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Edited version of private advice
Authorisation Number: 1051586740908
Date of advice: 21 October 2019
Ruling
Subject: Fringe benefits tax - in respect of employment
Question
Is the Tuition Fee Rebate received by employees ofa schoola fringe benefit under the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?
Answer
No
This ruling applies for the following periods
Year ended 31 March 2020
Year ended 31 March 2021
Year ended 31 March 2022
Year ended 31 March 2023
The scheme commenced on
1 April 2019
Relevant facts
You represent a school which provides education to members of the public from pre-school to Year 12. The school charges fees for education services provided to enrolled students.
Employees of the school are entitled to a staff concession on the tuition fees of their children enrolled in the school. The school has always treated such staff concessions as liable for Fringe Benefits Tax.
The school also operates a Tuition Fee Rebate program that provides financial assistance to school families facing financial difficulties in relation to the payment of their school fees. Any person with children enrolled in the school is eligible to apply. If an application is approved, a discount is applied to the applicant's school fees account.
The terms and conditions of the Tuition Fee Rebate program confirm that the rebate is applied equally to employees of the school with children at the school, and other parents of children at the school.
The Application Form confirms that eligibility for the Tuition Fee Rebate program is determined solely on financial considerations relating to income, expenses, assets and liabilities. There is no distinction between employees of the school and other parents of children at the school. Eligibility for the Tuition Fee Rebate program needs to be applied for on an annual basis.
The methodology in which the rebate is calculated does not vary between employees and other parents of students. The financial information provided on the Application Form is means-tested against that of the pool of applicants, following which a score is assigned to the applicant. A rebate percentage is applied depending on the score assignment.
The school treats employees who choose to apply for a tuition fee rebate as it would for any other school family applying for the rebate. There is no priority given to employees in the application process.
Relevant legislative provisions
Fringe Benefits Tax Assessment Act 1986 Subsection 136(1)
Reasons for decision
Is the Tuition Fee Rebate received by employees of a school a fringe benefit under the FBTAA?
Subsection 136(1) of the FBTAA defines a 'fringe benefit' as a benefit provided by an employer to an employee where that benefit is provided in respect of employment.
It is clear that the Tuition Fee Rebate received by staff who have children attending the school constitutes a financial benefit for those employees. It is also clear that these staff are employees of the school and receive payment of salary or wages.
"In respect of" is defined in subsection 136(1) of the FBTAA as in relation to the employment of an employee, including by reason of, by virtue of, or for or in relation directly or indirectly to, that employment. Subsections 148(1) and 148(3) of the FBTAA extend this meaning. Miscellaneous Taxation Ruling MT 2016 Fringe benefits tax: benefits not taxable unless provided in respect of employment explains that these do not remove, in any circumstances, the fundamental requirement that, before there can be a tax liability, the benefit under consideration has to be provided in respect of the employment of the employee.
A benefit that happens to be provided to an employee, but which is not in respect of employment, is not a fringe benefit. What must be established is whether there is a sufficient or material connection or relationship between the benefit and the employment.
Parents of students at the school who are employees receive the Tuition Fee Rebate under the same conditions and at the same rate as parents who are not employees of the school. They receive this rebate in the capacity of parents of students at the school. If they ceased employment at the school, they would continue to receive the rebate. If they never worked at the school, they would receive the same rebate. The application and approval processes are the same for parents who are teachers and parents who are not.
The purpose of the rebate is to assist parents in financing their children's attendance at the school, regardless of whether the parent works there.
On the basis that the Tuition Fee Rebate is widely available to all parents of students who attend the school, preferential access to the Tuition Fee Rebate is not provided to employees with students at the school, and the Tuition Fee Rebate is in addition to the employee tuition fee discount, it is reasonable to conclude that the Tuition Fee Rebate benefit is not provided in respect of employment of the employee. A fringe benefit therefore does not arise.