Edited version of your private ruling

Authorisation Number: 1012496155132

Ruling

Subject: Fringe benefits tax: Fly-in fly-out living-away-from-home allowance

Question 1

Can the taxable value of the living-away-from-home allowance provided to your employee be calculated in accordance with section 31A of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

Answer

No

This ruling applies for the following periods:

A number of fringe benefits tax years commencing in the 2013 fringe benefits tax year.

The scheme commences on:

In the relevant fringe benefits tax year.

Relevant facts and circumstances

Your employee is required to work away from their normal residence in order to perform the duties of their employment.

The employee's usual place of employment is at a location that is not a remote area.

The employee travels to their usual place of employment for a predetermined period of up to x months in duration and then returns to their normal residence for a period of less than y weeks duration.

The employee repeats this travel arrangement on an ongoing basis for up to a maximum predetermined length of time after which you expect that the employee will return to their normal residence.

While the employee is at their usual place of employment their working conditions are such that they work from x am to y pm for five days and on the sixth day from z am to v pm.

On the seventh day the employee is required to be on call so that they can monitor emails and be available to deal with issues that may arise.

No other employee performs the duties of the employees' employment on the seventh day.

The employee receives a living-away-from-home allowance during the periods that they are away from their normal residence.

The employee's family does not accompany them to their usual place of employment but maintains their normal residence.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 subsection 30(1)

Fringe Benefits Tax Assessment Act 1986 subdivision B

Fringe Benefits Tax Assessment Act 1986 section 31A

Fringe Benefits Tax Assessment Act 1986 subsection 31A(2)

Fringe Benefits Tax Assessment Act 1986 section 31E

Fringe Benefits Tax Assessment Act 1986 subsection 31E(1)

Fringe Benefits Tax Assessment Act 1986 subparagraph 31E(a)

Reasons for decision

Can the taxable values of the living-away-from-home allowances provided to your employees be calculated in accordance with section 31A of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

You have provided your employee with a living-away-from-home allowance (LAFHA) in accordance with the requirements of subsection 30(1) of the FBTAA.

Subdivision B of the FBTAA sets out the methods for calculating the taxable value of a LAFHA.

The taxable value of a living-away-from home allowance that is provided to fly-in fly-out employees and drive-in-drive-out employees is calculated in accordance with section 31A of the FBTAA:

31A Taxable value - fly-in fly-out and drive-in drive-out employees

(1) This section applies to a living-away-from-home allowance fringe benefit covered by subsection 30(1) in relation to a year of tax to the extent that the employee satisfies all of the following for the fringe benefit and the period to which it relates:

(a) the requirement that the employee has residential accommodation at or near his or her usual place of employment;

(b) section 31E (about extra requirements for these employees);

(c) section 31F (about declarations).

(2) Subject to this Part, the taxable value of the fringe benefit in relation to the year of tax is the amount of the fringe benefit reduced by:

(a) any exempt accommodation component; and

(b) any exempt food component.

That is, in order for the taxable value of a LAFHA to be calculated in accordance with section 31A, the requirements of section 31E of the FBTAA must be satisfied.

Section 31E of the FBTAA states:

31E Fly-in fly-out and drive-in drive out requirements

The employee satisfies this section if:

(a) the employee, on a regular and rotational basis:

(i) works for a number of days and has a number of days off (but not the same days in consecutive weeks); and

(ii) on completion of the working days, travels from his or her usual place of employment to his or her normal residence and, on completion of the days off, returns to that usual place of employment; and

(b) the basis of the work described in paragraph (a) is customary for employees performing similar duties in that industry; and

(c) it would be unreasonable to expect the employee to travel on a daily basis on work days between:

(i) his or her usual place of employment; and

(ii) his or her normal residence;

having regard to the location of those places; and

(d) it is reasonable to expect that the employee will resume living in his or her normal residence when the duties of that employment no longer require him or her to live away from it.

Fringe benefits tax - a guide for employers (NAT 1054) (FBT guide for employers), summarises the requirements of section 31E as follows:

The employee is considered to be working on a fly-in fly-out or drive-in-drive out (or equivalent) basis when all of the following apply:

· on a regular and rotational basis, the employee works for a number of days and has a number of days off which are not the same days in consecutive weeks (that is, following one week after another without interruption), such as a standard five-day working week and weekend

· the employee returns to the employee's normal residence during the days off

· it is customary in the industry in which the employee works for employees performing similar duties to work on a rotational basis and return home during days off - for example, miners - and the work duties continue to be undertaken by other employees on a rotational basis while any particular employee is on their days off

· it is unreasonable to expect the employee to travel to and from work and the normal residence on a daily basis given the locations of the employment and their home, and

· it is reasonable to expect that the employee will resume living at the normal residence when the employment duties no longer require them to live away from home.

The first requirement of section 31E, as summarised by the FBT guide for employers, is whether on a regular and rotational basis, the employee works for a number of days and has a number of days off which are not the same days in consecutive weeks (paragraph 31E(a)(i) of the FBTAA).

Does your employee, on a regular and rotational basis, work for a number of days and have a number of days off which are not the same days in consecutive weeks?

The meaning of 'regular and rotational basis' is not defined in the FBTAA. Therefore, it is relevant to consider the ordinary meaning of the terms 'regular' and 'rotational' in the context in which they are used in the FBTAA.

The Macquarie Dictionary [Multimedia], version 5.0.0, 01/10/01 (Macquarie Dictionary), defines 'regular' as:

Usual; normal; customary; conforming in form or arrangement; characterised by fixed principle, uniform procedure, etc; recurring at fixed times; periodic; adhering to rule or procedure.

The word 'rotational' in the employment context is defined in the Cambridge Dictionaries Online, Cambridge University Press 2013 as:

Relating to a system in which the person who does a particular job is regularly changed:

The shifts work on a rotational basis.

Depending on the department, some recruits will participate in rotational placements.

The employee performs the duties of their employment on the basis that they alone are responsible for the day to day operations for which they are employed. The employee does not job share nor does anyone else perform the duties of their employment when they are on call on the seventh day.

For the time that they are in receipt of a living-away-from-home allowance, the employee remains solely responsible for performing the duties of their employment and as such is not working on a regular and rotational basis.

Therefore paragraph 31E(a)(i) of the FBTAA is not satisfied.

Conclusion

As all of the requirements of section 31E must be met in order for the taxable value of a LAFHA to be calculated in accordance with section 31A of the FBTAA, the taxable value of the LAFHA provided to your employee cannot be calculated in accordance with section 31A of the FBTAA.