Edited version of private advice

Authorisation Number: 1051768224796

Date of advice: 15 December 2020

Ruling

Subject: Exempt benefits

Question 1

Are all employees based at a particular medical facility eligible to receive exempt benefits under subsection 57A(2) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) up to the capping threshold?

Answer

Yes

Question 2

Are all employees based at another medical facility eligible to receive exempt benefits under subsection 57A(2) of the FBTAA up to the capping threshold?

Answer

Yes

Question 3

Are employees in two job roles at a medical office eligible to receive exempt benefits under subsection 57A(2) of the FBTAA up to the capping threshold?

Answer

Yes

This ruling applies for the following periods

Year ended 31 March 20XX

Year ended 31 March 20XX

Year ended 31 March 20XX

Year ended 31 March 20XX

The scheme commenced on

1 April 20XX

Relevant facts

A medical facility is a State government entity.

The medical facility's services are free to patients and their families, and employ doctors, psychologists, pharmacists, nurses, aboriginal health workers and social workers.

The medical facility has several beds and provides medical treatment for patients going through withdrawal from drugs and alcohol.

The medical facility is staffed 24 hours a day, seven days a week by nurses and health workers. Doctors are on site during normal business hours and are available on call after hours.

Patients receiving treatment in another hospital who are in acute withdrawal may be referred and admitted to this medical facility.

Another medical facility acts as an extension to the first medical facility as they provide medical and clinical treatment to individuals with drug and alcohol dependency, many of whom have been discharged from the first medical facility after undergoing treatment there. Many of the patients would return to the first medical facility for continuing treatment if not for the second medical facility which they attend due to their proximity to their homes.

Medical Office

The Medical Office is an independent statutory officer who holds powers and duties as prescribed in the relevant Act.

The Medical Officers are required to be registered under the relevant Health Agency and must have clinical backgrounds in order for them to be able to effectively perform their roles.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 Subsection 57A(2)

Fringe Benefits Tax Assessment Act 1986 Subsection 136(1)

Reasons for decision

Question 1

Are all employees based at a particular medical facility eligible to receive exempt benefits under subsection 57A(2) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) up to the capping threshold?

Subsection 57A(2) of the FBTAA states:

Where:

(a)  the employer of an employee is a government body; and

(b)  the duties of the employment of the employee are exclusively performed in, or in connection with:

(i)            a public hospital; or

(ii)           a hospital carried on by a society or association that is a rebatable employer;

a benefit provided in respect of the employment of the employee is an exempt benefit.

The term 'government body' is defined in subsection 136(1) of the FBTAA to mean 'the Commonwealth, a State, a Territory or an authority of the Commonwealth or of a State or Territory.

Government body

The medical facility is registered as a State Government entity and is therefore a government body and satisfies paragraph 57A(2)(a) of the FBTAA.

Public hospital

The terms 'hospital' and 'public hospital' are not defined in the FBTAA. The ATO publication of the Employer's Guide to Fringe Benefit Tax, states that 'a hospital is an institution in which patients receive continuous medical care and treatment for sickness, disease or injury. The provision of accommodation is integral to a hospital's care and treatment'.

A public hospital is a hospital controlled by a state or territory health authority.

The medical facility provides 17 beds to facilitate medical care and treatment for drug and alcohol withdrawal. Patients at the facility are provided with continuous medical care 24 hours a day, seven days a week.

It is accepted that the medical facility is a hospital controlled by a state and is therefore a public hospital.

The other business units are not hospitals, and therefore are not eligible for the exemption under subsection 57A(2) of the FBTAA unless their employees were performing their employment duties wholly in connection with the medical facility.

Duties of employment exclusively performed in or in connection with a public hospital

Taxation Determination TD 2015/12 Fringe benefits tax: when are the duties of the employment of an employee of an employer who is a government body exclusively performed in, or in connection with, a public hospital or a hospital carried on by a society or association that is a rebatable employer? (TD 2015/12) provides guidance at paragraph 2:

The duties of the employment of an employee of an employer who is a government body are exclusively performed in, or in connection with, a public hospital or a hospital carried on by a society or association that is a rebatable employer for the purposes of paragraph 57A(2)(b) when the duties of the employment of the employee satisfy any of the following tests:

•         the duties are performed 'in' a hospital such that the employee performs their duties at the physical location of the hospital facility where the activities of the hospital are being conducted

•         the duties are performed 'in connection with' a hospital such that the employee performs their duties as a member of the hospital staff under the direction, management and control of the hospital board of management or chief executive officer, or

•         the duties are performed 'in connection with' a hospital such that the employee is engaged in duties that enable the hospital to carry out its functions.

It is accepted that the medical facility is a public hospital. Employees of the medical facility perform their duties in the physical location of a hospital. When employees perform duties outside the physical location of a hospital, they are engaging in activities that enable the hospital to carry out its functions. Employees of the medical facility satisfy all of the criteria in subsection 57A(2) of the FBTAA, and benefits, up to the capping threshold, are exempt from fringe benefits tax.

Question 2

Are all employees based at another medical facility eligible to receive exempt benefits under subsection 57A(2) of the FBTAA up to the capping threshold?

Government body

As stated above, the medical facility is registered as a State Government entity and is therefore a government body and satisfies paragraph 57A(2)(a) of the FBTAA.

Public hospital

The other medical facility provides outpatient alcohol and other drug services in the community. In the absence of accommodation being provided as part of the medical care, the other medical facility is not considered to be a hospital.

Duties of employment exclusively performed in or in connection with a public hospital

Employees of the other medical facility do not perform their duties 'in' the physical location of the first hospital.

The second medical facility acts as an extension to the first medical facility as they provide medical and clinical treatment to individuals with drug and alcohol dependency, many of whom have been discharged from the first medical facility after undergoing treatment there. Employees of the second medical facility perform their duties as a member of the hospital staff at the discretion, management and control of the hospital. The hospital (first medical facility) is responsible for all the recruitment and employment of medical and clinical employees for the second medical facility, and these employees are under the direction and control of the Director of Clinical Service at the hospital.

Employees at the second medical facility can be viewed as engaging in duties that enable the hospital to carry out its functions. A patient's treatment would typically begin as an inpatient of the hospital where they would undertake an initial assessment and depending on the severity of their condition, they may stay for a period to receive treatment. After such time, they are discharged and continue their treatment at the second medical facility.

The ongoing medical treatment provided to these patients at the second medical facility relieves the pressure on the first medical facility, and other hospitals, without which patients would not have access to alternative arrangements to manage their health conditions and these patients would present themselves to a hospital for treatment.

It is accepted that employees at the second medical facility perform duties 'in connection with' a hospital as they are under the direction, management and control of a hospital, and perform duties that enable the hospital to carry out its functions. Employees at the second medical facility similarly satisfy all of the criteria in subsection 57A(2) of the FBTAA, and therefore benefits, up to the capping threshold, are exempt from fringe benefits tax.

Question 3

Are employees in two job roles at a medical office eligible to receive exempt benefits under subsection 57A(2) of the FBTAA up to the capping threshold?

Government body

As stated above, the medical facility is registered as a State Government entity and is therefore a government body and satisfies paragraph 57A(2)(a) of the FBTAA.

Public hospital

Employees of the medical office may undertake their duties in public hospitals, or at the medical office. To satisfy the exemption in subsection 57A(2) of the FBTAA, the employee must perform his or her duties in the physical location of a hospital, or 'in connection with' a hospital, such that the employee is engaged in duties that enable the hospital to carry out its functions.

Two employees within the medical office are to be considered.

The majority of the employment duties of both employees are conducted outside the physical location of a hospital. The duties are performed wholly in connection with the hospitals being attending case conferences held at hospitals or next to hospitals, speaking directly with clinicians via telephone, taking calls directly from patients and their families, and providing advice on how hospitals should carry out their day to day activities to ensure compliance with the relevant Act.

The exemption under subsection 57A(2) of the FBTAA applies to these two employees, that is, benefits up to the capping threshold are exempt from fringe benefits tax.