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Edited version of your written advice
Authorisation Number: 1051400180297
Date of advice: 30 July 2018
Ruling
Subject: Income - benefits
Question
Are the benefits paid for by your employers included in your assessable income?
Answer
Yes.
This ruling applies for the following periods:
Year ended 30 June 20xx
Year ended 30 June 20xx
The scheme commences on
1 July 20xx
Relevant facts and circumstances
You were an Australian resident for tax purposes for the 20xx-xx and 20xx-xx income years.
Your employers during this period were non-resident entities for Australian taxation purposes (the Employers).
The Employers have no physical business presence in Australia.
Your Employers provided a number of benefits to you as part of your remuneration for your services while working overseas.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subsection 6-5(2)
Income Tax Assessment Act 1997 Section 10-5
Income Tax Assessment Act 1997 Section 15-2
Income Tax Assessment Act 1997 Subsection 15-2(2)
Fringe Benefits Tax Assessment Act 1986 Subsection 136(1)
Reasons for decision
Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources during the income year.
Ordinary income has generally been held to include three categories, namely, income from rendering personal services, income from property and income from carrying on a business.
Other characteristics of income that have evolved from case law include receipts that:
● are earned,
● are expected,
● are relied upon, and
● have an element of periodicity, recurrence or regularity.
Section 10-5 of the ITAA 1997 lists the various provisions that concern statutory income. Included in that list is section 15-2 of the ITAA 1997.
Section 15-2 of the ITAA 1997 states that your assessable income includes the value to you of all allowances, gratuities, compensation, benefits, bonuses and premiums provided to you in respect of, or for or in relation directly or indirectly to, any employment of or services rendered by you.
Subsection 15-2(2) of the ITAA 1997 provides that the above are assessable whether they are received as money or some other form. The payment/benefit is assessable income of the employee under section 15-2 of the ITAA 1997 unless it is subject to Fringe Benefits Tax in accordance with the Fringe Benefits Tax Assessment Act 1986 (FBTAA).
For a non-resident entity who has no physical business presence in Australia, there is no withholding obligation for amounts paid to the employee for work performed overseas as the amounts will not be 'salary and wages' as defined in subsection 136(1) of the FBTAA and no obligations under the FBTAA can arise for the non-resident entity in relation to benefits provided to that employee (refer to Taxation Determination TD 2011/1).
Based on the information provided, the benefits you received from the non-resident Employers are assessable by virtue of section 15-2 of the ITAA 1997 as they were provided in respect of your employment and they are not subject to Fringe Benefits Tax under the Fringe Benefits Tax Assessment Act 1986.