are offshore, however this does not change the nature of your allowance.
Your offshore allowance is assessable under section 15-2 of the ITAA 1997 and should be included on your tax return.