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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your private ruling

Authorisation Number: 1012500279781

Ruling

Subject: Exempt living-away-from-home accommodation

Question 1

Is the provision of rental accommodation overseas to an employee, during the period 1 October 2012 to 31 March 2013, exempt under subsection 47(5) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

Answer

Yes

Question 2

Is the provision of rental accommodation overseas to an employee, during the period 1 April 2013 to 30 September 2013, exempt under subsection 47(5) of the FBTAA?

Answer

Yes

Question 3

Is the provision of rental accommodation overseas to an employee, during the period 1 October 2013 to 31 October 2013, exempt under subsection 47(5) of the FBTAA?

Answer

This ruling applies for the following periods:

1 April 2012 - 31 March 2013

1 April 2013 - 31 March 2014

The scheme commences on:

The scheme has commenced

Relevant facts and circumstances

An employee (the Secondee) is employed by an entity (Employer) under an employment contract dating from 2004.

The Employer agreed to temporarily provide the services (secondment) of the Secondee to an overseas independent third party entity (Third Party) under the terms of a Secondment Agreement dated dd/mm/yyyy.

The Employer, Third Party and the Secondee were all signed parties to the Secondment Agreement.

Under the terms of the Secondment Agreement:

· The initial period of the Secondee's secondment is to run from dd/mm/yyyy to dd/mm/yyyy.

· The Secondee's services to the Third Party are to be provided overseas on a full-time basis.

· The Secondee remains at all times an employee of the Employer and not an employee of the Third Party.

· The Employer will continue to pay the Secondee's normal salary and any other benefits to which the Secondee is entitled under the terms of the 200X employment contract between the Secondee and the Employer.

· The Third Party will reimburse the Employer an amount equivalent to the Secondee's normal salary and any other benefits to which the Secondee is entitled on production of an invoice to the Third Party by the Employer.

· The Third Party will pay the Secondee a housing allowance while the Secondee is seconded overseas.

The Employer, Third Party and the Secondee then entered into another agreement (Addendum Agreement) where the Secondment Agreement was altered so that the Third Party would provide the Secondee (and the Secondee's immediate family) with accommodation overseas rather than provide a housing allowance.

The Employer, Third Party and the Secondee entered into a further agreement (1^st Extension Agreement), dated dd/mm/yyyy, to extend the period of secondment from dd/mm/yyyy to dd/mm/yyyy.

During the term of the 1^st Extension Agreement the Employer continued to pay the Secondee's normal salary and any other benefits to which the Secondee was entitled and the Third Party continued to reimburse the Employer for such costs and also continued to provide the Secondee (and the Secondee's immediate family) with accommodation overseas.

The Employer, Third Party and the Secondee then entered into yet another agreement (2^nd Extension Agreement), dated dd/mm/yyyy, to extend the period of secondment from dd/mm/yyyy to dd/mm/yyyy.

Under the terms of the 2^nd Extension Agreement the Secondee will perform a different (more senior) role for the Third Party and the Employer, consequently, will temporarily increase its usual payments and benefits to the Secondee to take into account the enlarged role to be performed by the Secondee for the Third Party.

The Third Party will continue to reimburse the Employer for such costs (included the increased temporary payments) and also will continue to provide the Secondee (and the Secondee's immediate family) with accommodation overseas.

It is also proposed that the Secondee will continue to be seconded by the Employer to the Third Party for another period (3^rd Extension Agreement) beginning on dd/mm/yyyy and terminating on dd/mm/yyyy.

During the period of the 3^rd Extension Agreement the Secondee will continue to be paid and receive benefits from the Employer in the same way as per the 2^nd Extension Agreement and also the Employer will continue to be reimbursed for such costs by the Third Party in the same way as per the 2^nd Extension Agreement.

It is proposed that during the period of the 3^rd Extension Agreement the Third Party will continue, as before, to provide overseas accommodation to the Secondee and the Secondee's immediate family.

At the expiry of the Secondee's secondment to the Third Party the Secondee will return to the Secondee's substantive position and pay rate with the Employer in Australia.

The Secondee is neither a temporary resident nor a foreign resident of Australia.

The Secondee owns a house in Australia which is the usual place of residence for both the Secondee and the Secondee's immediate family and to which they all intend to return at the end of the Secondee's secondment overseas.

The Secondee's house in Australia is neither rented out nor sublet whilst the Secondee is seconded overseas and the Secondee's house continues to be available for the Secondee's immediate use and enjoyment whilst the Secondee is seconded overseas.

The Secondee will provide all necessary declarations, in the approved form, to the Employer at the required times.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 section 25

Fringe Benefits Tax Assessment Act 1986 section 31C

Fringe Benefits Tax Assessment Act 1986 section 31D

Fringe Benefits Tax Assessment Act 1986 section 45

Fringe Benefits Tax Assessment Act 1986 subsection 47(5)

Fringe Benefits Tax Assessment Act 1986 subsection 136(1)

Tax Laws Amendment (2012 Measures No. 4) Act 2012 Schedule 1 Part 3

Reasons for decision

Question 1

1. Subsection 47(5) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) exempts the provision of accommodation to employees under certain limited circumstances. Subsection 47(5) of the FBTAA states (as relevant here):

47(5)

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; and

(b) the unit of accommodation is for the accommodation of eligible family members and is provided solely because the duties of that employment require the employee to live away from his or her normal residence; and

(ba) the employee satisfies:

(i) sections 31C (about maintaining an Australian home) and 31D (about the first 12 months);...

(ii) ...and

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

(d) any of the following conditions is satisfied:

(i) ...

(ii) if the employee satisfies sections 31C and 31D - the employee gives to the employer, before the declaration date, a declaration, in a form approved by the Commissioner, purporting to set out the matters in subparagraphs 31F(1)(a)(i) to (iii);

(iii) ...

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

2. Therefore, exemption is granted under subsection 47(5) of the FBTAA where all the following conditions are met (as relevant here):

(a) there is a residual benefit consisting of the subsistence of a lease or licence in respect of a unit of accommodation.

(b) the residual benefit is provided to an employee of an employer in respect of the employee's employment.

(d) the unit of accommodation is provided solely because the duties of the employee's employment require the employee to live away from the employee's normal residence.

(e) the employee satisfies the requirements of section 31C of the FBTAA.

(f) the employee satisfies the requirements of section 31D of the FBTAA.

(g) the accommodation is not provided while the employee is undertaking travel in the course of performing the employee's duties of employment.

(h) the employee gives to the employer the required declaration, in the approved form, by the required date.

(a) is there a residual benefit consisting of the subsistence of a lease or licence in respect of a unit of accommodation?

3. The term 'benefit' is defined in subsection 136(1) of the FBTAA to include any right (including a right in relation to, and an interest in, real or personal property), privilege, service or facility. It is considered, therefore, that the provision of accommodation in overseas to the Secondee, and also the Secondee's immediate family, will constitute a benefit to each of them for the purposes of the FBTAA.

4. The provision of the accommodation overseas to the Secondee indicates that section 25 of the FBTAA may have a possible application to this case. Section 25 of the FBTAA states that a housing benefit will arise where a 'housing right' is provided by one person to another.

5. The term 'housing right' is defined in subsection 136(1) of the FBTAA as meaning 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'.

6. Accommodation in a house, flat or home unit is a 'unit of accommodation' under paragraph (aa) of the definition a 'unit of accommodation' in subsection 136(1) of the FBTAA. The overseas accommodation provided to the Secondee will, therefore, meet the definition of a 'unit of accommodation'.

7. The Secondee is granted licence to stay at the accommodation overseas by the Third Party.

8. Therefore, the Secondee's circumstances meet some of the conditions in respect of the grant of a 'housing right'.

9. The definition of 'housing right', in subsection 136(1) of the FBTAA , further requires that the relevant lease or licence is granted at a time when the relevant unit of accommodation is the person's 'usual place of residence'.

10. The FBTAA does not define what is meant by the expression 'usual place of residence', however, the FBTAA defines what is meant by a 'place of residence' in subsection 136(1) of the FBTAA as follows:

place of residence, in relation to a person, means:

(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.

11. Therefore, the Secondee's house in Australia and also the accommodation provided to the Secondee overseas are both a 'place of residence' of the Secondee.

12. However, it is considered that the wording of the definition of 'housing right' (see paragraph 9 above) connotes that for the purposes of the aforementioned definition there can be only one 'usual' place of residence of the person at the relevant time.

13. In this case, the Secondee still has a house in Australia which is the usual place of residence for both the Secondee, and the Secondee's immediate family, and to which they all intend to return at the end of the Secondee's secondment overseas.

14. Albeit the overseas accommodation is also a place of residence of the Secondee, the overseas accommodation is, nonetheless, not the 'usual' place of residence of the Secondee.

15. As the accommodation overseas is not the 'usual' place of residence of the Secondee there is no 'housing right' being provided to the Secondee in respect of that accommodation nor, consequently, is there a 'housing benefit' being provided under section 25 of the FBTAA. Therefore, section 25 of the FBTAA has no application to this case.

16. Section 45 of the FBTAA states that a residual benefit is one that is not a benefit by virtue of any provision of Subdivision A of Divisions 2 to 11 inclusive of the FBTAA. Therefore, in basic terms, a residual benefit is a benefit that does not fall within one of the other more specific benefit types contained in the FBTAA.

17. It has been determined above (at paragraph 15) that section 25 of FBTAA has no application. It is also considered that no other specific benefit type applies to the Secondee's circumstances.

18. it is further considered, therefore, that the provision of the accommodation in overseas to the Secondee is a residual benefit.

19. This condition is met.

(b) is the residual benefit provided in respect of the employee's employment?

20. As determined above (at paragraph 18) the provision of the accommodation overseas to the Secondee is a residual benefit.

21. The meaning of the phrase 'in respect of the employment of the employee' was considered in J & G Knowles & Associates Pty Ltd v. Federal Commissioner of Taxation (2000) 96 FCR 402; 2000 ATC 4151; 44 ATR 22 (Knowles). It was found in Knowles that the words 'in respect of' must be given a meaning that depends on the context in which they are used.

22. In the case of the FBTAA, this means that there must be a sufficient or material relationship or connection between the provision of the benefit and the employee's employment. The establishment of a mere causal link between the benefit and the employee's employment is not necessarily enough.

23. The Secondee is employed by the Employer under the terms of the 200X employment contract. The Employer agreed to provide the secondment of the Secondee to the Third Party under the terms of the Secondment Agreement.

24. In the period dd/mm/yyyy to dd/mm/yyyy the Secondee was provided with accommodation overseas under the revised terms of the Secondment Agreement included in the Addendum Agreement of dd/mm/yyyy. From dd/mm/yyyy until dd/mm/yyyy, by virtue of the 1^st Extension Agreement, the Secondee was provided with accommodation overseas under the same terms.

25. Therefore, it is considered that the accommodation provided overseas during the period dd/mm/yyyy to dd/mm/yyyy, is provided to the Secondee in respect of the Secondee's employment.

26. This condition is met.

(c) is the unit of accommodation for the accommodation of eligible family members?

27. As determined previously (at paragraph 6) the overseas accommodation will meet the definition of a 'unit of accommodation'. The term 'eligible family member' is defined in subsection 136(1) of the FBTAA to mean (as relevant here):

eligible family member means:

(a) in relation to an employee whose duties of employment require the employee to live away, for a period, from his or her normal residence:

(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:

(A) who lived with the employee during that period; and

(B) whose usual place of residence during that period was the same as the usual place of residence of the employee; and

(b) ...

28. The accommodation overseas is occupied by the Secondee together with the Secondee's immediate family and the Secondee and the Secondee's immediate family also reside together at the usual place of residence of the Secondee in Australia.

29. The Secondee and the Secondee's immediate family, consequently, meet the requirements of both subparagraphs (a)(i) and (a)(ii) of the definition of 'eligible family member', in subsection 136(1) of the FBTAA.

30. Nonetheless, paragraph (a) of the current definition 'eligible family member', in subsection 136(1) of the FBTAA, also requires that the employee's duties of employment make it necessary for the employee to live away, for a period, from the employee's normal residence.

31. The term 'normal residence' is defined (as applicable here) in paragraph (a) of the definition of that term in subsection 136(1) of the FBTAA as meaning the employee's usual place of residence if the employee's usual place of residence is in Australia.

32. In this case, the Secondee's 'usual place of residence' is at the Secondee's house in Australia. Consequently, the Secondee's house in Australia is both the Secondee's 'usual place of residence' and also the Secondee's 'normal residence' for the purposes of the FBTAA.

33. The Secondee's secondment to the Third Party overseas is by the continued agreement by the Employer. Despite extensions of the period of the Secondee's secondment overseas, the Secondee still intends to remain away from the Secondee's normal residence in Australia for only a limited time.

34. It is accepted, therefore, that the Secondee is required to live away from the Secondee's normal residence because of the Secondee's duties of employment.

35. This condition is met as the Secondee is required to live away from the Secondee's normal residence because of the Secondee's duties of employment and the accommodation overseas is occupied by the Secondee and the Secondee's immediate family who also all reside together at the Secondee's usual place of residence in Australia.

(d) is the unit of accommodation provided solely because the duties of the employee's employment requires the employee to live away from the employee's normal residence?

36. It was determined above (at paragraph 34) that the duties of the Secondee's employment require the Secondee to live away from the Secondee's normal residence by the duties of the Secondee's employment.

37. However, it also needs to be determined that the overseas accommodation is provided to the Secondee 'solely' because the Secondee's duties of employment require the Secondee to live away, for a period, from the Secondee's normal residence.

38. It is accepted, in the absence of any evidence to the contrary, that the only reason the Secondee is provided with the accommodation overseas is because the Secondee's duties of employment require the Secondee to live away from the Secondee's normal residence in Australia.

39. This condition is met.

(e) does the employee meet the requirements of section 31C of the FBTAA?

40. Section 31C of the FBTAA was introduced by Tax Laws Amendment (2012 Measures No.4) Act 2012 (TLAA 142) and applies generally to employees who are living away from their normal residence on or after 1 October 2012 regardless of when the allowance or benefit was received or provided.

41. Consequently, the 'new LAFH rules' will apply to the overseas accommodation provided to the Secondee during the period 1 October 2012 to dd/mm/yyyy inclusive as the Secondee was living away from the Secondee's normal residence on or after 1 October 2012.

42. Section 31C of the FBTAA states:

SECTION 31C

31C MAINTAINING A HOME IN AUSTRALIA

The employee satisfies this section if:

(a) the place in Australia where the employee usually resides when in Australia:

(i) is a unit of accommodation in which the employee or the employee's spouse has an ownership interest (within the meaning of the Income Tax Assessment Act 1997); and

(ii) continues to be available for the employee's immediate use and enjoyment during the period that the duties of that employment require the employee to live away from it; and

(b) it is reasonable to expect that the employee will resume living at that place when that period ends.

43. Nonetheless, provided certain conditions are met, the requirements of paragraph 31C(a) of the FBTAA may be disregarded for the duration of an applicable 'transitional period' under Item 27 of the 'transitional rules', contained in Schedule 1, Part 3 of TLAA 142.

44. Therefore, to decide whether the conditions of section 31C of the FBTAA are met in this particular instance requires consideration of whether:

(i) the requirements of paragraph 31C(a) of the FBTAA are to be disregarded under Item 27 of the transitional rules?

(ii) the requirements of paragraph 31C(a) of the FBTAA are otherwise met, where necessary?

(iii) the requirements of paragraph 31C(b) of the FBTAA are met?

(i) are the requirements of paragraph 31C(a) of the FBTAA to be disregarded under Item 27 of the transitional rules?

45. Item 27 of schedule 1, Part 3 of TLAA 142 states (as applicable here):

27 Transitional - existing employment arrangements

(1) During the transitional period, disregard paragraph 31C(a) and section 31D of the Fringe Benefits Tax Assessment Act 1986 if:

(a) the employee is neither a temporary resident nor a foreign resident; and

(b) during the entire period:

(i) starting at the Budget time; and

(ii) ending on 30 September 2012;

that employment was covered by an eligible employment arrangement that was neither varied in a material way nor renewed.

(2) ...

(3) In this item:

Budget time means 7.30 pm, by legal time in the Australian Capital Territory, on 8 May 2012.

eligible employment arrangement means an arrangement under which:

(a) the employer; or

(b) an associate of the employer;

commits to provide the employee with [a] benefit for the employee's accommodation...while the duties of that employment require the employee to live away from [the employee's]...normal residence.

...

46. Therefore, before paragraph 31C(a) of the FBTAA can be disregarded during the applicable transitional period the following 'threshold conditions' of Item 27 of the transitional rules must, firstly, be met:

(A) the employee is neither a temporary resident nor a foreign resident of Australia.

(B) the employee was covered by an eligible employment arrangement in place before 7.30pm (AEST) on 8 May 2012.

(C) the eligible employment arrangement was not varied in a material way nor renewed from 7.30pm (AEST) on 8 May 2012 up to, and including, 30 September 2012.

(A) is the employee neither a temporary resident nor a foreign resident?

47. The Secondee is neither a temporary resident nor a foreign resident of Australia. This condition is met.

(B) is the employee covered by an eligible employment arrangement in place before 7.30pm (AEST) on 8 May 2012?

48. To meet this requirement two basic conditions must be met:

(i) there is an 'eligible employee arrangement'; and

(ii) the eligible employee arrangement was in place before 7.30pm (AEST) on 8 May 2012.

(i) is there an 'eligible employment arrangement'?

49. An 'eligible employment arrangement', as that term is defined in paragraph 3 of Item 27 of Schedule 1, Part 3 of TLAA 142 (as relevant here), is an arrangement under which the employer, or an associate of the employer, commits to provide the employee with a benefit for the employee's accommodation while the duties of that employment require the employee to live away from the employee's normal residence.

50. Therefore, an 'eligible employment arrangement' (as relevant here) requires that the following conditions are met:

(a) there is an 'arrangement',

(b) the employer, or an associate of the employer, commits to provide a benefit for the employee's accommodation under that arrangement;

(c) the relevant accommodation is to be provided while the employee's duties of employment require the employee to live away from the employee's normal residence.

(a) is there an 'arrangement'?

51. The term 'arrangement' is defined in subsection 136(1) of the FBTAA as follows:

arrangement means:

(a) any agreement, arrangement, understanding, promise or undertaking, whether express or implied, and whether or not enforceable, or intended to be enforceable, by legal proceedings; and

(b) any scheme, plan, proposal, action, course of action or course of conduct, whether unilateral or otherwise.

52. It is considered that the Secondment Agreement (together with the Addendum Agreement) falls within the definition of the term 'arrangement', in subsection 136(1) of the FBTAA.

53. This condition is met.

(b) is there a commitment by the employer (or associate) to provide the relevant accommodation under the arrangement?

54. Under the amended terms of the Secondment Agreement it is the Third Party rather than the Employer who is the entity actually supplying the accommodation to the Secondee.

55. Nonetheless, it is considered that under the terms of the Secondment Agreement (together with the Addendum Agreement) the Employer has 'committed itself' to provide the Secondee with the overseas accommodation.

56. The fact that the accommodation is supplied by the Third Party, who is unrelated to the Employer, is immaterial to the above conclusion.

57. This condition is met.

(c) is the relevant accommodation to be provided while the employee's duties of employment require the employee to live away from the employee's normal residence?

58. This condition is met as it was determined previously (at paragraph 38) the Secondee is required to live away from the Secondee's normal residence because of the Secondee's duties of employment.

Conclusion on whether there is an eligible employment arrangement

59. The Secondment Agreement (together with the Addendum Agreement) constitutes an eligible employment arrangement as all the required conditions are met.

(ii) was an eligible arrangement in place before 7.30pm (AEST) on 8 May 2012?

60. It was determined previously (at paragraph 59) that the Secondment Agreement (together with the Addendum Agreement) is an eligible employment arrangement.

61. The term of the Secondment Agreement (together with the Addendum Agreement) was extended by the 1^st Extension Agreement dated dd/mm/yyyy.

62. Therefore, an eligible employment arrangement was in place before 7.30pm (AEST) on 8 May 2012 and this condition is met.

(C) was the eligible employment arrangement not varied in a material way nor renewed from 7.30pm (AEST) on 8 May 2012 to 30 September 2012?

63. The term of the Secondment Agreement originally expired on dd/mm/yyyy. However, the relevant parties entered into the 1^st Extension Agreement on dd/mm/yyyy (which date was prior to the commencement of the relevant period beginning from 7.30pm (AEST) on 8 May 2012).

64. The eligible employment arrangement, represented by the Secondment Agreement (plus the Addendum Agreement), was neither varied in a material way nor renewed during the period from 7.30pm (AEST) on 8 May 2012 to dd/mm/yyyy by the 1^st Extension Agreement.

65. This condition is met.

66. Therefore, the threshold conditions of Item 27 of the transitional rules are met in this particular instance as the Secondee is a neither a temporary resident nor a foreign resident of Australia and is covered by an eligible employment arrangement that was neither varied in a material way nor renewed during the period from 7.30pm (AEST) on 8 May 2012 to dd/mm/yyyy.

67. However, notwithstanding that the threshold conditions of the transitional rules are met in this particular instance, paragraph 31C(a) of the FBTAA may only be disregarded for one of the limited periods that constitute a transitional period for the purposes of Item 27.

68. The term 'transitional period' is defined in Item 27 of schedule 1, Part5 3 of the TLAA, as follows:

transitional period means the period:

(a) starting on 1 October 2012; and

(b) ending at the earliest of:

(i) 30 June 2014; and

(ii) the time the eligible employment arrangement referred to in paragraph (1)(b)...ends; and

(iii) the first time that eligible employment arrangement is varied in a material way or renewed.

69. The relevant period for examination in this particular instance is from dd/mm/yyyy to dd/mm/yyyy.

70. The term of the Secondment Agreement (together with the Addendum Agreement) was extended by the 1^st Extension Agreement, dated dd/mm/yyyy, until dd/mm/yyyy.

71. Therefore, in the whole period from dd/mm/yyyy to dd/mm/yyyy the employment of the employee was covered by an eligible employment arrangement that had not been varied in a material way nor renewed, had not expired and whose existing term fell within the period from dd/mm/yyyy to dd/mm/yyyy.

72. Consequently, the requirements of paragraph 31C(a) of the FBTAA can be disregarded under Item 27 of the transitional rules for the period dd/mm/yyyy to dd/mm/yyyy.

(ii) are the requirements of paragraph 31C(a) of the FBTAA otherwise met?

73. It is not necessary to determine this point as it has been determined previously (at paragraph 72) that the requirements of paragraph 31C(a) of the FBTAA can be disregarded in this instance.

(iii) are the requirements of paragraph 31C(b) of the FBTAA met?

74. Paragraph 31C(b) of the FBTAA requires that it is reasonable to expect that when the relevant period ends the employee will resume living where the employee usually resides when in Australia.

75. The Secondee, and the Secondee's immediate family, intend to return to the Secondee's house in Australia at the end of the Secondee's secondment overseas. It is considered that the requirements of paragraph 31C(b) of the FBTAA are, therefore, met.

Conclusion on whether the employee meets the requirements of section 31C of the FBTAA?

76. As determined previously (at paragraph 72), the requirements of paragraph 31C(a) of the FBTAA are disregarded under Item 27 of the transitional rules for whole of the relevant period dd/mm/yyyy to dd/mm/yyyy.

77. As also determined previously (at paragraph 73), it is unnecessary to determine whether the requirements of paragraph 31C(a) of the FBTAA are otherwise met.

78. As further determined previously (at paragraph 75), that the requirements of paragraph 31C(b) of the FBTAA are met.

79. Therefore, the Secondee satisfies the applicable requirements of section 31C of the FBTAA for the period dd/mm/yyyy to dd/mm/yyyy.

(f) does the employee meet the requirements of section 31D of the FBTAA?

80. Section 31D of the FBTAA states (as relevant here):

SECTION 31D FIRST 12 MONTHS EMPLOYEE IS REQUIRED TO LIVE AWAY FROM HOME

31D(1)

The employee satisfies this section if the fringe benefit relates only to all or part of the first 12 months that the duties of that employment require the employee to live away from the place in Australia where he or she usually resides when in Australia.

31D(2)

...

81. Nonetheless, once again, provided certain conditions are met, the requirements of section 31D of the FBTAA may be disregarded for the duration of an applicable transitional period under Item 27 of the transitional rules.

82. For similar reasons it was determined previously (at paragraph 66) that the threshold conditions of Item 27 of the transitional rules are met in this particular instance in relation to paragraph 31C(a) of the FBTAA it is considered that the threshold conditions of Item 27 of the transitional rules are also met in this particular instance in relation to section 31D of the FBTAA.

83. It was determined previously (at paragraph 71) that for the whole of the period from dd/mm/yyyy to dd/mm/yyyy the employment of the employee was covered by an eligible employment arrangement that had not been varied in a material way or renewed, had not expired and whose existing term fell within the period dd/mm/yyyy to dd/mm/yyyy.

84. Therefore, the requirements of section 31D of the FBTAA are disregarded under Item 27 of the transitional rules for whole of the relevant period dd/mm/yyyy to dd/mm/yyyy as all the necessary conditions are met.

(g) is the accommodation provided while the employee is undertaking travel in the course of performing the employee's duties of employment?

85. The relevant accommodation is provided while the Secondee is providing the Secondee's services for an extended period overseas or.

86. It is accepted, therefore, that the relevant accommodation is not being provided while the Secondee is undertaking travel in the course of the Secondee performing the Secondee's duties of employment.

(h) will the employee give to the employer the required declaration, in the approved form, by the required date?

87. This condition is met as the Secondee will provide all necessary declarations, in the approved form, to the Employer at the required times.

Conclusion on exemption under current subsection 47(5) of the FBTAA for period dd/mm/yyyy to dd/mm/yyyy

88. The provision of overseas accommodation to the Secondee, during the period dd/mm/yyyy to dd/mm/yyyy inclusive, is exempt under subsection 47(5) FBTAA as all the required conditions have been met.

Question 2

1. As discussed previously (at paragraph 2 of Question 1), exemption is granted under subsection 47(5) of the FBTAA where all the following conditions are met (as relevant here):

(a) there is a residual benefit consisting of the subsistence of a lease or licence in respect of a unit of accommodation.

(b) the residual benefit is provided to an employee of an employer in respect of the employee's employment.

(d) the unit of accommodation is provided solely because the duties of the employee's employment requires the employee to live away from the employee's normal residence.

(e) the employee satisfies the requirements of section 31C of the FBTAA.

(f) the employee satisfies the requirements of section 31D of the FBTAA.

(g) the accommodation is not provided while the employee is undertaking travel in the course of performing the employee's duties of employment.

(h) the employee gives to the employer the required declaration, in the approved form, by the required date.

(a) is there a residual benefit consisting of the subsistence of a lease or licence in respect of a unit of accommodation?

2. This condition is met for similar reasons it was determined previously (at paragraph 18 of Question 1) that the provision of the overseas accommodation to the Secondee is a residual benefit.

(b) is the residual benefit provided in respect of the employee's employment?

3. On a similar basis it was determined previously (at paragraph 25 of Question 1) that the overseas accommodation, during the period dd/mm/yyyy to dd/mm/yyyy, was provided in respect of the Secondee's employment, it is considered that the overseas accommodation, during the period dd/mm/yyyy to dd/mm/yyyy, was also provided in respect of the Secondee's employment.

(c) is the unit of accommodation for the accommodation of eligible family members?

4. This condition is met for similar reasons it was determined previously (at paragraph 35 of Question 1) that the relevant unit of accommodation overseas is for the accommodation of eligible family members.

(d) is the unit of accommodation provided solely because the duties of the employee's employment requires the employee to live away from the employee's normal residence?

5. This condition is met for similar reasons it was determined previously (at paragraph 38 of Question 1) that the only reason the Secondee is provided with the overseas accommodation is because the Secondee's duties of employment require the Secondee to live away from the Secondee's normal residence.

(e) does the employee meet the requirements of section 31C of the FBTAA?

6. As explained previously (at paragraph 41 of Question 1), section 31C of the FBTAA and the 'new LAFH rules' apply generally to employees who are living away from their normal residence on or after 1 October 2012 regardless of when the allowance or benefit was received or provided.

7. Consequently, the 'new LAFH rules' will apply to the overseas accommodation provided to the Secondee during the period dd/mm/yyyy to dd/mm/yyyy as the Secondee was, during that particular period, living away from the Secondee's normal residence on or after dd/mm/yyyy.

8. As also explained previously (at paragraph 43 of Question 1), nonetheless, the requirements of paragraph 31C(a) of the FBTAA may be disregarded under Item 27 of the transitional rules, contained in Schedule 1, Part 3 of TLAA 142 provided certain conditions are met.

9. Therefore, as stated previously (at paragraph 44 of Question 1), to decide whether the conditions of section 31C of the FBTAA are met in this particular instance requires consideration of whether:

(i) the requirements of paragraph 31C(a) of the FBTAA are to be disregarded under Item 27 of the transitional rules?

(ii) the requirements of paragraph 31C(a) of the FBTAA are otherwise met, where necessary?

(iii) the requirements of paragraph 31C(b) of the FBTAA are met?

(i) are the requirements of paragraph 31C(a) of the FBTAA to be disregarded under Item 27 of the transitional rules?

10. As stated previously (at paragraph 46 of Question 1), before paragraph 31C(a) of the FBTAA can be disregarded during the applicable transitional period the following 'threshold conditions' of Item 27 of the transitional rules must, firstly, be met:

(A) the employee is neither a temporary resident nor a foreign resident of Australia.

(B) the employee was covered by an eligible employment arrangement in place before 7.30pm (AEST) on 8 May 2012.

(C) the eligible employment arrangement was not varied in a material way nor renewed from 7.30pm (AEST) on 8 May 2012 up to, and including, 30 September 2012.

(A) is the employee neither a temporary resident nor a foreign resident?

11. The Secondee is neither a temporary resident nor a foreign resident of Australia. This condition is met.

(B) is the employee covered by an eligible employment arrangement in place before 7.30pm (AEST) on 8 May 2012?

12. As explained previously (at paragraph 48 of Question 1) to meet this requirement two basic conditions must be met:

(i) there is an eligible employee arrangement; and

(ii) the eligible employee arrangement was in place before 7.30pm (AEST) on 8 May 2012.

(i) is there an eligible employment arrangement?

13. As explained previously (at paragraph 50 of Question 1), an eligible employment arrangement (as relevant here) requires that the following conditions are met:

(a) there is an 'arrangement',

(b) the employer, or an associate of the employer, commits to provide a benefit for the employee's accommodation under that arrangement;

(c) the relevant accommodation is to be provided while the employee's duties of employment require the employee to live away from the employee's normal residence.

(a) is there an 'arrangement'?

14. It is considered that the Secondment Agreement (together with the Addendum Agreement) plus the 1^st and 2^nd Extension Agreements fall within the definition of the term 'arrangement', in subsection 136(1) of the FBTAA.

15. This condition is met.

(b) is there a commitment by the employer (or associate) to provide the relevant accommodation under the arrangement?

16. As determined previously (at paragraph 55 of Question 1), under the terms of the Secondment Agreement (together with the Addendum Agreement) the Employer had 'committed itself' to provide the Secondee with the overseas accommodation. The 1^st and 2^nd Extension Agreements extend the time over which the commitment is made.

17. This condition is met.

(c) is the relevant accommodation to be provided while the employee's duties of employment require the employee to live away from the employee's normal residence?

18. This condition is met for similar reasons that it was determined previously (at paragraph 58 of Question 1) that the Secondee is required to live away from the Secondee's normal residence because of the Secondee's duties of employment.

Conclusion on whether there is an eligible employment arrangement

19. There is an eligible employment arrangement in this instance as all the required conditions are met.

(ii) was an eligible arrangement in place before 7.30pm (AEST) on 8 May 2012?

20. It was determined previously (at paragraph 62 of Question 1) that there was an eligible arrangement in place before 7.30pm (AEST) on 8 May 2012.

21. This condition is met.

(C) was the eligible employment arrangement not varied in a material way or renewed from 7.30pm (AEST) on 8 May 2012 to dd/mm/yyyy?

22. The term of the Secondment Agreement was extended by the 1^st Extension Agreement until dd/mm/yyyy. The term of the 2^nd Extension Agreement is from dd/mm/yyyy to dd/mm/yyyy.

23. Given the date of signing of the 2nd Extension Agreement was dd/mm/yyyy it was not entered into during the period from 7.30pm (AEST) on 8 May 2012 to dd/mm/yyyy.

24. This condition is met.

25. Therefore, once again, the threshold conditions of Item 27 of the transitional rules are met in this particular instance as the Secondee is neither a temporary resident nor a foreign resident of Australia is covered by an eligible employment arrangement that was neither varied in a material way nor renewed during the period from 7.30pm (AEST) on 8 May 2012 to dd/mm/yyyy.

26. Nonetheless, as previously pointed out (in paragraph 67 of Question 1), notwithstanding that the threshold conditions of the transitional rules are met in this particular instance, paragraph 31C(a) of the FBTAA may only be disregarded for one of the limited periods that constitute a transitional period for the purposes of Item 27.

27. As stated previously (at paragraph 68 of Question 1), the term 'transitional period' is defined in Item 27 of the 'transitional rules' as follows:

transitional period means the period:

(a) starting on 1 October 2012; and

(b) ending at the earliest of:

(i) 30 June 2014; and

(ii) the time the eligible employment arrangement referred to in paragraph (1)(b)...ends; and

(iii) the first time that eligible employment arrangement is varied in a material way or renewed.

28. The relevant period in this particular instance is from dd/mm/yyyy to dd/mm/yyyy.

29. The term of the Secondment Agreement (together with the Addendum Agreement) was extended by the 1^st Extension Agreement, dated dd/mm/yyyy, until dd/mm/yyyy. The 2^nd Extension Agreement extended that term from dd/mm/yyyy to dd/mm/yyyy.

30. It is considered that the entering into of the 2^nd Extension Agreement would constitute a variation or renewal of the eligible employment arrangement represented by the Secondment Agreement (together with the Addendum Agreement). This would also be the first time that the eligible employment arrangement was varied in a material way or renewed for the purposes of subparagraph (a)(iii) of the definition of 'transitional period' in Item 27 of the transitional rules.

31. Therefore, in this instance, it is only in the period from dd/mm/yyyy to the date of entering into 2^nd Extension Agreement that the employment of the employee was covered by an eligible employment arrangement that had not been varied in a material way nor renewed, had not expired and whose existing term fell within the period from dd/mm/yyyy to dd/mm/yyyy.

32. Consequently, the requirements of paragraph 31C(a) of the FBTAA can only be disregarded under Item 27 of the 'transitional rules' for the period 1 April 2013 up to the date of entering into the 2^nd Extension Agreement .

33. The requirements of paragraph 31C(a) of the FBTAA cannot be disregarded under Item 27 of the transitional rules for the period beginning on the date of entering into 2^nd Extension Agreement until 30 September 2013 (the relevant end date in this particular instance).

(ii) are the requirements of paragraph 31C(a) of the FBTAA otherwise met?

34. Paragraph 31C(a) of the FBTAA requires that:

(i) the place in Australia where the employee usually resides when in Australia is a unit of accommodation in which the employee or the employee's spouse has an ownership interest (within the meaning of the Income Tax Assessment Act 1997 (ITAA 1997)); and

(ii) that place in Australia continues to be available for the employee's immediate use and enjoyment during the period that the employee's duties of employment require the employee to live away from it.

35. Subsection 995(1) of the ITAA 1997 provides the following relevant definitions in relation to the term 'ownership interest':

ownership interest: an ownership interest:

(a) in...a ^*dwelling - has the meaning given by section 118-130; and

(b)...

dwelling has the meaning given by section 118-115.

36. Paragraph 118-130(1)(b) of the ITAA 1997 states that you have an 'ownership interest' in a dwelling you have a legal or equitable interest in the land on which it is erected or a licence or right to occupy it.

37. Subsection 118-115(1) of the ITAA 1997 gives the following definition of the meaning of the term 'dwelling':

118-115(1)

A dwelling includes:

(a) a unit of accommodation that:

(i) is a building or is contained in a building; and

(ii) consists wholly or mainly of residential accommodation; and

(b) ...

38. The Secondee owns a house in Australia which is the usual place of residence for both the Secondee and the Secondee's immediate family.

39. The Secondee's house in Australia is neither rented out nor sublet whilst the Secondee is seconded overseas and the Secondee's house continues to be available for the Secondee's immediate use and enjoyment whilst the Secondee is seconded overseas.

40. Therefore, the requirements of paragraph 31C(a) of the FBTAA are met as the Secondee owns the house in Australia where the Secondee usually resides and which continues to be available for the Secondee's immediate use and enjoyment while the Secondee is seconded overseas.

41. Consequently, the requirements of paragraph 31C(a) of the FBTAA are met for the relevant period beginning on the date of entering into 2^nd Extension Agreement until dd/mm/yyyy.

(iii) are the requirements of paragraph 31C(b) of the FBTAA met?

42. The requirements of paragraph 31C(b) of the FBTAA are met as the Secondee, and the Secondee's immediate family, intend to return to the Secondee's house in Australia at the end of the Secondee's secondment overseas.

Conclusion on whether the employee meets the requirements of section 31C of the FBTAA?

43. As determined previously (at paragraph 32), the requirements of paragraph 31C(a) of the FBTAA are disregarded under Item 27 of the transitional rules for the period dd/mm/yyyy up to the date of entering into the 2^nd Extension Agreement.

44. As also determined previously (at paragraph 41), the requirements of paragraph 31C(a) of the FBTAA are met for the relevant period beginning on the date of entering into 2^nd Extension Agreement until dd/mm/yyyy.

45. As further determined previously (at paragraph 42), that the requirements of paragraph 31C(b) of the FBTAA are met.

46. Therefore, the Secondee satisfies the applicable requirements of section 31C of the FBTAA for the period dd/mm/yyyy to dd/mm/yyyy.

(f) does the employee meet the requirements of section 31D of the FBTAA?

47. Section 31D of the FBTAA states (as relevant here):

SECTION 31D FIRST 12 MONTHS EMPLOYEE IS REQUIRED TO LIVE AWAY FROM HOME

31D(1)

31D(2)

...

48. Nonetheless, as stated previously (at paragraph 82 of Question 1), provided certain conditions are met, the requirements of section 31D of the FBTAA may be disregarded for the duration of an applicable transitional period under Item 27 of the transitional rules.

49. For similar reasons it was determined previously (at paragraph 25) that the threshold conditions of Item 27 of the transitional rules are met in this particular instance in relation to paragraph 31C(a) of the FBTAA it is considered that the threshold conditions of Item 27 of the transitional rules are also met in this particular instance in relation to section 31D of the FBTAA.

50. For similar reasons it was determined previously (at paragraph 32) that the requirements of paragraph 31C(a) of the FBTAA can only be disregarded under Item 27 of the transitional rules for the period dd/mm/yyyy to the date of entering into the 2^nd Extension Agreement, it is considered that the requirements of section 31D of the FBTAA can also only be disregarded under Item 27 of the transitional rules for the period dd/mm/yyyy up to the date of entering into the 2^nd Extension Agreement .

51. Consequently, for similar reasons it was determined previously (at paragraph 33) that the requirements of paragraph 31C(a) of the FBTAA cannot be disregarded under Item 27 of the transitional rules for the period beginning on the date of entering into 2^nd Extension Agreement until dd/mm/yyyy, it is considered that the requirements of section 31D of the FBTAA also cannot be disregarded under Item 27 of the transitional rules for the period beginning on the date of entering into 2^nd Extension Agreement until dd/mm/yyyy.

52. However, the operation of section 31D of the FBTAA may be affected in certain circumstances by Item 28 of the transitional rules, contained in Schedule 1, Part 3 of TLAA 142.

53. Item 28 of schedule 1, Part 3 of TLAA 142 states (as applicable here):

28 Transitional - first 12 months for existing arrangements

(1) This item applies if, on 1 October 2012:

(a) an employee's duties of employment require the employee to live away from the place in Australia where he or she usually resides when in Australia; or

(b) ...

(2) Treat the 12-month period referred to in subsection 31D(1) of the Fringe Benefits Tax Assessment Act 1986 as if it were the first 12 months on or after 1 October 2012 that the employee lives away from that place as so required.

54. Therefore, under Item 28 of the transitional rules, the 'first 12 months' for the purposes of subsection 31D(1) of the FBTAA notionally commences on dd/mm/yyyy (and, consequently, ends on dd/mm/yyyy) for those employees living away from their normal residence on dd/mm/yyyy due to their employment duties.

55. The application of Item 28 of the transitional rules, does not depend on whether any arrangement under which the employee was required to live away from the employee's place of residence in Australia was, or was not, an 'eligible employment arrangement' as defined in paragraph 3 of Item 27 of the transitional rules.

56. The Secondee was already living away from their normal residence on dd/mm/yyyy under the terms of the 1^st Extension Agreement. Therefore, the Secondee's 'first 12 months' for the purposes of subsection 31D(1) of the FBTAA notionally commenced on dd/mm/yyyy under Item 28 of the transitional rules and, consequently, ends on dd/mm/yyyy.

57. As the period from the date of entering into the 2^nd Extension Agreement until the dd/mm/yyyy falls within the period dd/mm/yyyy to dd/mm/yyyy this first mentioned period is within the 'first 12 months' for the purposes of subsection 31D(1) of the FBTAA.

Conclusion on whether the requirements of section 31D of the FBTAA are met

58. As determined previously (at paragraph 50), the requirements of paragraph 31D of the FBTAA are disregarded under Item 27 of the transitional rules for the period dd/mm/yyyy up to the date of entering into the 2^nd Extension Agreement.

59. As determined previously (at paragraph 57), the period from the date of entering into 2^nd Extension Agreement until the dd/mm/yyyy falls within the 'first 12 months' for the purposes of subsection 31D(1) of the FBTAA.

60. Therefore, the Secondee satisfies the applicable requirements of section 31D of the FBTAA for the period dd/mm/yyyy to dd/mm/yyyy.

(g) is the accommodation provided while the employee is undertaking travel in the course of performing the employee's duties of employment?

61. This condition is met for similar reasons it was accepted previously (at paragraph 87 of Question 1) that the relevant accommodation is not being provided while the Secondee is undertaking travel in the course of the Secondee performing the Secondee's duties of employment.

(h) will the employee give to the employer the required declaration, in the approved form, by the required date?

62. This condition is met as the Secondee will provide all necessary declarations, in the approved form, to the Employer at the required times.

Conclusion on exemption under current subsection 47(5) of the FBTAA for period dd/mm/yyyy to dd/mm/yyyy

63. The provision of the overseas accommodation to the Secondee, during the period dd/mm/yyyy to dd/mm/yyyy inclusive, is exempt under subsection 47(5) FBTAA as all the required conditions have been met.

Question 3

1. As discussed previously (at paragraph 1 of Question 2), exemption is granted under subsection 47(5) of the FBTAA where all the following conditions are met (as relevant here):