Edited version of your written advice

Authorisation Number: 1051337692708

Date of advice: 19 February 2018

Ruling

Subject: Fringe benefits tax

Question One

Is the taxable value of the expense payment fringe benefits to be provided to:

a. existing employees that are currently residing in a remote area

b. new employees that are currently residing in a remote area, and

c. new employees that are moving into a remote area in order to take up employment with you

reduced by 50% of the gross rent incurred by the employees, where the rent relates to a unit of accommodation under subsection 60(2A) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

Answer

Yes

Question Two

Is the taxable value of the expense payment fringe benefits to be provided to:

a. existing employees that are currently residing in a remote area

b. new employees that are currently residing in a remote area, and

c. new employees that are moving into a remote area in order to take up employment with you

reduced by 50% of the gross interest expenses incurred by the employees on the remote area housing loans under subsection 60(2) of the FBTAA?

Answer

Yes

Question Three

Is the taxable value of the expense payment fringe benefits to be provided to:

a. existing employees that are currently residing in a remote area

b. new employees that are currently residing in a remote area, and

c. new employees that are moving into a remote area in order to take up employment with you

reduced by 50% of the residential fuel expenses, where the expenses relate to a unit of remote area accommodation under subsections 59(2) and 59(3) of the FBTAA?

Answer

Yes

This ruling applies for the following periods:

Year ended 31 March 2019

Year ended 31 March 2020

Year ended 31 March 2021

Year ended 31 March 2022

The scheme commences on:

2018

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 are carrying on a business and have various projects that are located in remote areas for fringe benefits tax (FBT) purposes.

Most of your existing employees currently reside in remote areas.

You expect to hire a significant number of new employees.

You would like to encourage your employees to take up residence in the local areas and are keen to minimise your fly-in-fly-out (FIFO) workforce.

As part of your strategy to attract people to work and live in remote areas, you propose to offer these employees the ability to salary sacrifice housing-related expenses such as rent, interest on their housing loan, electricity and gas.

As a part of your strategy to retain your existing employees you will also give them the same opportunities and extend the offer of salary sacrificing.

You have provided us with the details of the benefits you are proposing to offer.

Employees will contribute toward the taxable values of the fringe benefits out of their after-tax salary and wages.

It is customary for businesses within the industry you operate in to provide these types of salary sacrifice arrangements.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 subsection 59(2)

Fringe Benefits Tax Assessment Act 1986 subsection 59(3)

Fringe Benefits Tax Assessment Act 1986 subsection 60(2)

Fringe Benefits Tax Assessment Act 1986 subsection 60(2A)

Fringe Benefits Tax Assessment Act 1986 subsection 142(1)

Fringe Benefits Tax Assessment Act 1986 subsection 142(1A)

Fringe Benefits Tax Assessment Act 1986 subsection 142(2E)

Reasons for decision

All references made in these reasons for decision are to the Fringe Benefits Tax Assessment Act 1986 unless otherwise stated.

Issue 1

Question 1

Summary

The taxable value of the expense payment fringe benefits you provide to existing and new employees who are currently residing in a remote area and new employees who are moving to a remote area to take up employment, may be reduced by 50% of the gross rent they incur.

Detailed reasoning

Subsection 60(2A) provides for a reduction of the taxable value of expense payment fringe benefits by 50% of the gross rent incurred by the employee in respect of remote area housing rent where all the following conditions are met:

(a) the recipient of an expense payment fringe benefit in relation to an employer in relation to a year of tax is an employee of the employer;

(b) the recipient's expenditure is in respect of remote area housing rent connected with a unit of accommodation;

(c) the recipient occupied or used the unit of accommodation as his or her usual place of residence during a period (in this subsection called the “occupation period”) during which the rent accrued; and

(d) the fringe benefit was not provided 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;

You will satisfy all of the conditions therefore the taxable value of any expense payment fringe benefits that you provide in relation to remote area housing rent may be reduced by 50% of the gross rent.

Question 2

Summary

The taxable value of expense payment fringe benefits you provide to existing and new employees who are currently residing in a remote area and new employees who are moving to a remote area to take up employment, may be reduced by 50% of the gross interest expenses that the employees incur.

Detailed reasoning

Subsection 60(2) provides for a 50% reduction of the taxable value of expense payment fringe benefits in respect of remote area housing loan interest payments where all the following conditions are met:

(a) the recipient of an expense payment fringe benefit in relation to an employer in relation to a year of tax is an employee of the employer;

(b) the recipients expenditure is in respect of interest in respect of a remote area housing loan connected with a dwelling;

(c) the recipient occupied or used the dwelling as his or her usual place of residence during a period (in this section referred to as the “occupation period”) during which the interest accrued;

(d) the fringe benefit was not provided 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;

You will satisfy all of the conditions therefore the taxable value of any expense payment fringe benefits that you provide in relation to interest incurred on a remote area housing loan may be reduced by 50%.

Question 3

Summary

The taxable value of the expense payment fringe benefits you provide to existing and new employees who currently reside in a remote area and new employees who are moving to a remote area to take up employment, may be reduced by 50% of the residential fuel expenses, where the expenses relate to a unit of remote area accommodation.

Detailed reasoning

Where you provide a current employee with residential fuel for use in connection with their usual place of residence, you may reduce the taxable value of the fringe benefit by 50% in the following circumstances:

● the fringe benefit is an expense payment fringe benefit, a property fringe benefit or a residual fringe benefit

● the fringe benefit was not provided to the employee under a non-arm's length arrangement, or an arrangement that was entered into by any of the parties for the purpose, or partial purpose, of enabling you to obtain the residential fuel concession

● the residential fuel is for use in connection with:

● a dwelling during a period when the employee occupied or used the dwelling as their usual place of residence and was under obligation to repay the whole or part of the remote area housing loan connected with the dwelling, (subsection 59(2)) or

● a unit of accommodation during a period when the employee occupied or used the unit of accommodation as their usual place of residence and remote area housing rent connected with the unit of accommodation accrued (subsection and 59(3)).

You will satisfy all of the conditions therefore the taxable value of the expense payment fringe benefits may be reduced by 50%.