Edited version of your written advice

Authorisation Number: 1012741154023

Ruling

Subject: Remote Area Housing Benefit Exemption

Question 1

Is the provision of housing to employees, an exempt benefit under subsection 58ZC (1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA 1986) as it is a remote area housing benefit?

Answer

Yes

This ruling applies for the following periods:

01 April 2014 - 31 March 2015

The scheme commences on:

01 April 2014

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

You operate and carry on a business and your headquarters is in a city in an Australian state.

You have acquired and carry on business in areas in an Australia state.

You are providing a unit of accommodation to your employees during the year of tax at arm's length; and you consider the provision of such residential accommodation as necessary for the purposes of sub-section 58ZC (2) (d) (i)(ii)(iii)

That locality where the residential accommodation is provided is in a locality which is designated a remote area as per ato.gov.au and search for QC 25906)

You were given a favourable ruling on the same arrangement and you claim the circumstances, the remote locality and reasons for the provision of the benefits during the years of tax subject to this ruling, remain identical and the same.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 Section 25

Fringe Benefits Tax Assessment Act 1986 Section 136(1)

Fringe Benefits Tax Assessment Act 1986 Section 58ZC

Fringe Benefits Tax Assessment Act 1986 Subsection 58ZC(1)

Fringe Benefits Tax Assessment Act 1986 Subsection 58ZC(2)(i)(ii(iii)

Fringe Benefits Tax Assessment Act 1986 Section 140

Fringe Benefits Tax Assessment Act 1986 Subsection 140(1)(a)(b)

Reasons for decision

You are providing residential accommodation to your employees, which is located in the an Australia state and in an area which is not at a location in or adjacent to an eligible urban area. The accommodation you provide to your employees, is to allow your employees to use the premises as their usual place of residence and it is necessary and customary in the industry you operate.

Within the FBTAA1986 there are thirteen different categories of benefits. Each category has its own valuation rules and most categories specify certain benefits that are exempt benefits.

Section 25 of the FBTAA 1986 provides that a housing benefit arises from the subsistence of a housing right granted by the provider to the recipient during the whole or part of a year of tax.

Sub-section 58ZC(1) of the FBTAA 1986, provides that a housing benefit that is a remote area housing benefit is an exempt benefit.

As you are providing your employees with the use of residential premises, to be their usual place of residence, the benefit will be a housing benefit.

In determining whether the housing benefit will be exempt it is first necessary to determine and confirm whether the housing benefit provided is in a remote area and can be accepted as a remote area housing benefit for the purposes of the application of section 58ZC and sub-sections 140(1) and (3) of the FBTAA 1986.

Whether the housing benefit provided, is a remote area housing benefit to qualify for exemption.

Under sub-section 58ZC(1) of the FBTAA 1986, a housing benefit that is a remote area housing benefit, is an exempt benefit.

Subsection 58ZC(2) of the FBTAA 1986 sets out the conditions that need to be satisfied for a housing benefit to be a remote area housing benefit. It states

A housing benefit in relation to an employer for a year of tax and for a unit of accommodation, being a benefit provided to an employee of the employer in respect of the employee's employment, is a remote area housing benefit if:

(a) during the whole of the tenancy period, the unit of accommodation was located in a State or internal Territory and was not at a location in, or adjacent to, an eligible urban area; and

(b) during the whole of the tenancy period, the recipient was a current employee of the employer and the usual place of employment of the recipient was not at a location in, or adjacent to, an eligible urban area; and

(d) it would be concluded that it was necessary for the employer, during the year of tax, to provide, or to arrange for the provision of, residential accommodation for employees of the employer because:

(i) the nature of the employer's business was such that employees of the employer were liable to be frequently required to change their places of residence; or

(ii) there was not, at or near the place or places at which the employees of the employer were employed, sufficient suitable residential accommodation for those employees (other than residential accommodation provided by or on behalf of the employer); or

(iii) it is customary for employers in the industry in which the recipient was employed during the tenancy period to provide residential accommodation for their employees free of charge or for a rent or other consideration that is less than the market value of the right to occupy or use the accommodation concerned; and

(e) the recipients overall housing right was not granted to the recipient under:

(i) a non-arm's length arrangement; or

(ii) an arrangement that was entered into by any of the parties to the arrangement for the purpose, or for purposes that included the purpose, of enabling the employer to obtain the benefit of the application of this section.

To summarise, the conditions to be met are:

• the accommodation is in a remote area

• the usual place of employment of the employee is in a remote area

• it is necessary for the employer to provide, or arrange for the provision of residential accommodation for employees for one of the following three reasons:

• the nature of the employer's business is such that employees are liable to move frequently from one residential location to another, or

• there is insufficient suitable residential accommodation otherwise available at or near the place where the employee is employed, or

• it is customary for employers in the employer's industry to provide free or subsidised accommodation for employees, and

• the housing benefit is not granted to the employee under:

• a non-arm's length arrangement, or

• an arrangement entered into by any of the parties for purposes that included the purpose of enabling the employer to obtain the benefit of the application of the exemption

Is the accommodation located in a remote area?

By reference to your submission and the information you provided that the residential accommodation is provided is in a locality which is designated a remote area (as per ato.gov.au and search for QC 25906), it is accepted the housing benefit provided is a remote area housing pursuant to the provisions of sub-section 58ZC(2) of the FBTAA 1986 and therefore is an exempt benefit under sub-section 58ZC(1) of the FBTAA 1986.