ATO Interpretative Decision

ATO ID 2010/151

Fringe Benefits Tax

Property fringe benefit: money - tangible or intangible property
FOI status: may be released

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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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Can a payment of money constitute the provision of 'tangible property' as defined in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

Decision

No. Although money is property for the purposes of the FBTAA, it does not meet the definition of 'tangible property' under subsection 136(1) of the FBTAA. Money will however satisfy the definition of 'intangible property' under subsection 136(1) of the FBTAA.

Facts

The employer makes a payment of money to an associate of an employee in respect of the employment of the employee.

The money is in a form that is used in the ordinary course of business, that is, a medium of exchange.

The payment does not constitute 'salary or wages' as defined in subsection 136(1) of the FBTAA.

The payment of money represents a 'benefit' as defined in subsection 136(1) of the FBTAA.

Money is 'property' as defined in subsection 136(1) of the FBTAA.

Reasons for Decision

'Property' is defined in subsection 136(1) of the FBTAA as meaning:

intangible property; and
tangible property.

While money is property for the purposes of the FBTAA, it must be determined whether money is intangible property or tangible property for the purposes of the definition of 'property'.

'Tangible property' is defined in subsection 136(1) of the FBTAA as meaning:

goods and includes:

(a)
animals, including fish; and
(b)
gas and electricity.

There is no definition of 'goods' in the FBTAA. While money is property it is not generally considered as 'goods' (Miller v. Race (1758) 1 Burr 452; Sale of Goods Act 1923 (NSW), section 5; Goods Act 1958 (Vic), section 3; Sale of Goods Act 1896 (Qld), section 3; The Sale of Goods Act 1895 (WA), section 60; etcetera).

Further, paragraphs (a) and (b) of the definition of tangible property do not apply to money. Therefore, money will not satisfy the definition of 'tangible property' in subsection 136(1) of the FBTAA.

'Intangible property' is defined in subsection 136(1) of the FBTAA as meaning:

(a)
real property
(b)
a chose in action; and
(c)
any other kind of property other than tangible property;
but does not include:
(d)
a right arising under a contract of insurance; or
(e)
a lease or licence in respect of real property or tangible property.'

As money is property and it is not tangible property, money will come within paragraph (c) of the definition of intangible property as 'any other kind of property other than tangible property'. The two exclusions at paragraphs (d) and (e) have no application to property in the form of money.

It might be considered that there is an alternative view as expressed in the decision in Walstern v. Commissioner of Taxation (2003) 138 FCR 1; 2003 ATC 5076; (2003) 54 ATR 423 where Hill J stated at FCR 23; ATC 5092; ATR 441:

It follows in my mind that at the time of allocation there was the provision of property, namely the benefit in the trust fund constituted by the money which was tangible property, so that there was a property benefit as defined in the FBTA Act.
...

However, it is not considered that the use of the words 'tangible property' by Hill J above was in the context of the definition of 'tangible property' in subsection 136(1) of the FBTAA. Rather it was the use of the words in their ordinary sense; that is, capable of being touched, or real or actual.

Although money is property for the purposes of the FBTAA, it does not meet the definition of 'tangible property' under subsection 136(1) of the FBTAA. Money will however satisfy the definition of 'intangible property' under subsection 136(1) of the FBTAA.

Date of decision:  2 July 2010

Year of income:  Year ended 31 March 2011

Legislative References:
Fringe Benefits Tax Assessment Act (1986)
   subsection 136(1)

Sale of Goods Act 1923 (NSW)
   section 5

Goods Act 1958 (VIC)
   section 3

Sale of Goods Act 1896 (QLD)
   section 3

Sale of Goods Act 1895 (WA)
   section 60

Case References:
Walstern v Commissioner of Taxation
   (2003)138 FCR 1
   2003 ATC 5076
   (2003) 54 ATR 423

Miller v Race
   (1758) 1 Burr 452

Related ATO Interpretative Decisions
ATO ID 2007/204

Keywords
Fringe benefits tax
Fringe benefits
Property fringe benefits
FBT intangible property
FBT tangible property

Siebel/TDMS Reference Number:  1-21F3CFE; 1-BZO3ACC

Business Line:  Private Groups and High Wealth Individuals

Date of publication:  27 August 2010
Date reviewed:  22 August 2017

ISSN: 1445-2782