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Edited version of your written advice
Authorisation Number: 1051445467211
Date of advice: 26 October 2018
Ruling
Subject: Fringe benefits tax – exempt residual benefits
Question
Is the provision of recreational facilities to employees an exempt benefit under subsection 47(2) of the Fringe Benefits Assessment Act 1986 (FBTAA)?
Answer
Yes
This ruling applies for the following periods:
1 April 2019 – 31 March 20XX
1 April 2020 – 31 March 20XX
1 April 2021 – 31 March 20XX
1 April 2022 – 31 March 20XX
The scheme commences on:
20XX
Relevant facts and circumstances
You own and manage a recreation centre.
It is open to the public and you pay all the costs of its operation.
You have offered your employees use of the facilities for a number of years.
You had a previous private ruling stating that the use of these recreational facilities by your employees is an exempt benefit under subsection 47(2) of the FBTAA.
You have confirmed that the facts of the arrangement have not changed.
Relevant legislative provisions
Fringe Benefits Tax Assessment Act 1986 section 45
Fringe Benefits Tax Assessment Act 1986 subsection 47(2)
Fringe Benefits Tax Assessment Act 1986 subsection 136(1)
Reasons for Decision
Summary
The provision of the recreational facilities by way of membership of the recreation centre is an exempt benefit under subsection 47(2).
Detailed reasoning
As provided for in subsection 47(2) a benefit will be an exempt benefit where it is:
(a) a residual benefit provided to a current employee in respect of his or her employment consists of:
(i) the provision, or use, of a recreational facility; or
(ii) ….
(b) the recreational facility…is located at the business premises of:
(i) the employer; or
(ii) if the employer is a company, of the employer or of a company that is related to the employer;
The benefit provided must be a residual benefit which according to section 45 '…is a benefit that … is not a benefit by virtue of a provision of Subdivision A of Divisions 2 to 11 (inclusive)...'.
The benefits you are providing to your employees are not benefits by virtue of another provision of Subdivision A of Divisions 2 to 11 (inclusive), the benefits are residual benefits under section 45.
As the residual benefits involve the use of the recreation centre by your employees paragraph 47(2)(a) will be satisfied.
To satisfy paragraph 47(2)(b) the recreation centre must be located at your business premises, which is defined in subsection 136(1).
Paragraph 12 of Taxation Ruling TR 2000/4 Fringe benefits tax: meaning of ‘business premises’, provides guidance concerning the two requirements that must be satisfied for premises to be classified as business premises of the employer. These requirements are:
● the control the employer has over the premises and
● the consistency of an employer's actions and activities on the premises with those of normal business practices.
The recreation centre is located on premises that you own and its operation is part of your business operations. Therefore it is located at your business premises.
As all of the conditions in subsection 47(2) will be satisfied the provision of recreational facilities to your employees by way of membership of the recreation centre is an exempt benefit.