Edited version of private advice

Authorisation Number: 1012642574758

Ruling

Subject: Living Away Or Travelling

Questions

1. For the purposes of the Fringe Benefits Tax Assessment Act 1986 and in accordance with Miscellaneous Taxation Ruling MT 2030 Fringe benefits tax : living-away-from-home allowance benefits, would employee B be considered to be living away from home while in Z performing employment duties?

Answer-No

2. If In circumstances employee B is considered to be living away from home when staying in Z, under the 12 months rule

a. are the benefits in respect of the accommodation provided on and after the 01 October 2013 taxable fringe benefits because it is 12 months from the commencement of 01 October 2012 (the commencement of the new LAFHA rules)?or

b. after the expiration of 365 actual days of the provision of accommodation in the temporary location? (i.e. days away from Z when accommodation is not provided are excluded from the 12 month limitation period)

Answer- On the expiration of 365 actual days of provision of accommodation commencing 01 October 2012.

3. For the purposes of the Fringe Benefits Tax Assessment Act 1986 and in accordance with Miscellaneous Taxation Ruling MT 2030 Fringe benefits tax : living-away-from-home allowance benefits, would the employee C be considered to be living away from home while Y performing employment duties?

Answer-Yes

4. If employee C is considered to be Iiving away from home, are the travel costs paid by the employer to allow travel from home in X taxable benefits?

Answer-Yes

5. If employee C is considered to be living away from home, and the unit of accommodation is available whenever in Y, does the 12 month period expire on I May 2014 or after the expiry of 365 days of him actually using the unit for accommodation?

Answer-01 May 2014

6. If employee C is considered to be living away from home, and the cost of flights are considered to be "home to work travel", is it appropriate to reduce the taxable value in circumstances where:

a. The employer pays for a flight from Y to X when employee C is required to be in X for a genuine business need such as a meeting with the customer. If this was late in the week employee C would work from the office in X for the remainder of the working week rather than return to Y.

Answer-Yes

b. The employer pays for a flight from Y to X when employee C is required to be in X for a genuine business need such as a meeting with the customer. Employee C then stays at their X home for the evening before flying back to Y for the remainder of the week.

Answer-Yes

c. The employer pays for a booking covering flights from X to Z to Y to X where employee C needs to stay in Z overnight for meetings with staff or the customer

Answer-Yes

7. If it is appropriate to reduce the taxable value to take account of the "non-Y" travel, is it fair and reasonable to apportion the cost of the travel to take account of the dual purpose of the travel and therefore half the taxable value?

Answer-Yes

8. Are the travel costs paid by the employer for airline flights in April 2013 prior to employee C's appointment on 1 May 2013 subject to FBT?

Answer-No

This ruling applies for the following periods:

01 April 2013 to 31 March 2017

Relevant facts and circumstances

The Facts relating to Employee B

1. Employee B is employed by the employer.

2. Employee B lives in W

3. On 27 June 2012 the employer signed a two year secondment agreement. The secondment terminates on 27 June 2014.

4. Under the Agreement the employer remains responsible for employee B's salary and any tax obligations.


5. The Agreement does not specify where employee B will work.


6. While employed by the employer employee B was located in W

7. While on secondment employee B will often work from Z. When not in Z employee B will work from a variety of locations.

8. These records of employee B show that employee B spends, on average, each alternative week in Z.


9. Employee B normally spends 3 to 4 nights in Z when the employee visits.


10. For the period from 1 October 2012 to 31 March 2013, employee B spent 68 days in Z.


11. For the period I April 2013 to 31 March 2014, employee B spent 96 days in Z.


12. Employee B stays in hotels when the employee travels, B does not have a standing.

13. The employer pays for the flights to and from Z and a hire car while in Z.

The Facts relating Employee C

1. Employee C is employed by the employer.


2. On 9 April 2013 employee C was appointed with effect from 01 May 2013.


3. Prior to this appointment employee C was employed in X.


4. Employee C lives in X with their family. Though employee C's new position is located in Y and the appointment was conditional on C moving to Y within a number of years: employee C has not relocated yet. Employee C's spouse and family continue to live in X

5. The employer's business unit has its headquarters in Y.


6. The employer has offices in various locations throughout Australia.


7. The employer pays for the flights to and from Y. The employer also pays for flights to and from other work locations.


8. When employee C travels to the X before or after a trip to Y, they will use their corporate credit card. The employer directly pays the credit card provider for the expenses on the credit card issued to employee C.


9. The employer directly hires a unit Y. This unit is permanently available to employee C for use while in Y.


10. Employee C leaves their personal effects in the unit so that the employee does not have to transport them for every visit up to Y.


11. The unit is currently shared by another employee.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act (1986) section 31(D)

Fringe Benefits Tax Assessment Act (1986) section 45

Fringe Benefits Tax Assessment Act (1986) section 47

Fringe Benefits Tax Assessment Act (1986) subsection 47(5)

Fringe Benefits Tax Assessment Act (1986) section 52

Fringe Benefits Tax Assessment Act (1986) subsection 136(1)

Income Tax Assessment Act 1997 section 8-1

Reasons for decision

Are employee C and employee B travelling or living away from home?

Guidance for determining whether the employee is travelling in the course of his employment or living away from home is provided in paragraphs 35 to 43 of MT 2030 Fringe benefits tax: Living-away-from-home allowance benefits. The following paragraphs 36 to 40 discuss the criteria which indicate whether the employee is travelling or living away from home.

Distinction between travelling and living-away-from-home allowances

36. When an employee is travelling on business on behalf of an employer, expenses of travel are incidental to the proper carrying out of the employment function and do not have the character of being private or domestic expenses. As it was stated in Case No. B 84, 2 TBRD 390, " ... where the employment actually involves the duty of travelling and therefore staying away from home, the extra expenses of living at hotels, etc., together with costs of conveyance, etc., are deductible as, to that extent, they cease to be of a private or domestic nature."

37. Unlike living-away-from-home allowances, there is generally no change of employment location in relation to the payment of travelling allowances. While the expenses that they are intended to compensate for may be similar - meals and accommodation, etc., - the circumstances in which the allowances are paid are essentially different.

38. A living-away-from-home allowance is paid where the employee has moved and taken up temporary residence away from his or her usual place of residence so as to be able to carry out employment duties for a time at the new (but temporary) workplace. A travelling allowance, on the other hand, is paid because the employee is travelling in the course of performing his or her job. In the former case, there is a change of job location and an actual change of residence to a place at or near that location. In the latter, the employee does not change job locations but simply travels in order to carry out the requirements of the job.

39. Travelling allowances are often paid for comparatively short periods, exceptions being allowances paid where the employment is inherently itinerant in nature or where travelling is a regular incident of the occupation, e.g., commercial travellers, travelling entertainers, etc. Academics studying on sabbatical leave have also been held to be travelling in the course of their employment rather than living away from home and thus could receive a travelling allowance over an extended period of time.

40. The nature of an allowance is not to be determined by reference solely to the period for which it is paid. As mentioned, a travelling allowance might be paid to a commercial traveller almost continuously throughout the year whereas another employee may receive a living-away-from-home allowance only for a month or so.

41. There will be circumstances, however, when an employee is away from his or her home base for a brief period in which it may be difficult to conclude whether the employee is living away from home or travelling. As a practical general rule, where the period away does not exceed 21 days the allowance will be treated as a travelling allowance rather than a living-away-from-home allowance. For longer periods, it will be necessary to determine the nature of the allowance with the guidance provided by this Ruling.

42. An employee travelling in the course of employment ordinarily would not be accompanied by his or her spouse and family. On the other hand, it is more common for the spouse and children of an employee who has temporarily changed job locations and is living away from the usual place of residence to have his or her family living at the new location.

43. That is not to say that an unaccompanied employee should always be treated as travelling and an accompanied one regarded as living away from home. While those factors might be indicative of the nature of the employee's absence, the tests for determining the purpose of an allowance are as previously explained. To illustrate the point, an employee who lives during the working week in the country town where his permanent job is located but who travels perhaps several hundred kilometres to live during weekends with his wife and children in the family home located in another town would be, during the week, living away from home. So, too, would a married public servant based in a capital city who is seconded for six months to carry out a special task interstate in circumstances where his family stays behind in the family home. It is not where the family is that determines the nature of the allowance but where the employee is in relation to the usual place of residence and whether, on the facts, the employee can be said to be travelling on the job or living away from home.

Employee B's situation having regard to paragraphs 36 to 43 MT 2030

Employee B secondment agreement does not specify the secondment work location. While on secondment employee B would often work from the Z and when not in Z would work from a variety of locations including his home in W.

Employee B has not changed their residence to Z and taken up temporary residence in Z away from their usual place of residence in W so as to be able to carry out secondment duties. The circumstances suggest that employee B's intention is to maintain a home in W and continue to live there but travel to Z every alternate week and spend 3 to 4 days when employee B travels to Z. The rest of the working days in the year are spent in W.

On average Employee B only spends 3 to 4 nights each alternative week in Z. Employee B has not changed their job location but simply travels to Z in order to carry out the requirements of the job.

There is no change of job location to Z and no actual change of residence temporarily or permanently to Z from usual place of residence in W. There is no regular rented or leased place of residence in Z that is available to use when in Z. Employee B stays in hotels when travelling. Employee B does not have a standing booking in Z. It was not a condition of the secondment that employee B relocate to Z. As pointed out above the employee simply travels to Z in order to carry out the requirements of the job.

Employee B spends comparatively short periods in Z. For the period from 1 October 2012 to 31 March 2013, employee B spent only 68 days (out of 181 days) in Z. For the period I April 2013 to 31 March 2014, employee B spent only 96 (out of 364 days) days Z. Employee B spends, on average, 3 to 4 nights each alternative week in Z. The total days spent in Z in the FBT years would consist of the addition of broken up periods of 3 to 4 days each alternative week. Travelling to Z to perform duties is a regular incident of employee B's secondment.

Although paragraph 40 MT 2030 above indicates that whether an employee is travelling or living away from home is not to be determined by reference solely to the period away, the nature and pattern of the employee's travels and the comparatively fewer working days spent in Z than in W suggest that employee B is travelling and not living away from home.

Accordingly, in the circumstances employee B would be considered to be travelling on work and not living away from home.

Employee C's situation having regard to paragraphs 36 to 43 MT 2030

Employee C's new employment position is located in Y. Employee C has taken up temporary residence in Y away from their usual place of residence in X so as to be able to carry out the employment duties of his new position. Currently the arrangement is to travel to Y during the working week and use the flat while in Y during the working week and return home to X at the weekends. Employee C's family has not moved to Y, the residence in X is still maintains and employee C returns there to visit family for the weekends.

There is a change of job location and an actual change of residence temporarily to Y. It was a condition of the offer of employee C's new position to relocate to Y. Currently instead of moving usual place of residence to Y, employee C has chosen to keep usual place of residence in X and commute to the Y flat. The position does not require employee C to travel every weekend between home in X and Y. It was employee C's choice and therefore the travel is home to work private travel and not travel on work.

By contrast, some of the trips directly to X from Y or via other locations may be considered travelling on work, if work is performed in X. Similarly trips from X to Y directly or via other locations may be considered travelling on work.

Employee C's trips between the home in X and Y, over the weekends as a result of the personal choice to maintain their usual place of residence X and visit the employee's family, are private travel because there is no business (work) purpose for the trips.

Although paragraph 40 MT 2030 states the nature of the allowance is not to be determined solely by reference to the period for which it is paid, it is relevant to note that employee C's new position is not for a short period. The contract of employment states it is a condition of employee C's new position that the employee relocate to Y, and is to be based in Y from the time of taking up the new position.

In Case B47 2 TBRD 201, the taxpayer maintained a home in Perth where his wife lived for a period of 6 years while he worked in a town 130 miles away, staying in hotel accommodation and returning home each weekend and for holidays. The Board of Review found that his home in Perth was more permanent and was his "usual" place of abode.

Employee C maintains a usual place of residence in X and continues to use it as a home, has not yet relocated to Y and returns home to X over the weekends. Under the circumstances and in line with the above Taxation Board of Review decision, employee C's X residence would be considered more permanent and a usual place of residence. Employee C merely lives in the Y flat during the working to carry out their employment duties.

Paragraph 43 of MT 2030 makes it clear that it is not where the family is that determines the nature of the allowance but where the employee is in relation to the usual place of residence and whether, on the facts, the employee can be said to be travelling on the job or living away from home. Generally employee C lives during the working week in Y where the permanent position is located but travels to X to live during the weekends with family in the family home. Therefore employee C is considered during the week, to be living away from home.

The above conclusion is strengthened by the fact that:

• Employee C's position is located in Y, the employee spends more working days there than any other location including X, has not changed their usual place of residence but lives in the flat during the week in Y and travel back to X at the weekend to be with the family in the employee's normal residence in X.

• Employee C's `travel records show that in the 44 weeks in the 2014 FBT year since the promotion, employee C was actually present in Y on one or more days in 28 of the 44 weeks. Employee C's travel records indicate that of the 28 weeks excluding the weekends:

19 weeks employee C was in Y more days than in any other location he travelled to;

9 weeks employee C was in other locations more days than in Y.

Considering that of the 44 weeks in the new position employee C was actually present in Y on one or more days in 28 of the 44 weeks and in 19 of those 28 weeks was in Y more days than in any other location he travelled to, it is concluded that employee C is required to be away in Y frequently and for periods during the working week more than in X (i.e. excluding the weekends) or any other work location. Accordingly, in the current circumstances for the reasons stated above, employee C is considered to be living away from home during the working week so as to be able to carry out employment duties at a new workplace.

Employee C's Travel Costs in Question 4

Will a fringe benefits tax liability arise in respect of the payment of travel costs for from Employee C's home in X?

The travel costs in question include the costs of taxi fares between employee C's home and X airport and the costs of flights out from X airport.

When employee C travels to X airport before or after a trip to Y employee C would use a corporate credit card. The employer directly pays the credit card provider. Hence in accordance with the definition of fringe benefit in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA), a fringe benefit is provided.

Expenditure is not incurred by an employee who uses a corporate credit card issued to an employer to obtain a benefit from a supplier. In this circumstance, section 150 FBTAA deems:

1. the supplier to have supplied the benefit in respect of the employee's employment under an arrangement with the employer, and

2. the employer has incurred the expenditure of the supplier of the benefit.

Where an employer provides an employee with a credit card that was issued to the employer but able to be used by the employee, a residual benefit under section 45 FBTAA will arise unless another category of benefit applies when the card is used by the employee. For example, the purchase of food or drink will be property benefit unless an election is made by the employer to treat the expenditure as meal entertainment. A residual benefit will arise if the employee uses the corporate credit card in most other circumstances, for example, where it is used to pay for services such as recreation, taxi fares and airfares.

Alternatively an employee may be provided with an expense payment benefit under section 20 of the FBTAA if:

(a) the employer pays an amount that the employee or an associate has contracted to pay or

(b) the employer reimburses an employee for expenditure that the employee or an associate has contracted to pay

In both instances the employee or associate must have incurred the expense that is the subject of the payment or reimbursement. For example, an expense payment benefit does not arise if the employer allows an employee to use a corporate credit card since the employee is not obligated to the issuer of the card. As stated above, in the circumstances a residual benefit will arise.

Employee C's travel costs are not considered incurred by the employee as the travel costs are paid for using the corporate credit card. The obligation to pay the supplier is incurred by the employer. The payment of the travel costs referred to above using the corporate credit card will result in residual benefits under section 45 FBTAA.

In determining whether a fringe benefits tax liability will arise from the provision of these residual benefits it is necessary to consider:

(a) whether the benefit is an exempt benefit; and

(b) whether the expenditure would be otherwise deductible to the employee

Note: Where a benefit is an exempt benefit a fringe benefit does not arise.

Will the payment of the taxi fare be an exempt benefit?

In considering whether the payment of the taxi fare is an exempt benefit it is relevant to consider is section 58Z FBTAA.

Under section 58Z FBTAA a benefit that arises from taxi travel by an employee will be an exempt benefit if:

• the travel is a single trip beginning or ending at the employee's place of work; or

• the travel is the result of sickness or injury to the employee and the whole or part of the journey is directly between the employee's place of work, the employee's residence or any other place that it is necessary, or appropriate for the employee to go as a result of the sickness or injury.

As neither of these conditions apply to the residual benefit arising from the taxi travel the benefit will not be exempt residual benefit under section 58Z FBTAA.

Will the provision of flights be an exempt benefit?

The provision of the flights constitute residual benefits. A residual benefit will be an exempt residual benefit where the conditions in section 47 of the FBTAA are satisfied. None of these exemptions apply to the residual benefits arising from the provision of flights to employee C as the circumstances involved do not meet the requirements for any of the exemption section 47 FBTAA.

Would travel costs in question 4 be otherwise deductible to the employee?

In calculating the taxable value of a residual fringe benefit section 52 FBTAA enables the taxable value of a residual fringe benefit to be reduced by the amount that an employee would have been entitled to claim as an income tax deduction if the employer had not provided the benefit and the employee had paid for the benefit.

A number of significant court decisions have affirmed the position that travel between home and place of employment is ordinarily private travel. While travel to work is a necessary pre-requisite to earning income it is not undertaken in the course of earning income. In other words travel to work and back is private.

Generally, the expenses of travel between work and home are not deductible (Lunney & Haley v. FC of T (1958) 100 CLR 478; (1958) 11 ATD 404 (Lunney's Case)). For an expense to satisfy the deductibility tests in section 8-1 Income Tax Assessment Act 1997 (ITAA 1997), it must have the essential character of an outgoing incurred in gaining or producing assessable income. The general rule, as discussed in Taxation Ruling IT 2199 Income Tax: Allowable deductions: travelling expense(s) between places of employment and/or place(s) of business, is that travel between home and a person's regular place of employment or business is ordinarily private travel. Home to work travel is generally not considered travel in the course of gaining or producing assessable income.

Employee C chose not to move to Y (location of their employment) but instead to travel between there and home over the weekend. It was employee C's personal decision to retain a family home in X and travel to and from Y. There was no requirement for the employee to continue to reside in X and travel to and from Y over the weekends. The travel is undertaken to enable the employee to either travel from the usual place of residence in X to the place of employment in Y, or to return to the usual place of residence over the weekends. There is no business purpose/need involved. Therefore, the travel is not on work but to work.

Hence, the travel costs between employee C's usual place of residence (C's home) in X and their flat in Y would be considered incurred to enable the employee to get to work and back. This travel is essentially home to work travel and back. The essential character of these travel costs is private. This is on the understanding that there is no work being performed in X. Where work is being performed the deductibility of the travel expense is explained in the response to question 6.

Accordingly, the travel costs referred to in Question 4 are not considered to be incurred in the course of the employee's employment. They were not incurred in the performance of the employment duties of the employee. Rather, they arise from the employee's decision to return to the family home and family each weekend. They would be considered to have been incurred before or after the performance of employment duties and therefore not otherwise deductible to the employees.

This conclusion is consistent with the decisions in FC of T v Toms 89 ATC 4373 and in F.C. of T. v. Charlton 84 ATC 4415 as the expenditure incurred in commuting between X and Y arise from the employee's decision to maintain a usual place of residence in X but live in Y. This choice was dictated not by work requirements but by private considerations.

As the travel costs are not incurred for a work related purpose, the otherwise deductible rule cannot be applied to reduce the taxable value of the residual benefits.

Accordingly, the payment of the taxi fare using the corporate credit card from employee C's home to X Airport and the costs of flights from X airport will give rise to residual fringe benefits and be subject to FBT.

Would travel costs in question 6 be otherwise deductible to the employee?

As stated above the taxable value of a residual benefit may be reduced in accordance with the 'otherwise deductible rule set out in section 52 FBTAA. Broadly, this means that the taxable value may be reduced by the amount that an employee would have been entitled to claim as an income tax deduction if the employer had not provided the benefit and the employee had paid for the benefit.

An expense is deductible under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) when it has the essential character of an income-producing expense. However, expenses of a private or domestic nature are not deductible under this section.

There have been numerous court cases regarding the deductibility of airfares expenditure for overseas travel involving both a business and private purpose. These cases have been decided having regards to the purpose of the travel. There are circumstances where apportionment under section 8-1 of the ITAA 1997 is appropriate where the travel achieves both a business and a private end.

Where more than one purpose is achieved by incurring travel expenditure for example, the trip has both a business and a private purpose, an apportionment is required between the business and private purposes. Support for this view can be found in court decisions where apportionment was considered appropriate because neither the business nor private purpose was significantly dominant. In the vast majority of these cases a straight forward 50/50 apportionment between business and private purposes was considered appropriate.

In Case R13, 84 ATC 168, the taxpayer, who was a dentist, spent nearly six weeks overseas. Only five days of that time was spent at a Dental Congress, the rest being spent sightseeing. The Commissioner apportioned the airfares on a time basis allowing the taxpayer a 5/40ths deduction. The Board found that as the trip was undertaken by the taxpayer with two objects in mind (attending the Congress and having a holiday), both of which were of equal weight, the taxpayer should be allowed a 50% deduction.

In Case A48, 69 ATC 282 Taxpayer, a pharmaceutical chemist, claimed a deduction for part of the cost of fares and accommodation incurred during a six months' overseas trip undertaken for the dual purpose of attending pharmaceutical conferences and having a holiday. He claimed air fares from Sydney to London. The conferences were held near Paris and at Blackpool. The Commissioner allowed some expense but disallowed the fare to London. Before the Board, the Commissioner sought to justify the assessment on the basis that of the total amount the airfare was expenditure of a private nature. By majority decision the trip having a dual purpose, one half of the actual fare was allowed.

In Case R75, 84 ATC 527. In that case out a total of about 33 days a medical technologist devoted 07 days to private activities. He was employed as the head of the immunology department in a large medical practice was allowed a deduction for the full cost of airfares to Europe where he attended a conference and visited hospitals, etc., even though he also took the opportunity to have a week's holiday in Athens.

Paragraph 69 Taxation Ruling TR 95/9: Income tax: employee lawyers - allowances, reimbursements and work-related deductions states:

If the dominant purpose in incurring the costs is the attendance at the conference, seminar or training course, then the existence of any «private» activity would be merely «incidental» and the cost would be fully deductible. If the attendance at the conference, seminar or training course is only incidental to a private activity (e.g., a holiday) then only the costs directly attributable to the conference, seminar or training course are an allowable deduction. The cost of accommodation, meals and «travel» directly relating to the «private» activity is not allowable under subsection 51(1) of the Act.

In considering the scenarios in question 6, the flights under scenarios (a), (b) and (c) can be distinguished from the flights between X and Y in question 4 where there was no work requirement for employee C to travel from Y to X and then return to Y after spending the weekend with the family.

Under scenarios (a) and (b) the travelling is undertaken to enable the employee to be in X for a business related purpose. Under scenario (c) Z leg of the travel is undertaken to enable the employee to be in Z for a business related purpose. Because under these three scenarios the travel achieves the dual purpose of carrying out employment duties and a private purpose, it is considered to be travel partially on work (travel in the course of undertaking work duties) and partially for a private purpose.

The travel under scenario (a) is considered to have the dual purposes of business and private because it is employee C's choice to spend the weekend with the family in X. However, although it could be said that the trip under scenario (b) has a dual purpose, because employee C stays overnight with the family, the better conclusion is that either there is only one purpose, or that the overwhelming dominant purpose is business. Accordingly, under scenario (a) the full cost of the travel from Y to X and return should be apportioned due to the dual purpose of the trip. However, under scenario (b) the full cost of the travel from Y to X and back would be deductible as the overwhelming purpose of the trip was business.

Under scenario (c) the employer pays for a booking covering flights from X to Z to Y to X where employee C stays overnight in Z for meetings with staff and or the customer. This travel could be considered having a dual purpose because of the y to X leg. The Y to X leg of the travel would be treated as having a private nature unless it was predominantly for a work purpose.

Accordingly, the cost of the flights should be apportioned. For administrative purposes, it would be acceptable to apportion 50% of the cost of the business trip.

By contrast under the scenario in question 4 the travel is undertaken to enable the employee to either travel from the usual place of residence in X to the place of employment in Y, or to return to the usual place of residence. There is no business purpose involved. Therefore, under the scenario in question 4 as stated before, the travel is not on work but to work from C's home in X or back to their home from Y.

Accordingly, in summary, under the otherwise deductible rule as provided in section 52 FBTAA, the taxable value of the residual fringe benefits in respect of the travel costs can be reduced as follows:

a. under scenario (a) 50% of the total cost of the travel from Y to X and back to Y from X

b. under scenario (b) 100% of the total cost of the travel from Y to X and back to Y from X

c. under scenario (c) 50% of the total cost of the travel from X to Z to Y to Z

Would travel costs in question 7 be otherwise deductible to the employee?

This question relates to scenario (c) in question 6 and the reasons are provided in the reasons for scenario (c) question 6 above.

Would travel costs in question 8 be otherwise deductible to the employee?

Prior to taking up his appointment on 01 May 2013 employee C was not living away from their usual place of residence in X. Employee C's travel prior to the appointment had a business need/purpose. Consequently the travel to Y in connection with the handover from the former position holder and other work duties is travel in the course of carrying out their employment duties and not considered private home to work travel. There is no private purpose the essential character of the expenditure is business.

Therefore Employee C's travel expenses for airline flights prior to his appointment are otherwise deductible under section 8-1 ITAA 1997 thus reducing the taxable value of the residual fringe benefits to nil.

When does the 12 month period living away from home end

One of the conditions for the concessional treatment of LAFHA and LAFHA benefits is the 12 month period set out in section 31(D) FBTAA.

Section 31(D) FBTAA provides that the fringe benefit provided has to relate to all or part of the first 12 months that an employee is living away from home in Australia for the purposes of their employment. The 12 months do not have to be consecutive.

The employer can choose to pause the 12-month period - for example, you may choose to pause the period because the employee is taking leave, such as annual leave, long service leave or sick leave. This gives you the flexibility to pause the period when circumstances arise in which it is appropriate and beneficial to do so.