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Edited version of your private ruling
Authorisation Number: 1012520301919
Ruling
Subject: Remote area holiday transport fringe benefits subject to ceiling
Question 1
Is the 50% reduction for remote area holiday transport fringe benefits applied before employee contributions are deducted?
Answer
Yes.
This ruling applies for the following periods:
1 April 2007 to 31 March 2013
The scheme commences on:
1 April 2007
Relevant facts and circumstances
You are a not for profit company that provides town administration and municipal services.
You are considered to be a remote location according to the ATO fact sheet Fringe benefits tax - remote areas.
You provide your employees with a remote area holiday transport fringe benefit and apply the 50% reduction for remote area holiday transport subject to ceiling before employee contributions are deducted.
Relevant legislative provisions
Fringe Benefits Tax Assessment Act 1986 subsection 60A(1).
Fringe Benefits Tax Assessment Act 1986 section 143.
Reasons for decision
Your employees work in a remote area and you provide a remote area holiday transport fringe benefit to them in respect of the costs of their holiday transport.
Section 143 of the FBTAA defines a remote area holiday transport fringe benefit as a benefit that meets the costs of holiday transport (or meals and accommodation en route during travel), and are provided in accordance with an award or industry custom to an employee who works in a remote area.
Subsection 60A(1) of the FBTAA provides a reduction of taxable value for remote area holiday transport fringe benefits subject to ceiling and states that:
Where one or more remote area holiday transport fringe benefits in relation to an employer in relation to a year of tax relate to a particular employee of the employer and to a particular holiday for a particular family member, the amount (in this subsection called the ``gross taxable value'') that, but for this subsection and section 62, would be:
(a) so much of the taxable value of that fringe benefit as is attributable to transport, meals or accommodation in relation to the holiday for the family member; or
(b) so much of the sum of the taxable values of those fringe benefits as is attributable to transport, meals or accommodation in relation to the holiday for the family member;
as the case requires, in relation to that year of tax, shall be reduced by:
(c) 50% of the gross taxable value; or
(d) 50% of the benchmark travel amount in relation to that fringe benefit, or in relation to those fringe benefits, in relation to the holiday for the family member;
whichever is the less.
Therefore the gross taxable value of the remote area holiday transport fringe benefit is the sum of the taxable value of the fringe benefits attributable to transport, meals or accommodation, in relation to the holiday, for the family member(s).
The value of that benefit is then reduced by the lesser of either 50% of the gross taxable value of the benefit or 50% of the benchmark travel amount that would be applicable to that benefit.
Where an employee makes a contribution towards the cost of providing the fringe benefit, chapter two of Fringe benefits tax - a guide for employers (NAT 1054) states that the taxable value of the fringe benefit is reduced by the amount of that contribution.
Therefore, under subsection 60A(1) of the FBTAA, the 50% reduction for a remote area holiday transport fringe benefit subject to ceiling is applied on the gross taxable value before any employee contributions are deducted.