Edited version of your written advice

Authorisation Number: 1012874398077

Date of advice: 24 September 2015

Ruling

Subject: Fringe benefits tax: work-related preventative health care

Question

Is the participation of an employee in a group exercise class provided by the employer at the on-site facility an exempt benefit under subparagraph 58M(c)(iii) of the Fringe Benefits Tax Assessment Act 1986 if the participation occurs as a result of a referral by the medical practitioner located on the business premises?

Answer

Yes

This ruling applies for the following periods:

1 April 2015 to 31 March 2016

1 April 2016 to 31 March 2017

1 April 2017 to 31 March 2018

1 April 2018 to 31 March 2019

1 April 2019 to 31 March 2020

Relevant facts and circumstances

Due to the nature of your business activities, you have a qualified medical practitioner located on your business premises.

The medical practitioner provides a range of services.

The services include the treatment of injuries suffered at work and making recommendations to prevent a reoccurrence of the injuries.

The recommendations made by the medical practitioner include a proposal for the provision of group exercise classes for employees at an on-site facility.

Under the proposal the classes will be made available to employees referred by the medical practitioner.

The employees may be engaged in manual labour activities within a manufacturing facility or in a management position.

When a referral is made, the referral will be for the group or category of employees who perform similar tasks and are all likely to be at risk of suffering similar injuries.

Relevant legislative provisions

Fringe Benefits Tax assessment Act 1986 section 58M

Fringe Benefits Tax assessment Act 1986 section 136

Reasons for decision

Is the participation of an employee in a group exercise class provided by the employer at an onsite facility an exempt benefit under subparagraph 58M(c)(iii) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) if the participation occurs as a result of a referral by the medical practitioner located on the business premises?

Subparagraph 58M(1)(c)(iii) of the FBTAA provides that a residual benefit will be an exempt benefit where the recipients benefit consists of the provision of work-related preventative health care of the employee. A similar exemption is provided for an expense payment benefit where the recipients expenditure is in respect of work-related preventative health care (subparagraph 58M(1)(a)(iii)) and a property benefit where the recipients property is required solely for the purposes of work-related preventative health care (subparagraph 58M(1)(c)(iii).

Subsection 136(1) of the FBTAA defines work-related preventative health care to mean:

… any form of care provided by, or on behalf of, a legally qualified medical practitioner, nurse, dentist or optometrist wholly or principally in order to prevent the employee suffering from work-related trauma, but does not include a form of care that is not made available generally to all employees of the employer:

(a) who are likely to be at risk of suffering from similar work-related trauma;

(b) who perform the duties of their employment at or near the place where the employee performs the duties of their employment; and

(c) whose duties of employment are similar to those of the employee.

The application of this definition was discussed in paragraphs 104 to 110 of CR 2011/41Fringe benefits tax: health services provided by BUPA Wellness Pty Ltd. CR2011/41 also provides two flowcharts at paragraphs 86 and 102 which summarise the tests that need to be met for a benefit to be work-related preventative health care. These are:

(i) the benefit must not be an examination or test;

(ii) the benefit must involve the provision of care;

(iii) the care must be provided by, or on behalf of, a legally qualified medical practitioner, nurse, dentist or optometrist;

(iv) the care must be provided to an employee;

(v) the care must be provided wholly or principally in order to prevent the employee suffering from work-related trauma;

(vi) the care must be made available to all employees of the employer who are likely to be at risk of suffering from similar work-related trauma, who perform the duties of their employment at or near the place where the employee performs the duties of his or her employment and whose duties are similar to those of the employee.

(i) Is the benefit an examination or test?

In discussing 'examination or test', paragraph 85 of CR 2011/41 states:

Neither examination, nor test are defined in the FBTAA. The Macquarie Dictionary ² defines the word 'examination' as:

1 . ... 2 . the state of being examined. ...' and 'test' as ' 1 . that by which the presence, quality, or genuineness of anything is determined; a means of trial. 2 . ... 5 . Psychology a standardised procedure for eliciting responses upon which appraisal of the individual can be based ...

Although the referral may be the result of an examination or test, the participation in the exercise classes is not an examination or test.

(ii) Does the benefit involve the provision of care?

In discussing 'care' paragraphs 104 to 106 of CR 2011/41 state:

104. The word 'care' is not defined within the FBTAA. However, 'health care' is defined in subsection 136(1) to mean 'any examination or test or form of care (whether therapeutic, preventative or rehabilitative) that is related to the physiological or psychological health of a person'. It includes the provision of drugs, vaccines or other medical preparations in connection with the care.

105. The Macquarie Dictionary ⁵ defines the word 'care' as

1 ... 4 . protection; charge: under the care of a doctor .' Care for is defined as ' a ... c to look after; make provision for.

106. In applying the definitions in paragraphs 104 and 105 of this Ruling it can be concluded that 'care' is wider than just health care and can include counselling or other activities that are provided either by, or as a result of a referral by a medical professional listed in the definition of 'work-related preventative health care' in subsection 136(1).

In relation to the participation in a group exercise class, paragraph 156 of CR 2011/41 states:

As set out in flowchart 2 in paragraph 102 of this Ruling the initial test to consider is whether a group exercise class involves the provision of care. As discussed at paragraph 106 of this Ruling 'care' is wider than just health care. It can include the directions given by a professional instructor in a group exercise class.

In applying these paragraphs it is accepted that the participation in the group exercise classes involves the provision of care.

(iii) Is the care provided by, or on behalf of, a legally qualified medical practitioner, nurse, dentist or optometrist?

In discussing whether the care in the exercise classes considered in CR 2011/41 was provided by, or on behalf of, a legally qualified medical practitioner, nurse, dentist or optometrist paragraphs 157 to 160 of CR2011/41 state:

157. Having concluded the exercise classes involve the provision of care, the second test to consider is whether the care is provided by or on behalf of a listed medical professional.

158. The professional instructors who conduct the exercise classes are not listed medical professionals. However, an employee may attend a group exercise class as a result of a referral provided by:

• a BUPA medical practitioner or nurse; or

• an external medical practitioner.

159. In both situations, the professional instructor conducting the class can be seen to be acting 'on behalf of' the referring medical practitioner or nurse as they will be providing the care as a result of a direction made by the medical practitioner or nurse. Therefore, the appropriate conditions to consider are those that apply to 'work-related preventative health care'. These conditions are considered at paragraphs 161 to 163 of this Ruling.

160. By contrast, the care provided to an employee who attends without a referral cannot be seen to be made 'on behalf of' a medical professional listed in the definition of 'work-related preventative health care' in subsection 136(1). In such a situation the relevant conditions to consider are those that apply to 'work-related counselling'. These conditions are considered at paragraphs 164 to 165 of this Ruling.

In applying these paragraphs, the instructors who conduct the classes are not a legally qualified medical practitioner, nurse, dentist or optometrist. Therefore, for the group exercise classes to be work-related preventative health, it is necessary for the care to be provided on behalf of a legally qualified medical practitioner, nurse, dentist or optometrist.

In discussing the meaning of 'on behalf of' paragraphs 93 to 96 of CR2011/41 state:

93. Where the person providing the benefit does not come within one of the listed categories it is necessary to consider whether the benefit is being provided on behalf of a listed medical professional.

94. The phrase 'on behalf of' is not defined for the purposes of the FBTAA. The Australian Concise Oxford Dictionary ³ defines the term 'behalf' or 'on behalf of' as:

behalf n. on (US in) behalf of (or on a person's behalf ) 1 in the interests of (a person, principle, etc.). 2 as representative of (acting on behalf of my client ).

95. In Cuthbertson & Richards Sawmills v. Thomas (1999) 93 FCR 141 the meaning of the phrase 'on behalf of' was discussed. It was stated that the phrase does not have a strict legal meaning. The court referred to R v. Toohey ; Ex parte Attorney General (N.T.) (1980) 145 CLR 374 at 386 where Stephen, Mason, Murphy and Aickin JJ referred to the phrase in these terms:

...it bears no single and constant significance. Instead it may be used in conjunction with a wide-range of relationships, all however, in some way concerned with the standing of one person as auxiliary to or representative of another person or thing.

...Context will always determine to which of the many possible relationships the phrase 'on behalf of' is in a particular case being applied; 'the context and subject matter' (per Dixon J in R v. Portus ; Ex parte Federated Clerks Union (1949) 79 CLR 428) will be determinative.

'Auxiliary' is defined in the Macquarie Dictionary :⁴

1. giving support, helping, aiding or assisting

96. In the context of the definitions of 'work-related medical examination', as well as 'work-related medical screening' and 'work-related preventative health care', the phrase 'on behalf of' requires a relationship between the two parties such that one party is acting in place of or as representative of the other. That is, if the person carrying out the examination or test (or providing the care) is not a specified medical person, then that person must be giving support or assisting a specified medical person who is providing the benefit.

In applying these paragraphs, for the instructor to be providing care on behalf of the medical practitioner, the instructor must be giving support to, helping or assisting the medical practitioner.

In the situation being considered, the on-site medical practitioner provides a referral for a group or category of employees to participate in particular exercises to address the risks associated with the duties performed by the employees. When the instructor guides the employees through the exercises, the instructor can be seen to be helping, aiding or assisting the medical practitioner's care of the employees.

Therefore, it is accepted that where the employee participates in an on-site exercise class as a result of a referral from the on-site medical practitioner, the instructor in running the class will be providing care on behalf of the medical practitioner.

This requirement will not be met if an employee who is not covered by a referral from the medical practitioner attends the class.

(iv) Is the care provided to an employee?

The group exercise classes will only be attended by employees.

(v) Is the care provided wholly or principally in order to prevent the employee suffering from work-related trauma?

Work related trauma is defined in subsection 136(1) of the FBTAA to mean:

(a) the injury of the employee (including the aggravation, acceleration or recurrence of an injury of the employee);

(b) the contraction, aggravation, acceleration or recurrence of a disease of the employee;

(c) the loss or destruction of, or damage to:

(i) an artificial limb or other artificial substitute;

(ii) a medical, surgical or similar aid or appliance used by the employee; or

(iii) clothing worn by the employee; or

(d) the coming into existence, the aggravation, acceleration or recurrence of any other physiological or psychological condition in relation to the employee that is or may be harmful or disadvantageous to, or result in harm or disadvantage to, the employee;

that is related to any employment of the employee.

This definition requires the care to be provided to prevent the employee from suffering from an injury or illness related to the employee's employment. This requirement will be met when the on-site medical practitioner refers an employee (or group of employees who perform similar duties) to the exercise class to undertake prevention strategies.

(vi) Is the care made available to all employees of the employer who are likely to be at risk of suffering from similar work-related trauma, who perform the duties of their employment at or near the place where the employee performs the duties of his or her employment and whose duties are similar to those of the employee?

This requirement is met as the referral made by the medical practitioner is made for the group or category of employees who perform similar duties.

Conclusion

As all of the requirements of the definition of work-related preventative health care are met, the participation of an employee in a group exercise class provided by the employer at the on-site facility will be an exempt benefit where the participation occurs as a result of a referral by the medical practitioner located on the business premises.