Edited version of your written advice

Authorisation Number: 1012853480876

Date of advice: 6 August 2015

Ruling

Subject: Remote area housing assistance

Question 1

Is it customary for employers in your industry to provide housing assistance to their employees?

Answer

Yes.

This ruling applies for the following periods:

1 April 2015 to 31 March 2019

The scheme commences on:

1 April 2015

Relevant facts and circumstances

You are a professional services firm.

Your firm has branches at locations that are not in or adjacent to an eligible urban area.

The employees who work in these branches reside at the locations where the branches are located.

You provide a range of housing assistance to these employees under a salary sacrifice agreement. These benefits include:

• the right to use a unit of accommodation as the employee's usual place of residence;

• the provision of residential fuel for use in connection with the employee's unit of accommodation;

• the provision of a loan benefit in relation to housing which is the employee's usual place of residence;

• the payment or reimbursement of interest incurred by an employee in relation to a loan for a dwelling that is the employee's usual place of residence;

• the payment or reimbursement of rent incurred by the employee that relates to the employee's usual place of residence; and

• the provision of property that consists of an estate or interest in land which is used by the employee as his or her usual place of residence.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 section 58ZC

Fringe Benefits Tax Assessment Act 1986 section 59

Fringe Benefits Tax Assessment Act 1986 section 60

Reasons for decision

Is it customary for employers in your industry to provide housing assistance to their employees?

The Fringe Benefits Tax Assessment Act 1986 (FBTAA) provides a range a concessions that apply to the provision of housing assistance to employees who work at a location that is not located in or adjacent to an eligible urban area.

The concessions include:

• an exemption for a remote area housing benefit under subsection 58ZC;

• a reduction in the taxable value of fringe benefits relating to the provision of remote area residential fuel under section 59;

• a reduction in the taxable value of a loan fringe benefit that arises from a remote area housing loan under subsection 60(1);

• a reduction in the taxable value of an expense payment fringe benefit that arises in respect of a remote area housing loan under subsection 60(2);

• a reduction in the taxable value of an expense payment fringe benefit that is in respect of remote area housing rent under subsection 60(2A);

• a reduction in the taxable value of a property fringe benefit where the recipients property is remote area residential property under subsection 60(3);

• a reduction in the taxable value of an expense payment fringe benefit that is in respect of remote area residential property under subsection 60(4);

• a reduction in the taxable value of a property fringe benefit that is a remote area residential property option fee under subsection 60(5); and

• a reduction in the taxable value of a property fringe benefit that is where the recipients property is remote area residential property repurchase consideration under subsection 60(6).

In general terms, for any of these concessions to apply it must be customary for employers in the relevant industry to provide the assistance to employees.

For example, paragraph 58ZC(2)(d) states:

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) …; or

(ii) …; 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;

A similar customary requirement is contained in subsection 142(2E) which contains the requirements that are common to the other remote area concessions. Subsection 142(2E) states:

For the purposes of the application of this section to a fringe benefit in relation to a year of tax in relation to an employee of an employer, the common conditions in relation to a particular period or in relation to a particular time are as follows:

(a) it is customary for employers in the industry in which the employee was employed during that period or at that time, as the case may be, to provide housing assistance for their employees;

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

(i) …;

(ii) ...; or

(iii) it is customary for employers in the industry in which the employee was employed during that period or at that time, as the case may be, to provide housing assistance for their employees.

The application of this customary requirement is discussed in Taxation Determination TD 94/97 Fringe benefits tax: what does the phrase 'customary for employers in the industry' mean in relation to the provision of fringe benefits to employees?

2. A benefit will be accepted as being customary where it is normal or common for employees of that class or job description in that industry to be provided with the same or similar benefits. It is not necessary that all or even the majority of employees in the industry receive the benefit. Where the provision of the benefit is unique, rare or unusual within an industry it would not be accepted as being customary.

3. In defining the employer's industry, this Office will accept categorisation based on any recognised industry classification system. Examples of these are the industry codes for business income used by this Office (listed in the company income tax return instructions), and Australian and New Zealand Standard Industrial Classification (ANZSIC) codes.

4. The ANZSIC has a structure comprising categories at four levels, namely Divisions (the broadest level), Subdivisions, Groups and Classes (the finest level). For example, the operations of a wine maker fall within the following categories:

 Division: Manufacturing

 Subdivision: Food, Beverage and Tobacco Manufacturing

 Group: Beverage and Malt Manufacturing

 Class: Wine Manufacturing.

It will be open for an employer to argue that their operations fall within any of the four levels of classification.

5. Employers may seek a private ruling from this Office on whether it is customary within their industry for a particular benefit to be provided. An industry group, with the written consent of employers, may also seek such a ruling.

Example

Oil Driller Pty Ltd regularly employs expatriate technicians on secondment from the parent company in the United Kingdom. These employees are provided with return travel to their UK home for themselves and their families twice a year during their secondment. It is accepted that it is customary for employees of that type to be provided with such benefits, notwithstanding that industry employees generally do not receive similar benefits.

The Macquarie online dictionary defines customary to mean:

1.  according to or depending on custom; usual; habitual.

2.  of or established by custom rather than law.

3. …

In applying this guidance it is accepted that while the majority of employees in your industry may not receive housing assistance, it is not unusual for housing assistance to be provided. For example, it is not unusual for employees of larger employees in the industry to be relocated to an interstate or overseas office and to be provided with housing assistance at the new location.

Similarly, it is accepted that it is not unique for housing assistance to be provided to employees required to live and work in a remote area.

Therefore, it is accepted that it is customary for housing assistance to be provided by employers in your industry.

However, it should be noted that the customary requirement is only one of the requirements that must be met for the concessions to apply. This ruling has not considered these other requirements and therefore, does not infer that the concessions will apply in relation to the benefits provided to your employees.