Edited version of your written advice

Authorisation Number: 1013026471640

Date of advice: 22 June 2016

Ruling

Subject: Fringe benefits tax - work-related counselling

Question 1

Does the employer's Core Financial Counselling program satisfy the definition of 'work-related counselling' in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) and therefore is an exempt benefit under subsection 58M(1)(c)(iv) of the FBTAA?

Answer

Yes

Question 2

Does the employer's Comprehensive Financial Counselling program satisfy the definition of 'work-related counselling' in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) and therefore is an exempt benefit under subsection 58M(1)(c)(iv) of the FBTAA?

Answer

Yes

This ruling applies for the following periods

Year ended 31 March 2016

Year ended 31 March 2017

Year ended 31 March 2018

Year ended 31 March 2019

Year ended 31 March 2020

The scheme commenced on

1 April 2015

Relevant facts

An employer provided a program to eligible employees in relation to financial counselling. The aim of the program is to reduce employee's work-related health risk through educating them to take control of their own financial health especially employees approaching retirement.

The rationale for the program is as follows:

• many employees are not well organised for retirement which may force them to continue to work well beyond when they might ordinarily be expected to retire; and

• the stress associated with financial issues is known to be one of the main contributors to work affected stress which can lead to poor performance and judgement.

The program is intended to result in:

• improved performance and productivity;

• improved retention;

• lower personal leave/absenteeism;

• improved morale and workplace satisfaction; and

• improved personal relationships.

The financial counselling is not provided as a form of remuneration but rather to improve an employee's performance at work. There is no change in the employee's remuneration for those participating in the program (i.e. no remuneration has been forgone that would have been otherwise received as salary in return for receiving the services).

Two levels of counselling are provided - Core and Comprehensive -depending on the employee's age and years of service as follows:

The Comprehensive counselling is largely provided to employees who are close to retirement age, and the financial stress associated with transitioning from full-time employment to retirement income is imminent.

The Comprehensive counselling involves the advisor individually tailoring a financial plan to the employee's needs depending on their current and future financial needs. The counselling may cover the following areas:

• budgeting;

• debt analysis;

• insurance;

• superannuation;

• wills and estate planning;

• retirement planning; and

• investment planning and portfolios.

The employee will usually meet with the advisor over two sessions. The employee's spouse or partner may attend discussions with the advisors. The advice is provided verbally in the consultations and documented in a written report.

The Core counselling is targeted at younger employees with general education and information to reduce their current financial related stress and future retirement related stress. The Core counselling is considered to be more of a financial 'health check' and any information that is provided is basic or generic. The employee will receive a written report

The counselling is provided by a financial advisory firm.

Participation in the program is voluntary. The program is intended to be ongoing and the employee will receive counselling from the financial advisors each year.

Counselling to improve an employee's financial situation is expected to have a positive impact on the employee's stress levels, personal relationships and health. Reduction in stress levels improve an employee's general health, as high stress levels have negative impact to several health issues including:

• heart disease;

• asthma;

• obesity;

• diabetes;

• headaches;

• depression and anxiety; and

• gastrointestinal problems.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 Section 45

Fringe Benefits Tax Assessment Act 1986 Subsection 58M(1)(c)(iv)

Fringe Benefits Tax Assessment Act 1986 Subsection 136(1)

Income Tax Assessment Act 1997 Section 32-65

Reasons for decision

Summary

The Core Financial Counselling and Comprehensive Financial Counselling provided to employees of the employer satisfies the definition of 'work-related counselling' in subsection 136(1) of the FBTAA and are therefore exempt benefits under subsection 58M(1)(c)(iv) of the FBTAA.

Detailed reasoning

Subsection 136(1) of the FBTAA defines the term 'fringe benefit'. The term does not include, by virtue of paragraph (g) of that definition, a benefit that 'is an exempt benefit'.

Subsection 58M(1) of the FBTAA provides that 'work-related counselling' is an exempt benefit as follows:

Where any of the following benefits is provided in respect of the employment of an employee:

(a) an expense payment where the recipients expenditure is in respect of:

(i) a work-related medical examination of the employee;

(ii) work-related medical screening of the employee;

(iii) work-related preventative health care of the employee;

(iv) work-related counselling of the employee or of an associate of the employee; or

(v) migrant language training of the employee or of an associate of the employee;

(b) a property benefit where the recipients property is required solely for the purposes of:

(i) a work-related medical examination of the employee;

(ii) work-related medical screening of the employee;

(iii) work-related preventative health care of the employee;

(iv) work-related counselling of the employee or of an associate of the employee; or

(v) migrant language training of the employee or of an associate of the employee;

(c) a residual benefit where the recipients benefit consists of:

(i) a work-related medical examination of the employee;

(ii) work-related medical screening of the employee;

(iii) work-related preventative health care of the employee;

(iv) work-related counselling of the employee or of an associate of the employee; or

(v) migrant language training of the employee or of an associate of the employee;

the benefit is an exempt benefit.

The term 'benefit' is defined in subsection 136(1) of the FBTAA and includes rights, privileges and services. Benefits are categorised into 13 different types in Divisions 2 to 12 of Part III of the FBTAA.

'Work-related counselling' is defined in subsection 136(1) of the FBTAA as follows:

(a) in relation to an employee of an employer, means counselling attended by the employee;

(b) in relation to an associate of an employee of an employer, means counselling attended by the associate where the associate is accompanied by the employee;

where all of the following conditions are satisfied:

(c) the attendance of:

(i) if paragraph (a) applies - the employee; and

(ii) if paragraph (b) applies - both the employee and the associate;

at the counselling gives effect to an objective, purpose, plan or policy devised, adopted or required to be followed, by the employer to:

(iii) improve or maintain the quality of the performance of employees' duties; or

(iv) prepare employees for retirement;

(d) the counselling relates to any of the following matters:

(i) safety;

(ii) health;

(iii) fitness;

(iv) stress management;

(v) personal relationships;

(vi) retirement problems;

(vii) drug or alcohol abuse;

(viii) rehabilitation or prevention of work-related trauma or of other disease or injury;

(ix) first aid;

(x) any similar matter;

(e) there is no benefit that:

(i) is provided in respect of the employment of the employee;

(ii) consists of the provision of, or relates to, the counselling; and

(iii) is provided wholly or principally as a reward for services rendered or to be rendered by the employee.

The conditions for the exemption for work-related counselling are as follows:

1. The benefit is an expense payment benefit, a property benefit or a residual benefit.

2. The benefit consists of the provision of 'counselling' that is attended by the employee, or an associate accompanying the employee.

3. The counselling gives effect to an objective, purpose, plan or policy devised, adopted or required to be followed, by the employer to improve or maintain the quality of performance of the employees' duties, or to prepare employees for retirement.

4. The counselling relates to the matters listed in paragraph (d) of the definition.

5. The counselling is not provided wholly or principally as a reward for services rendered by the employee.

1. Benefit provided

The counselling provided under the Financial Counselling Program to employees is a benefit, as defined in subsection 136(1) of the FBTAA. The benefit would be a fringe benefit as defined in subsection 136(1) of the FBTAA, as a benefit has been provided by the employer to their employee in respect of the employee's employment, unless it is an exempt benefit.

The financial counselling falls under the residual benefit category under section 45 of the FBTAA being a benefit not specifically covered in Subdivision A of Divisions 2 to 11 (inclusive) of the FBTAA.

2. The benefit consists of the provision of 'counselling' that is attended by the employee, or an associate accompanying the employee

Counselling

'Counselling' is defined in subsection 136(1) of the FBTAA to 'include the giving of advice or information in a seminar.'

"Seminar' is defined in section 32-65 of the Income Tax Assessment Act 1997 (ITAA 1997) to include 'a conference, convention, lecture, meeting (including a meeting for presentation of awards), speech, 'question and answer session', training session or educational course'.

Class Ruling CR 2008/73 Fringe benefits tax: Fernwood Health Counselling program (CR 2008/73) discussed the definition of 'counselling' and 'seminar' above, and dictionary definitions to conclude:

53. The wording of these definitions suggests 'counselling' is not limited to verbal advice provided at a seminar, or similar session, but can extend to include discussion group meetings facilitated by a trained leader that include some practical demonstrations. The knowledge or skills provided in such situations can be in a wide range of areas, however, a predominantly physical activity session with negligible or no lecture component, such as attendance at an external gym will not constitute 'counselling'.

Class Ruling CR 2011/41 Fringe benefits tax: health services provided by BUPA Wellness Pty Ltd (CR 2011/41), in paragraphs 112 to 117, discusses the meaning of 'counselling' to highlight the following principles:

• counselling involves a suitably qualified person providing advice or guidance to someone else in relation in relation to their established area of expertise,

• it can be provided either on an individual basis, or in a group situation such as a seminar,

• counselling can cover a wide range of issues provided the provision of advice is the principal purpose for the benefit being provided to the employee.

In Class Ruling CR 2013/43 Fringe benefits tax: FitSense Australia Pty Ltd (FitSense) Health Checks, Health Coaching and Health Seminars provided to employer clients of FitSense (CR 2013/43) the following is stated:

58. Although the advice or information provided can be in relation to a wide range of areas a benefit will not be considered to be 'counselling' unless the provision of advice is the principal purpose for the benefit being provided to the employee. For example, although 'counselling' can include training or advice about how to undertake various physical activities, a physical activity session with limited instruction undertaken by an employee for the purpose of keeping fit will not constitute 'counselling'.

It is accepted that the Core and Comprehensive financial counselling is counselling for the purpose of the definition of work-related counselling in subsection 136(1) of the FBTAA.

Recipient of counselling

The counselling must be attended by either:

(a) the employee, or

(b) an associate of the employee who is accompanied by the employee.

The counselling is attended by the employee, or the employee's spouse or partner may also attend with the employee to ensure that the advice suits the requirements of the couple, including the employee's personal relationships.

This condition is satisfied.

3. Purpose of the counselling

The counselling must be an initiative of the employer. The counselling must give effect to an objective, purpose, plan or policy devised, adopted or required to be followed, by the employer to:

(i) improve or maintain the quality of the performance of employees' duties, or

(ii) prepare employees for retirement.

The counselling was initiated by the employer, who provided and paid for a program of financial counselling. The objective and purpose of the counselling was to educate employees to take control of their own financial health. The rationale is that the stress associated with poor financial wellbeing is a contributor to work related stress which leads to poor performance and judgement. The program is intended to result in: improved performance and productivity; improved retention; lower personal leave; improved morale and workplace satisfaction and improved personal relationships.

Core Counselling

The Core counselling is aimed at younger employees and provides the employee with general education and information to manage their finances to reduce their current financial related stress and reduce future retirement related stress by planning early.

It is accepted that poor financial well-being can leads to stress, illness, and loss in employee and company performance. Counselling to improve financial well-being can reduce worry and illness, and therefore improve or maintain employee's quality of performance. It is accepted that the objective or purpose of the employer in providing Core counselling is to improve or maintain the quality of the performance of the employee's duties. Therefore, this condition is satisfied in respect of the Core financial counselling.

Comprehensive Counselling

The Comprehensive counselling is aimed at employees nearing retirement to advise on financial stress and coping with retirement.

Therefore, this condition is satisfied as an objective or purpose of the employer in providing Comprehensive counselling is to prepare employees for retirement. It is also accepted that an objective or purpose is to improve or maintain the quality of the performance of the employee's duties for the reasons discussed in relation to the Core counselling.

4. Scope of the counselling

Paragraph (d) of the definition of work-related counselling requires that the counselling 'relates to' certain specified matters. Those matters include health; fitness; stress management; personal relationships; retirement problems and 'any similar matter'.

The phrase 'relates to' is not defined in the FBTAA but has been considered in several court cases to require the existence of an association or connection between two subject matters, which is relevant, direct or indirect, substantial or real: see ATO Interpretative Decision ATO ID 2015/1 Fringe Benefits Tax Exempt benefits: work-related counselling - training courses or activities for employees being made redundant (ATO ID 2015/1).

Further, ATO ID 2015/1 provides in relation to the phrase in subparagraph (d)(x) 'any similar matter':

The Macquarie Dictionary Online edition defines 'similar' to mean having likeness or resemblance, especially in a general way. In this context, for an unlisted matter to be similar, that matter would have to resemble or have likeness to one of the listed matters

The listed matters are matters that relate to the employees lifestyle and general wellbeing where experiencing problems may reasonably be expected to have a negative impact on the employees performance and where counselling would reasonably be expected to improve or maintain the employees' performance. The exemption does not extend to matters that are properly private expenses such as the obtaining of investment advice.

Comprehensive Counselling

The emphasis of the Comprehensive counselling program is on financial matters relating to retirement and is targeted at employees approaching retirement. The advisor works with the employee to assist them in preparing for retirement and easing stress related to financial matters. Involving both the employee and their spouse or partner ensures that the financial advice is focussed on family considerations.

Due to the targeting of the Comprehensive counselling program to employees close to retirement and its focus on preparing those employees for retirement, the counselling is considered to relate directly to retirement problems, and therefore, satisfy subparagraph (d)(vi) of the definition of 'work-related counselling'.

Core counselling

For employees attending the Core counselling, the counselling is considered too remote a connection to relate to retirement problems although early planning at younger ages may ease retirement problems.

However, the Core counselling is also directed at educating and advising employees to manage their finances and financial related stress. It is accepted that the financial counselling resembles or has a likeness to the other listed lifestyle and general wellbeing matters, such as health, fitness, relationships and stress management, where problems experienced by employees can reasonably be expected to have a negative impact on performance at work and where counselling can reasonably be expected to improve or maintain an employee's performance at work.

Core counselling therefore satisfies subparagraph (d)(x) of the definition of 'work-related counselling'.

5. Counselling must not be a reward for services

The provision of the counselling is not connected to a reward for services, but is aimed at improving employee performance and retirement preparation. It is not funded by a salary sacrificed arrangement between the employee and employer.

This condition is satisfied.

Conclusion

The benefit provided is a residual benefit.

The benefit being provided is accepted as being counselling.

The counselling is provided to the employee, or an associate of the employee accompanied by the employee.

The counselling is initiated by the employer to give effect to an objective or purpose of improving or maintaining the work performance of employees or prepare the employees for retirement.

The counselling satisfies paragraph (d) of the definition of 'work-related counselling'.

The counselling is not provided wholly or principally as a reward for services.

The Core and Comprehensive Financial Counselling provided by the employer satisfies the definition of 'work-related counselling' in subsection 136(1) of the FBTAA and therefore is an exempt benefit under subsection 58M(1)(c)(iv) of the FBTAA.