Edited version of your private ruling

Authorisation Number: 1012550645128

Ruling

Subject: Provision of accommodation

Question 1

Will the provision of residential accommodation to The coordinators, for private purposes, constitute a fringe benefit under the FBTAA in the circumstances described?

Answer

Yes

This ruling applies for the following periods:

01/04/2013 to 31/03/2017

The scheme commences on:

01/09/2012

Relevant facts and circumstances

The organisation has commenced a project aimed at increasing its membership.

To achieve its aim the organization has allowed the project workers to use a house it owns as their residence and to carry out the project.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 Section 58ZC

Fringe Benefits Tax Assessment Act 1986 Subsection 136(1)

Fringe Benefits Tax Assessment Act 1986 Subsection 137(1)

Reasons for decision

Summary

The provision of the right to live in the manse would constitute a housing fringe benefit under section 25 FBTAA as the coordinators are regarded as employees of the provider and therefore the provision of the accommodation is in respect of employment.

Detailed Reasoning

The term 'benefit' is very broadly defined in subsection 136(1) FBTAA. It includes any right, privilege, service, or facility. Therefore the right to use the manse as residential accommodation is a benefit within the meaning of term as defined in subsection 136(1) FBTAA.

Before a benefit will be subject to FBT, the benefit must be a 'fringe benefit' as defined in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA). In general terms, under the FBTAA, a benefit provided to an employee, or associate of an employee, will be a fringe benefit if it is provided by their employer, or associate of the employer, in respect of employment, and is not an exempt or excluded benefit.

The term 'employee' as per subsection 136(1) of the FBTAA means current employee, or a future employee or a former employee.

The term 'current employee' is defined in subsection 136(1) FBTAA to be a person who receives, or is entitled to receive, salary or wages.

It is noted that how an individual worker is described does not determine their status as employee, independent contractor or volunteer of an organisation for tax purposes.

The coordinators are not paid or entitled to receive salary and wages. Therefore, at first instance they do not fit the definition of an employee and the benefit is not in respect of employment.

However, subsection 137(1) of the FBTAA deems a person who receives a not insignificant benefit to have received salary and wages. This in turn deems them an employee as defined in subsection 136(1) FBTAA, and the benefit to have been provided in respect of employment and constitute a fringe a fringe benefit for FBTAA purposes.

As the private use of the manse is more than incidental and its accommodation value not insignificant because the coordinators have use of the manse for the full duration of their involvement in the project, paragraph 137(1)(c)(i) applies to deem the benefit (use of the manse as a private residence) as salary or wages received by the coordinators. This in effect would bring them within the meaning of an employee as defined in subsection 136(1) FBTAA, and make the benefit in respect of employment and a fringe benefit for FBTAA purposes.

Is the accommodation provided a remote area housing benefit?

As the address of the house is not in a remote area as provided in section 58ZC FBTAA, it would not qualify as an exempt remote area housing benefit.

Conclusion

The project workers have been determined to be employees

The accommodation is provided in respect of their employment.

The provision of accommodation is not an exempt benefit.

The provision of accommodation is a housing fringe benefit.