ATO Interpretative Decision
ATO ID 2009/24
Fringe Benefits Tax
Reportable fringe benefits: excluded fringe benefit - 'occasional' travelFOI status: may be released
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Are the fringe benefits provided to an employee, being travel between their present place of residence in a remote area and their home city, excluded fringe benefits as prescribed by paragraph 5E(3)(j) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?
Decision
No. Paragraph 5E(3)(j) of the FBTAA can only apply where occasional travel is undertaken.
Facts
An employee has a house in a major Australian population centre (city X)
The employer seconded the employee to a country location (location Y) where they took up residence. Location Y was not in or adjacent to an eligible urban area.
The employee was provided with flights back to city X where their family resided.
In the six months they were a resident at location Y they made seven return flights to city X.
Each journey occurred at least once a month, and always started on a Friday.
For the rest of the time they remained a resident of location Y.
Reasons for Decision
Paragraph 5E(3)(j) of the FBTAA states that an excluded fringe benefit is a fringe benefit:
that relates to occasional travel to a major population centre in Australia provided to employees and family members resident in a location that is not in or adjacent to an eligible urban area.
The FBTAA does not include a definition of 'occasional', therefore it takes its ordinary meaning.
The Macquarie Dictionary, [Multimedia], version 5.0.0, 1/1001 defines 'occasional' as:
1. occurring or appearing from time to time, not at regular intervals: an occasional visitor.
There is no explanation of the intended operation of paragraph 5E(3)(j) of the FBTAA in the Explanatory Memorandum which accompanied the Bill [A New Tax System (Fringe Benefits Reporting) Bill 1998] that introduced the legislation.
At the time it moved through the Senate however, as provided in the Historic House Hansard Database on 29 March 1999 at pages 3442- 3445, in successfully amending the Bill to include present paragraph 5E(3)(j), the following was recorded:
Senator Crossin - the fares entitle these people and their families who are resident in remote localities to paid travel- either by air or by motor vehicle at 49c a kilometre- to Alice Springs or Darwin two or three times a year, depending on their location. So the benefit is specifically designed to assist these people to get out of these isolated communities two or three times a year.
Taken together the dictionary meaning and the apparent intent stated above, 'occasional' in this context means something that occurs from time to time and not at regular intervals, for example two or three times a year.
The employee's travel is not considered to be 'occasional' as they made seven return trips by plane which happened at regular intervals, that is each journey occurred at least once a month and always started on a Friday.
Accordingly, as the employee's travel is not 'occasional' the fringe benefits are not excluded fringe benefits as specified by paragraph 5E(3)(j) of the FBTAA.
Date of decision: 24 March 2009Year of income: Year ended 31 March 2009
Legislative References:
Fringe Benefits Tax Assessment Act 1986
paragraph 5E(3)(j)
Other References:
Australia, Senate, Debates 29 March 1999, at pp 3442-3445
The Macquarie Dictionary [Multimedia] version 5.0.0 1/1001
Keywords
Fringe benefits tax
Fringe benefits
Excluded fringe benefits
Date reviewed: 3 April 2018
ISSN: 1445-2782