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Ruling

Subject: Living-away-from-home accommodation, exempt benefits, minor benefits

Question 1

Will a fringe benefits tax (FBT) liability arise from the payment of the lease expenses of the apartment?

Answer

No

Question 2

Will an FBT liability arise from the payment of the lease expenses for the furniture and whitegoods?

Answer

No

Question 3

Will an FBT liability arise from the provision of goods for the apartment?

Answer

A ruling can not be given in relation to this question as the answer will depend upon the factual circumstances associated with each of the goods.

Question 4

Will an FBT liability arise from the payment of meals for:

· employee

· client

· staff

Answer

A ruling can not be given in relation to this question as the answer will depend upon the factual circumstances associated with the provision of the meals.

No

Question 5

Will an FBT liability arise from the payment for person service items?

Answer

A ruling can not be given in relation to this question as the answer will depend upon the factual circumstances associated with each of the items.

This ruling applies for the following periods:

1 April 2011 to 31 March 2012

1 April 2011 to 31 March 2013

Relevant facts and circumstances

This ruling concerns various benefits provided to an employee who at the time of his appointment was employed by an interstate associated entity. This employment has not ceased.

The appointment is intended to be for a maximum of two years. This will be reviewed on an ongoing basis depending on when he achieves the goals of his appointment.

During the period of his appointment he will commute between the two employment locations. The employee spends six days in your office, three days at the interstate office, three days in your office and six days in the interstate office. These periods in each state can change depending on where they are required and for how long.

The employee returns to his interstate residence for all public holidays which is where the employee's residential and electoral address remain.

The employee has a spouse and children who remain interstate, except for when the employee at your office for six days.

The employee intends to return to the interstate residence permanently once their appointment ceases.

The employee has entered into a contract for the lease of a residential property.

The employee also entered into a contract for the rental of whitegoods and furniture for the rented property.

Under the terms of his employment agreement you pay the rental expenses for the residential property, whitegoods and furniture. You also pay for the electricity and gas used in the rented accommodation.

You also provide the employee with a corporate credit card which the employee has used to pay for:

· the initial stocking up of food and other goods for the apartment;

· the cost of meals when the employee has taken a client or other staff members out to lunch or dinner; and

· other expenses such as personal service items.

You use the actual method to calculate the taxable value of any fringe benefits that arise from the provision of meal entertainment.

At the time of their employment you became responsible for the employee's lease obligations in relation to a car under a novated lease. You also pay for the cost of registration, insurance and fuel for this car. At the conclusion of the employee's employment with you your obligations under the novated lease will be transferred to the interstate associated entity.

The employee has another car interstate and the employee's spouse has the use of a car through a novated lease with the interstate associated entity.

You have provided a copy of:

· the rental agreements for the residential property, whitegoods and furniture;

· a 12 week log book; and

· a Living Away from Home declaration. The declaration states the usual place of residence during this period was interstate.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 Section 20

Fringe Benefits Tax Assessment Act 1986 Section 21

Fringe Benefits Tax Assessment Act 1986 Section 45

Fringe Benefits Tax Assessment Act 1986 Section 58E

Fringe Benefits Tax Assessment Act 1986 Section 58P

Fringe Benefits Tax Assessment Act 1986 Section 63

Fringe Benefits Tax Assessment Act 1986 Subsection 136(1)

Reasons for decision

Will a fringe benefits tax (FBT) liability arise from the payment of the lease expenses of the apartment?

In general terms an FBT liability will arise when your employee receives a 'fringe benefit', but it will not arise if the benefit is an exempt benefit.

Under the arrangement you will pay the lease expenses incurred by the employee. This payment is an expense payment benefit under paragraph 20(a) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA).

Paragraph 20(a) states:

Where a person (in this section referred to as the "provider"):

· makes a payment in discharge, in whole or in part, of an obligation of another person (in this section referred to as the "recipient") to pay an amount to a third person in respect of expenditure incurred by the recipient ; or

· the making of the payment referred to in paragraph (a), …, shall be taken to constitute the provision of a benefit by the provider to the recipient.

Is the expense payment benefit that arises from the payment of the lease expenses an exempt benefit?

Section 21 of the FBTAA provides an exemption from fringe benefits tax for the payment of accommodation expenses incurred by an employee who is required to live away from his or her usual place of residence in order to perform the duties of employment.

Section 21 of the FBTAA states:

Where -

(a) an expense payment benefit is provided in a year of tax to a current employee of an employer in respect of his or her employment;

(b) the recipients expenditure is in respect of accommodation for eligible family members;

(ba) the accommodation is not provided while the employee is undertaking travel in the course of performing the duties of that employment:

(c) the accommodation is required 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;

and

(d) the employee gives to the employer, before the declaration date, a declaration, in a form approved by the Commissioner, purporting to set out -

(i) the employee's usual place of residence; and

(ii) 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.

For this section to apply there are five conditions that must be met. They are:

· an expense payment benefit must be provided to a current employee;

· the recipients expenditure must be in respect of accommodation for eligible family members;

· the accommodation must not be provided while the employee is undertaking travel in the course of performing his or her employment;

· the accommodation must be required solely because the employee is required to live away from his or her usual place of residence in order to perform their duties of employment; and

· the relevant declaration must be provided to the employer.

Has an expense payment benefit been provided to a current employee?

A 'current employee' is defined in subsection 136(1) of the FBTAA to mean 'a person who receives, or is entitled to receive, salary or wages'. The employee comes within this definition and as discussed above, the benefit being provided to the employee is an expense payment benefit.

Was the recipient's expenditure in respect of accommodation for eligible family members?

The phrase 'eligible family member' is defined in subsection 136(1) of the FBTAA to mean:

in relation to an employee who is required to live away from his or her usual place of residence during a period in order to perform the duties of his or her employment:

(i) the employee; or

(ii) the spouse of the employee, or a child of the employee, being a spouse or child as the case may be:

who lived with the employee during that period; and

whose usual place of residence during that period was the same as the usual place of residence of the employee.

This requirement is met as the accommodation is for your employee and their family.

Was the accommodation provided while the employee is undertaking travel in the course of performing the duties of that employment?

The accommodation was provided while the employee is undertaking duties in your office which is located in city B. As the accommodation is also in city B, the employee is not considered to be undertaking travel in the course of performing the duties of their employment.

Was the accommodation required 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 employment?

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

· a place at which the person resides; or

· 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:

adjective

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 (MT 2030).

Paragraphs 15 to 18 of MT 2030 refer to various decisions of Taxation Boards of Review relating to the former section 51A of the Income Tax Assessment Act 1936 (ITAA 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 in paragraphs 19 to 25 of MT 2030, and 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 of MT 2030 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 been considered 'usual place of abode' or 'usual place of residence' were discussed by the Administrative Appeals Tribunal (AAT) 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 CaseB47, 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, the following factors indicate that your employee is living away from their usual place of residence:

· your employee has a residence in city C;

· your employee's family stay in the city C residence; except for when your employee is in city B for a six day period;

· your employee returns to city C for all public holidays, such as Christmas and Easter;

· your employee also has employment duties in city C, and

· your employee intends to remain in city C when the city B appointment expires.

These factors indicate that the place to which the employee habitually returns is the residence in city C which is considered to be the employee's usual place of residence.

Given the work location is in city B it is accepted the employee is required to live away from the usual place of residence to perform their employment duties. It is also accepted that these employment duties are the only reason for the employee requiring the city B accommodation.

Therefore, this requirement is met.

Has the relevant declaration been provided?

You have received a signed declaration from your employee.

As all the above conditions have been met the benefit provided to the employee is an exempt accommodation expense payment benefit under section 21 of the FBTAA.

Will an FBT liability arise from the payment of the lease expenses for the furniture and whitegoods?

Under the arrangement you will pay the lease expenses incurred by the employee. As with the accommodation, this payment is an expense payment benefit under paragraph 20(a) of the FBTAA.

Is the expense payment benefit that arises from the payment of the lease expenses for furniture and whitegoods an exempt benefit?

Section 58E of the FBTAA provides an exemption for the leasing of household goods while an employee is living away from home.

Section 58E states:

Where:

· either of the following benefits (in this section called a "household goods leasing benefit") is provided in, or in respect of, a year of tax in respect of the employment of an employee:

(i) an expense payment benefit where the recipients expenditure is in respect of a lease or licence in respect of goods;

(ii) a residual benefit where the recipients benefit consists of the subsistence of a lease or licence in respect of goods;

· the goods are primarily for domestic use by, and in connection with accommodation for, family members;

· either of the following benefits is provided in, or in respect of, the year of tax to the employee in respect of that employment;

· an expense payment benefit where the recipients expenditure is in respect of a lease or licence in respect of that accommodation;

· a residual benefit where the recipients benefit is constituted by the subsistence of a lease of licence in respect of that accommodation; and

· by virtue of section 21 or subsection 47(5), the benefit referred to in paragraph (c) is an exempt benefit in relation to the year of tax;

· the household goods leasing benefit is an exempt benefit in relation to the year of tax.

Therefore, this exemption will apply if:

· you have provided an expense payment benefit or a residual benefit in respect of the leasing of the household goods;

· the goods are primarily for use in connection with accommodation for family members;

· you have provided an expense payment benefit or a residual benefit in respect of the accommodation, and

· the provision of the accommodation is an exempt benefit.

These conditions are considered below.

Have you provided an expense payment benefit or a residual benefit in respect of the leasing of the household goods?

As you have paid for the leasing of the household goods on behalf of your employee you have provided an expense payment benefit.

Are the goods primarily for use in connection with accommodation for family members?

The furniture and whitegoods were provided to the employee for furnishing the apartment which they and their family resided while in city B.

Family member is defined under subsection 136(1) of the FBTAA to be:

· the employee

· the spouse of the employee; or

· a child of the employee

Therefore, the goods were primarily for use in connection with accommodation for family members.

Have you provided an expense payment benefit or a residual benefit in respect of the accommodation?

As detailed in question 1 above, you provided an expense payment benefit in respect of the accommodation used by the employee.

(d) Is the provision of the accommodation an exempt benefit.

As concluded above, the provision of the accommodation is an exempt benefit under section 21 of the FBTAA.

As all the conditions under section 58E of the FBTAA have been satisfied the payment of the expenses incurred by the employee in leasing the furniture and whitegoods is an exempt benefit.

Will an FBT liability arise from the provision of goods for the apartment?

Under the arrangement your employee used a corporate credit card to purchase various goods. A property benefit will arise from the provision of each of these goods which come within the definition of 'tangible property' in subsection 136(1) of the FBTAA.

Are the property benefits that arise from the goods exempt benefits?

The only exemption that may apply to these benefits is the exemption contained in section 58P of the FBTAA.

Subsection 58P(1) states:

Where:

a benefit (in this section called a ``minor benefit'') is provided in, or in respect of, a year of tax (in this section called the ``current year of tax'') in respect of the employment of an employee of an employer;

the benefit is not an airline transport benefit;

in the case of an expense payment benefit, a property benefit or a residual benefit - if the minor benefit were an expense payment fringe benefit, a property fringe benefit or a residual fringe benefit, as the case may be, in relation to the employer, the expense payment fringe benefit, the property fringe benefit or the residual fringe benefit, as the case requires, would not be an in-house fringe benefit;

in the case of a tax-exempt body entertainment benefit where the provider incurs non-deductible exempt entertainment expenditure that is wholly or partly in respect of the provision of entertainment to the employee or an associate of the employee:

(i) the provision of entertainment to the employee or the associate of the employee, as the case may be:

is incidental to the provision of entertainment to outsiders; and

neither consists of, nor is provided in connection with, the provision of a meal (other than a meal consisting of light refreshments) to the employee or the associate of the employee, as the case may be; or

the entertainment is provided to the employee or the associate of the employee, as the case may be:

on eligible premises of the employer; and

solely as a means of recognising the special achievements of the employee in a matter relating to the employment of the employee;

the notional taxable value of the minor benefit in relation to the current year of tax is less than $300; and

having regard to:

the infrequency and irregularity with which associated benefits, being benefits that are identical or similar to:

the minor benefit; or

benefits provided in connection with the provision of the minor benefit;

have been or can reasonably be expected to be provided;

the amount that is, or might reasonably be expected to be, the sum of the notional taxable values of the minor benefit and any associated benefits, being benefits that are identical or similar to the minor benefit, in relation to the current year of tax or any other year of tax;

the amount that is, or might reasonably be expected to be, the sum of the notional taxable values of any other associated benefits in relation to the current year of tax or any other year of tax;

the practical difficulty for the employer in determining the notional taxable values in relation to the current year of tax of:

if the minor benefit is not a car benefit - the minor benefit; and

if there are any associated benefits that are not car benefits - those associated benefits; and

(v) the circumstances surrounding the provision of the minor benefit and any associated benefits including, but without limiting the generality of the foregoing:

whether the benefit concerned was provided to assist the employee to deal with an unexpected event; and

whether the benefit concerned was provided otherwise than wholly or principally by way of a reward for services rendered, or to be rendered, by the employee;

it would be concluded that it would be unreasonable to treat the minor benefit as a fringe benefit in relation to the employer in relation to the current year of tax;

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

In summarising these requirements, each of the property benefits will be an exempt minor benefit if:

the notional taxable value of the benefit is less than $300; and

it can be concluded on the basis of the factors listed in paragraph 58P(1)(f) of the FBTAA that it would be unreasonable to treat the benefit as a fringe benefit.

Guidance as to the application of both of these requirements is provided in Taxation Ruling TR 2007/12 Fringe benefits tax: minor benefits (TR 2007/12).

Was the notional taxable value of the minor benefit less than $300?

'Notional taxable value' is defined in subsection 136(1) of the FBTAA to mean:

· the amount that, if it were assumed that:

· in all cases - the benefit was a fringe benefit in relation to the employer in relation to the year of tax;

· would be the taxable value of the fringe benefit in relation to the year of tax.

That is, in calculating the 'notional taxable value' it is necessary to determine what the taxable value will be if the benefit is a 'fringe benefit'.

Generally, the taxable value of property benefit which is purchased by the employer and provided to the employee will be the cost price of the property under paragraph 43(a) of the FBTAA. However, this value can be reduced under section 63 of the FBTAA where the property is food or drink that is provided for consumption by eligible family members while the employee is required to live away from his or her usual place of residence to perform the duties of employment.

Can the value of the food purchased for the pantry be reduced under section 63 of the FBTAA?

Section 63 provides that the taxable value may be reduced where:

· a living-away-from-home food fringe benefit, or 2 or more living-away from home food fringe benefits, in relation to an employer in relation to a year of tax relates or relate to a particular employee;

· the fringe benefit or fringe benefits are equivalent to the food component of a living-away-from-home allowance fringe benefit in respect of a particular period in the year of tax;

· that food component exceeds the sum of the statutory food amounts in respect of eligible family members in respect of that period; and

· the employee gives to the employer, before the declaration date, a declaration, in a form approved by the Commissioner, purporting to set out particulars of:

· the employee's usual place of residence during that period; and

· the place at which the employee actually resided during that period,

· the following provisions apply:

· if there is only one living-away-from-home fringe benefit-the amount that, but for this section and section 62 and the recipients contribution, would be the taxable value of that fringe benefit, shall be reduced by the amount of the excess referred to in paragraph (c);

· if there are 2 or more living-away-from-home food fringe benefits-the amount that, but for this section and section 62 and the recipients contribution, would be the taxable values of those fringe benefits shall be reduced by amounts proportionate to those taxable values and equal in total to the amount of the excess referred to in paragraph (c).

Is the food purchased for the pantry a living-away-from-home food fringe benefit?

A living-away-from-home food fringe benefit is defined in subsection 136(1) of the FBTAA as:

an expense payment fringe benefit provided in respect of the employment of an employee where:

(i) the recipients expenditure was incurred in respect of food and drink;

(ii) the food or drink was not for consumption while the employee was undertaking travel in the course of performing the duties of that employment; and

the food or drink was for consumption by eligible family members at a time when the employee was required to live away form his or her usual place of residence in order to perform the duties of that employment; or

(b) a property fringe benefit provided in respect of the employment of an employee where:

the recipients property is food or drink;

the food or drink was not for consumption while the employee was undertaking travel in the course of performing the duties of that employment; and

the food or drink was for consumption by eligible family members at a time when the employee was required to live away from his or her usual place of residence in order to perform the duties of that employment.

Therefore the benefit will be a living-away-from-home food fringe benefit where the following criteria are met:

· the benefit is an expense payment benefit or a property benefit;

· the employee's expenditure was incurred in respect of food and drink or the property was food and drink;

· the food and drink was not for consumption while the employee was travelling on work; and

· the food and drink was for consumption by eligible family members while the employee was living away from his usual place of residence while performing his employment duties.

These criteria are considered below.

Was the benefit an expense payment benefit or a property benefit?

As discussed above the provision of the pantry items was a property benefit.

(2) Was the property food or drink?

As discussed above, some of the pantry items were food and drink. The reduction will not apply to the items that were not food or drink.

Was the food and drink provided while the employee was travelling on work?

As discussed above, the employee was not travelling on work when provided with the food for their pantry.

(4) Was the food and drink for consumption by eligible family members while the employee was living away from his usual place of residence while performing his employment duties?

As discussed above, your employee is living away from their usual place of residence while performing their employment duties. Therefore, as all the above criteria have been met, the food or drink purchased for the pantry is considered to be a living-away-from-home food fringe benefit.

The calculation of the taxable value of a 'living-away-from-home food fringe benefit

In accordance with the treatment of cash living-away-from-home allowances section 63 reduces what would otherwise be the taxable value of the property benefit to the equivalent of $42 a week for each adult and $21 a week for each child.

Therefore, in summary the notional taxable value of the items purchased for the pantry, the home wares, linen and personal amenities will be:

· the amount paid for the items that are not food or drink; and

· the reduced value calculated under section 63 for items that are food or drink.

As you have not provided details of the breakdown of the cost of each of these items it is not possible to determine whether the notional taxable value of each of the items is less than $300. However, it is noted that it is likely that some of the items would have a value that is less than $300.

The criteria used to determine if it is unreasonable to treat the benefit as a fringe benefit

Infrequency and irregularity with which associated identical or similar benefits are provided

Paragraphs 187 to 189 of TR 2007/12 discusses what is meant by 'associated benefits':

Paragraph 188 states:

For the purposes of the minor benefits exemption the term 'associated benefits' is defined in subsection 58P(2) to mean a benefit that is any of the following:

· identical or similar to the minor benefit;

· provided in connection with the provision of the minor benefit; or

· identical or similar to a benefit provided in connection with the provision of the minor benefit.

Paragraph 189 goes on to state:

In addition:

· the associated benefit and the minor benefit must relate to the same employment of a particular employee, and

· an associated benefit does not include a benefit that is an exempt benefit under any provision of the FBTAA other than this section (that is, section 58P).

Paragraph 190 explains what is meant by the phrase 'in connection with' as follows:

A benefit that is provided 'in connection with' the minor benefit is one that is provided in conjunction with the minor benefit. For example if accommodation, board and electricity benefits are provided in conjunction with the payment of minor telephone expenses, these benefits are provided in connection with the telephone expense payment benefit.

Paragraphs 200 to 208 discuss the terms 'infrequent and irregular' and 'identical' and 'similar' as follows:

200. The first criterion to be considered is the infrequency and irregularity with which associated benefits, being benefits that are identical or similar to the minor benefit or benefits that are given in connection with the minor benefit, are provided, or can reasonably be expected to be provided.

201. It is important to note that although this is the first criterion listed, it is not the main, or only, criterion and 'regard must be had to all factors, even if only to consider that a particular factor is irrelevant in the circumstances'.27

202. 'Infrequency and irregularity' and 'identical or similar' are not defined in the FBTAA and therefore take their ordinary meaning.

203. The Macquarie Dictionary28 defines 'infrequent' as:

1. happening or occurring at long intervals or not often

2. not constant, habitual or regular and 'irregular' as:

2. not characterised by any fixed principle, method or rate: irregular intervals

204. The Macquarie Dictionary defines 'identical' as:

1. (sometimes followed by to or with) corresponding exactly in nature, appearance, manner, etc.: this leaf is identical to that.

2. the very same: I almost bought the identical dress you are wearing and 'similar' as:

1. having a likeness or resemblance, especially in a general way.

205. The decision in the NAB case is of some assistance in interpreting the meaning of the words 'infrequency and irregularity', as they are used in section 58P. In reaching a conclusion under section 58P, Ryan J said that the notional taxable value of the minor benefit, being the travel by taxi on a particular day was 'small'. Ryan J then held that:

… on a broad view of the matters specified in paragraphs (F) of s58P(i) of the Act I am not able to conclude that it would be unreasonable to treat the presumptively minor benefit provided to Mr Brewster on 29 March 1988 as a fringe benefit in relation to the relevant year of tax.29

206. Ryan J was able to find, on the evidence, that the associated benefits, being each journey by taxi cab undertaken in similar circumstances in the relevant tax year, were not provided infrequently or irregularly to the employee. This was based on the facts before the Court, including the facts that the employees were 'shift workers' and that they were entitled to the provision of transport by taxi cab at the end of afternoon shifts, both before and after night shifts, and before and after weekend shifts.

207. In Case 2/96 the term 'infrequent and irregular' was considered further. The AAT stated:

27. We do not think that the examples set out in the Draft Taxation Determination TD 94/D33 are of much assistance. Those examples focus on the 'infrequency and irregularity' factors set out in the section. Example 1 would have it that one taxi fare home (costing between $10 and $15) in each month would be sufficiently frequent and regular [sic] we think that this example is unlikely to be correct. It seems to us that there is a clear distinction to be drawn between benefits which are isolated or rare and benefits which are infrequent and irregular, and that the worked examples may have equated these concepts.

28. Taxation Determination TD 93/76 issued on 29 April 1993 focus [sic] on each of the tests in 58P(1)(f) in relation to redeemable vouchers; we do not think that the worked examples are of assistance in the present case.

29. Nor do we consider that, while accepting that the relevant employees are not shift workers, the 'balance of probabilities' test contended for by the Applicant can be the correct test; the wording of paragraph (f)(i) does not suggest to us that such a test was intended for this purpose. There were some employees who performed overtime work regularly, and must reasonably have expected that taxi fares would be provided; they would naturally have been aware of the fact that they were covered for this purpose by a relevant award.

34. The Tribunal has come to the conclusion having regard to the tests laid down in section 58P(1) that a benefit and its associated like benefits will be minor if, in relation to any given employee and in respect of each FBT year, the number of Total Trips is less than 48, or, on a monthly averaging basis, less than 4 per month. This view (which is inevitably somewhat arbitrary) is based on the view that that number of trips is likely to be infrequent, and having regard to the evidence as to the ad hoc nature of the applicant's requirements, irregular; further the employee could not reasonably have expected them.

208. Having regard to the above, it is clear that the words 'infrequent and irregular' do not mean 'isolated or rare'.

The question of how regularly and frequently the employee received associated benefits is a question of fact for which we do not have the necessary information.

All that can be noted is that the initial stocking of the pantry would appear to be a once off event.

Sum of the notional taxable values of the minor benefits and associated benefits which are identical or similar to the minor benefit

This criterion is discussed at paragraphs 218 to 224 of TR 2007/12 which state:

218. The second criterion to be considered is the amount that is, or might reasonably be expected to be, the sum of the notional taxable values of the minor benefit and any associated benefits, being benefits that are identical or similar to the minor benefit, in relation to the current year or any other year of tax.

219. This criterion addresses the situation where there are multiple occasions where identical or similar benefits are provided to an employee.

220. In the NAB case Ryan J found that:

The sum of the presumptively minor benefit and all the associated benefits to Mr Brewster both in the current year of tax (amounting on the evidence to about $8,000) was substantial in the current tax years and might reasonably be expected to be similarly substantial in subsequent tax years.³¹

221. The greater the value of the minor benefit and identical or similar benefits, the less likely it is the minor benefit will qualify as an exempt benefit.

222. The value of the benefits in the current year as well as in any other year must be taken into account when determining the total value of benefits for the purposes of this criterion.

223. This will apply to identical or similar benefits that have been provided in the past and are likely to be provided in the future.

224. Even if the value of each benefit is below the minor benefits threshold, the sum of the values of the benefits provided, being identical benefits in the current year of tax, the previous year and those that are reasonably expected to be provided in the future, are all taken into consideration under this criterion.

As discussed at paragraphs 215 to 217 of a benefit will be identical to another benefit when it is the same in all respects except for differences (if any) that are minimal or insignificant and do not affect the value of the other benefit. By contrast, a similar benefit as discussed in paragraph 204 of TR 2007/12 is a benefit that has a likeness or resemblance, especially in a general way.

As set out in paragraph 218 of TR 2007/12, this criterion requires a consideration of the sum of the taxable values in relation to both the current year and any other year of tax. From the information provided it is not possible to make a conclusion about this criterion as it is a question of fact for which no information has been provided.

Sum of the notional taxable values of any other associated benefits

This criterion is discussed at paragraphs 225 to 231 of TR 2007/12 which state:

225. The third criterion to be considered is the amount that is, or might reasonably be expected to be, the sum of the notional taxable values of any other associated benefits provided in relation to the current year of tax or any other year of tax.

226. Other associated benefits will include benefits which themselves may also be minor benefits.

227. This criterion has regard to any other associated benefits; that is, associated benefits which are not identical or similar to the minor benefit. This will include those associated benefits which are provided in connection with the minor benefit and benefits which are identical or similar to a benefit provided in connection with the minor benefit.

Example 16: other associated benefits

228. A meal, which is a minor benefit, is provided in connection with a night's accommodation and taxi travel. Each benefit under these circumstances is a separate benefit.

229. The total of the taxable values of the night's accommodation and taxi travel, and any other accommodation or taxi travel provided in the current year, in a previous year and those that are reasonably expected to be provided in the future must be considered.

230. The 'any other accommodation and taxi travel' being identified as associated benefits for this purpose do not have to be provided in connection with meals. They only have to be identical or similar benefits to the accommodation and taxi travel that is provided in connection with the meal (minor benefit).

231. The greater the total value of the other associated benefits, in this case being the accommodation and the taxi travel, the less likely it is that the minor benefit, being the meal, will qualify as an exempt benefit. The other criteria used to determine if it is unreasonable to treat the minor benefit as a fringe benefit would need to be considered before any conclusion could be reached that the benefit is a minor benefit.

As with the previous criteria it is not possible to make a conclusion about this criterion as it is a question of fact for which no information has been provided.

The practical difficulty in determining the notional taxable values of the minor benefit and any associated benefits

Given the benefits were purchased using the corporate credit card there would appear to be no practical difficulty in determining the notional taxable values of the minor benefit and any associated benefits.

Circumstances surrounding the provision of the minor benefit and any associated benefits

This criterion is discussed in paragraphs 236 to 244 of TR 2007/12. These paragraphs state:

236. The fifth criterion requires consideration of the circumstances surrounding the provision of the minor benefit. Without limiting the generality of the circumstances to be considered surrounding the provision of the benefit, it is necessary to consider specifically whether the benefit was provided as a result of an unexpected event and whether or not it could be regarded to be provided wholly or principally as a reward for services rendered, or to be rendered, by the employee.

237. Whether a benefit is provided to assist the employee to deal with an unexpected event will always be a question of fact. The EN³⁴ included an example of an employer providing a short term loan to an employee to pay unexpected debts. This would be an example where this requirement of this criterion would be satisfied.

238. Whether a benefit was provided otherwise than wholly or principally by way of a reward for services rendered, or to be rendered, by the employee, will in some instances be clear (for example where the benefit is provided as part of a SSA). In other instances, whether a benefit has been provided wholly or principally as a reward for services will be less clear.

239. The difficulties associated with reaching a decision on this point are highlighted in the NAB case and Case 2/96. As noted by Ryan J in the NAB case, it can be difficult to determine whether the requirements of this criterion are satisfied in some situations:

It is debatable whether the aggregate of such benefits was provided wholly or principally by way of a reward for services to Mr Brewster but however the consideration indicated in s. 58P(2)(f)(v)(B) [sic] be evaluated, it would not in view of the preponderance the other way of the considerations to which I have just adverted, lead to the conclusion that it would be unreasonable to treat the benefit of 29 March 1988 as a fringe benefit in relation to Mr Brewster for the relevant tax year.³⁵

240. Also in Case 2/96, whilst the AAT was inclined to the view that taxi fares are likely to relate to services rendered or to be rendered, the AAT noted that this conclusion was debatable.

241. Whether a benefit has been provided wholly or principally for services rendered or to be rendered will depend on the circumstances. As the two cases illustrate, this can be difficult to determine and that it should be noted that this is merely one criterion to be considered when determining whether a benefit is a minor benefit. The Commissioner's view is that where a SSA is in place it is clear that any benefits provided under the SSA by the employer to the employee are wholly or principally by way of a reward for services rendered because the benefits have been provided in substitution for salary and wages. On the other hand, although a Christmas party provided to employees and their families may be considered to be a reward for services rendered or to be rendered, it would not necessarily be considered to have been provided wholly or principally by way of a reward for services rendered or to be rendered by the employee. In most instances a Christmas party would not be considered to be provided to an employee as a substitute for salary, wages or bonuses.

242. The definition of a 'salary sacrifice arrangement' as per TR 2001/10 paragraph 19 is:

...an arrangement under which an employee agrees to forego part of his or her total remuneration, that he or she would otherwise expect to receive as salary or wages, in return for the employer or someone associated with the employer providing benefits of a similar value.

243. The provision of benefits through a SSA forms part of the total remuneration package of an employee. Therefore, it is clear that, under these arrangements, benefits (together with salary) are provided wholly or principally as a reward for services rendered.

244. In considering the criteria in paragraph 58P(1)(f), and in particular the circumstances in which a benefit is provided under a SSA, a reasonable conclusion would be that all such benefits are not exempt benefits under section 58P.

In considering the two circumstances set out in subparagraph 58P(1)(f)(v) the provision of the benefits is not to assist the employee to deal with an unexpected event. However, depending upon the circumstances in which the corporate credit card is provided to the employee the benefits may be provided as a reward for services to be rendered by the employee.

Conclusion

In the absence of additional information it is not possible to rule whether the provision of goods for the apartment is a minor benefit.

Will an FBT liability arise from the payment of meals for:

· employee

· client

· staff

Under the arrangement the employee is able to use the corporate credit card to pay for the cost of meals purchased while dining with clients and other employees. Although this expenditure can be considered to be 'meal entertainment' you have not made an election to value this expenditure as a 'meal entertainment benefit'.

As you use the actual cost method to value these benefits they will be property benefits.

For the benefits to be property fringe benefits the benefits have to be a fringe benefit. To come within the 'fringe benefit' definition in subsection 136(1) of the FBTAA the benefit must be provided to an employee or an associate of an employee. Therefore, unless the clients are an associate of the employee, an FBT liability will not arise from the cost of the meals provided to the clients.

Although an FBT liability will not arise in relation to the meals provided to clients, a liability may arise in relation to the meals consumed by the employee and other employees as these meals are provided to an employee. This will depend upon the application of the minor benefit exemption discussed above.

As discussed above, a benefit will be an exempt minor benefit if:

· the notional taxable value of the benefit is less than $300; and

· it can be concluded on the basis of the factors listed in paragraph 58P(1)(f) of the FBTAA that it would be unreasonable to treat the benefit as a fringe benefit.

As no details have been provided in relation to these requirements it is not possible to make a ruling on whether the benefits will be exempt minor benefits. However, it is possible that the meals provided to the employee may be a living-away-from-home food fringe benefit that is valued under section 63 of the FBTAA.

Will an FBT liability arise from the payment for personal service items?

Under the arrangement the employee is able to use the corporate credit card to pay for the cost of some personal service items. These benefits will be residual benefits which as defined in section 45 of the FBTAA are a benefit that is not a benefit by virtue of any provision of Subdivision A of Divisions 2 to 11 inclusive of the FBTAA.

As with the previous two questions, in determining whether an FBT liability arises from these benefits it is necessary to consider whether the benefit is an exempt minor benefit under section 58P of the FBTAA.

As discussed above, a benefit will be an exempt minor benefit if:

· the notional taxable value of the benefit is less than $300; and

· it can be concluded on the basis of the factors listed in paragraph 58P(1)(f) of the FBTAA that it would be unreasonable to treat the benefit as a fringe benefit.

As no details have been provided in relation to these requirements it is not possible to make a ruling on whether the benefits will be exempt minor benefits.

Calculation of car fringe benefits

Although you did not ask for a ruling about the calculation of the taxable value of the car fringe benefits that arise from the novated car lease you provided a copy of the logbook that was kept.

In reviewing this log book we note it appears the employee has recorded the journeys between the apartment in which he stays when in city B and your office as being business journeys. It also appears the journeys between the airport and the apartment have been treated as business journeys.

From the information provided, it is not clear why these journeys are business journeys as they appear to involve either:

· travel between home and work which does not appear to be travelling on work; or

· travel between the city C residence and the city B residence.

Therefore, we suggest you review the log book to ensure that all of the journeys that have been recorded as business journeys were exclusively in the course of producing assessable income of the employee.