Edited version of administratively binding advice

Authorisation Number: 1012491243202

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Advice

Subject: Written Agreement under subsection 135X(3) of the Fringe Benefits Tax Assessment Act 1986

Question

Will the Commissioner enter into a written agreement, under subsection 135X(3) of the Fringe Benefits Tax Assessment Act 1986 with the Queensland State Government regarding the application of certain provisions of the FBTAA?

Answer

Yes

This advice applies for the following periods:

1 April 2012 to 31 March 2013

1 April 2013 to 31 March 2014

The arrangement commenced on:

3 April 2012

Relevant facts and circumstances

Certain functions and employees of various State or Territory government bodies were transferred to other State or Territory government bodies as a consequence of Machinery of Government (MOG) Changes during the 2013 FBT year.

Certain functions and employees of various abolished State or Territory government bodies were transferred to other State or Territory government bodies during the 2013 FBT year.

Certain benefits provided previously to the transferred employees by their former State or Territory government body employers continue to be provided to those employees by their new State or Territory government body employers.

All of the relevant transferring State or Territory government bodies and all of the receiving State or Territory government bodies had previously been nominated by their State or Territory under section 135S of the FBTAA to be treated as separate employers in their own right for the purposes of the FBTAA.

Prior to the relevant transfers, the transferring State or Territory government bodies did any, or all, of the following:

(a) kept registers for the purposes of valuing car parking fringe benefits using the 12 week record keeping method in Subdivision D of Division 10A of Part III of the FBTAA;

(b) treated certain benefits as exempt benefits under sections 58B, 58C, 58D or 58S of the FBTAA (as applicable);

(c) treated certain fringe benefits as amortised fringe benefits under section 65CA of the FBTAA;

(d) treated certain fringe benefits as being covered by a recurring fringe benefit declaration under section 152A of the FBTAA;

(e) treated a year of tax as a log book year of tax for the purposes of the application of section 10 of the FBTAA in relation to car fringe benefits;

(f) treated a year of tax as a base year of tax for the purposes of section 26 of the FBTAA.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 section 135S

Fringe Benefits Tax Assessment Act 1986 section 135X

Reasons for decision

Issue 1

Question 1

Detailed reasoning

1. Section 135X of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) enables the Commissioner to enter into a written agreement with a State or Territory regarding the application of certain provisions of the FBTAA in certain circumstances.

2. Section 135X of the FBTAA states (as relevant here):

SECTION 135X APPLICATION OF CERTAIN PROVISIONS BY AGREEMENT WITH THE COMMISSIONER

135X(1) Object.

The object of this section is:

(a) to ensure that the calculation of the taxable value of certain fringe benefits is not affected where continuity in the fulfilment of certain record-keeping provisions is broken solely because of a transitional event; and

(b) to preserve the character of certain benefits where that character would otherwise be lost solely because of a transitional event.

135X(2) Meaning of transitional event.

A transitional event occurs if:

(a) a State or Territory makes a nomination under section 135S; or

(b) a State or Territory varies a nomination under section 135S; or

(c) a State or Territory revokes a nomination under section 135S; or

(d) a nominated State or Territory body ceases to exist.

135X(3) Agreement about consequences of transitional events.

The Commissioner may enter into a written agreement with a State or Territory about what is to happen in respect of the following when a transitional event occurs:

(a) whether a register kept by the State or Territory, or a nominated State or Territory body, is to be treated as a valid register for the purposes of Subdivision D of Division 10A of Part III of the Act (which deals with the 12 week record keeping method for car parking fringe benefits) and the employees and FBT years in relation to which the register is to be treated as valid;

(b) whether a benefit that would otherwise lose its character as an exempt benefit under section 58B, 58C, 58D or 58S is to be treated as an exempt benefit;

(c) whether a benefit that would otherwise lose its character as an amortised fringe benefit under section 65CA is to be treated as an amortised fringe benefit;

(d) whether a benefit that would not otherwise be covered by a recurring fringe benefit declaration under section 152A is to be treated as being covered by the declaration;

(e) whether a year of tax is to be treated as a log book year of tax of the State or Territory or a nominated State or Territory body, for the purposes of the application of section 10 in relation to a car fringe benefit in relation to that State or Territory, or that nominated State or Territory body, in relation to a particular car or class of cars (however described);

(f) whether a year of tax that is a base year of tax for the purposes of section 26 is to continue to be treated as a base year of tax.

135X(4) [Agreement prevails]

So far as the agreement is inconsistent with this Act, the agreement prevails.

3. In view of the underlying objectives of section 135X of the FBTAA (as listed in subsection 135X(1) of the FBTAA), it is agreed by the Commissioner that, in relation to the relevant transfers between the State or Territory government bodies, the following matters should be given effect for the fringe benefit tax years ended 31 March 2013 and 2014:

(a) a register kept by the State or Territory, or nominated State or Territory body (as applicable), is to be treated as a valid register for the purposes of Subdivision D of Division 10A of Part III of the FBTAA (which deals with the 12 week record keeping method for car parking fringe benefits) and the employees and FBT years in relation to which the register is to be treated as valid;

(b) a benefit that would otherwise lose its character as an exempt benefit under sections 58B, 58C, 58D or 58S of the FBTAA is to be treated as an exempt benefit;

(c) a benefit that would otherwise lose its character as an amortised fringe benefit under section 65CA of the FBTAA is to be treated as an amortised fringe benefit;

(d) a benefit that would not otherwise be covered by a recurring fringe benefit declaration under section 152A of the FBTAA is to be treated as being covered by the declaration;

(e) a year of tax is to be treated as a log book year of tax of the State or Territory, or nominated State or Territory body (as applicable), for the purposes of the application of section 10 of the FBTAA in relation to a car fringe benefit in relation to that State or Territory, or that nominated State or Territory body (as applicable), in relation to a particular car or class of cars (however described);

(f) a year of tax that is a base year of tax for the purposes of section 26 of the FBTAA is to continue to be treated as a base year of tax.