Edited version of your written advice

Authorisation Number: 1012865353059

Date of advice: 24 August 2015

Ruling

Subject: Fringe benefits tax

Question 1

Is X your employee for the purpose of subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) as a result of living in the First Dwelling to care for the livestock?

Answer

No

Question 2

If X is your employee, have you provided a fringe benefit to X for the purpose of subsection 136(1) of the FBTAA during the years ended 31 March 2012, 31 March 2013, 31 March 2014, 31 March 2015 and 31 March 2016 (inclusive)?

Answer

Not applicable

Question 3

If a fringe benefit has been provided to X during the 2012 to 2016 FBT years, is the fringe benefit provided to X a housing fringe benefit pursuant to Part III, Division 6 of the FBTAA?

Answer

Not applicable

Question 4

If a fringe benefit has been provided to X during the 2012 to 2016 FBT years, and that fringe benefit is not a housing fringe benefit, what type of fringe benefit has been provided to X?

Answer

Not applicable

This ruling applies for the following periods:

Year ended 31 March 2012

Year ended 31 March 2013

Year ended 31 March 2014

Year ended 31 March 2015

Year ended 31 March 2016

The scheme commences on:

The scheme has commenced

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 and your spouse are the sole shareholders of a company that employs X.

Your spouse acquired a property (the Property) and is the registered owner.

Your spouse own several livestock and they live on the Property.

There are two dwellings on the Property, the Dwelling that you currently live in and another that you lived in previously (the First Dwelling).

You intended to have a livestock-minder live in the First Dwelling once you moved into your current house.

You and your spouse need someone to reside on the Property to look after your livestock if you both are to be away for more than 18 hours as:

• The livestock needs attention every morning and evening. In addition to the usual tasks of general care, feed preparation and stable cleaning, there are particular tasks due to the climate. Because of this you spend at least an hour each morning and afternoon looking after the livestock.

• The Property is somewhat remote.

• Access to the Property can be cut off at short notice. A few times a year access will be cut off and will be affected for less than 24 hours, but in the years you have lived on the Property there have been several occasions where access has been affected by the best part of a week.

The first minder

Previously your spouse's friend B who had experience with the animals, came, and stayed on the Property when you needed to be away.

No payment was provided to B to stay and look after the animals and B did not pay to stay on the Property.

B was supposed to move into the First Dwelling once you had moved into the current house.

When you and your spouse moved to the current house B's circumstances had changed and it was no longer an option for B to move into the First Dwelling.

You and your spouse still wanted someone to reside in the First Dwelling to care for the animals and provide peace of mind. You did not believe there would be many candidates.

The second minder

You and your spouse asked X who was working for the company to live in the First Dwelling to be the resident animal-minder.

X had been working on a full time basis for the company. X proved to be an honest and trustworthy individual in this role and had the required experience with animals.

X accepted the offer to stay in the First Dwelling to be the minder.

You and your spouse do not charge X rent to stay in the First Dwelling and do not pay X any form of payment for animal-minding.

There is no lease or any other documentation with respect to X occupying the First Dwelling.

X does not have a set timetable or schedule as to how often or when X is required to care for the livestock. However, the animal-minding is carried out before and after work on weekdays and as and when required on the weekends.

X's wage and employment conditions with the company did not change as a result of moving into the First Dwelling. X's wage and employment conditions would not change if X chose to stop being the resident animal-minder and move out of the First Dwelling.

In the event X ceases employment with the company, you and your spouse would wish X to remain living in the First Dwelling as X is now very experienced in caring for the animals and finding another suitable minder would be difficult.

The nature of the arrangement to care for the animals between X and you and your spouse is private and domestic and independent of any business otherwise conducted by you and your spouse.

In the past 10 months X has minded the animals on approximately 60 days.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 Subsection 136(1)

Fringe Benefits Tax Assessment Act 1986 Subsection 137

Reasons for decision

While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.

Question 1

Summary

Section 137 of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) does not apply such that X is considered to be your employee for the purposes of the FBTAA.

Detailed reasoning

An employee is defined in subsection 136(1) of the FBTAA to be:

a current employee

a future employee, or

a former employee.

Subsection 136(1) of the FBTAA also sets out that a current employee is someone who receives, or is entitled to receive, salary or wages.

Section 137 of the FBTAA further expands this to include persons who receive non-cash remuneration in circumstances where the person would have been treated as an employee if the non-cash remuneration had been received by way of a cash payment.

Subsection 137(1) states:

For the purpose only of ascertaining whether a person is an employee or an employer within the meaning of this Act, where:

(a) a benefit is provided by a person (in this subsection referred to as the first person) to, or to an associate of, another person (in this subsection referred to as the second person);

(b) but for this subsection, the benefit would not be regarded as having been provided in respect of the employment of the second person; and

(c) either of the following conditions is satisfied:

(i) if the benefit were provided by the first person by way of a cash payment to the second person, the payment would constitute salary or wages paid by the first person to the second person;

(ii) all of the following conditions are satisfied:

(A) subparagraph (i) does not apply in relation to the benefit;

(B) the first person is an associate of a third person or the benefit is provided under an arrangement between the first person and a third person;

(C) if the benefit were provided by the third person by way of a cash payment to the second person, the payment would constitute salary or wages paid by the third person to the second person;

a definition in subsection 136(1) applies as if the benefit were salary or wages paid to the second person by:

(d) in a case to which subparagraph (c)(i) applies - the first person; or

(e) in a case to which subparagraph (c)(ii) applies - the third person.

In paragraph (a) the first person is the provider of a benefit. The benefit in this situation is the provision of accommodation for X in the First Dwelling. As you are not the registered owner of the Property, you have not provided the benefit to X.

We consider that subparagraph 137(1)(c)(i) of the FBTAA is satisfied for the provider of the benefit and therefore, subparagraph 137(1)(c)(ii) of the FBTAA cannot be applied to you. The result of this is that X is not your employee for the purposes of the FBTAA.