ATO Interpretative Decision
ATO ID 2011/57
Fringe Benefits Tax
Housing fringe benefits: house destroyed in natural disasterFOI 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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
Will a housing fringe benefit, as defined in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) still exist where an employee has been previously granted a housing right, but is unable to continue to occupy the house as it has been destroyed in a natural disaster?
Decision
No. A housing fringe benefit, as defined in subsection 136(1) of the FBTAA, no longer exists from the date the house was destroyed.
Facts
An employer grants an employee the right to occupy a house on a rent free basis during the FBT year.
The house is the employee's usual place of residence. Part-way through the FBT year the house is destroyed in a bushfire.
The house is uninhabitable from the date of the bushfire.
Reasons for Decision
A housing fringe benefit is defined in subsection 136(1) of the FBTAA as a fringe benefit that is a housing benefit. A housing benefit is defined in subsection 136(1) of the FBTAA as a benefit referred to in section 25 of the FBTAA.
Section 25 of the FBTAA provides that a housing benefit will arise when an employee is provided with a housing right.
A housing right is defined in subsection 136(1) of the FBTAA as,
in relation to a person, means a lease or licence granted to the person to occupy or use a unit of accommodation, insofar as that lease or licence subsists at a time when the unit of accommodation is the person's usual place of residence.
A unit of accommodation is defined widely in subsection 136(1) of the FBTAA and includes a house, flat or home unit.
A housing fringe benefit will not arise unless the employee is provided with the right to use or occupy a unit of accommodation and the accommodation is the employee's usual place of residence.
Where a house has been destroyed due to a natural disaster a 'housing right' will not exist from that point in time, as there is no unit of accommodation that can be used or occupied.
Accordingly, a housing fringe benefit will no longer exist from the date the house was destroyed for the purposes of subsection 136(1) of the FBTAA.
Date of decision: 1 June 2011Year of income: Year ended 31st March 2012
Legislative References:
Fringe Benefits Tax Assessment Act (1986)
section 25
subsection 136(1)
Keywords
Fringe benefits tax
Housing fringe benefit
FBT accommodation
FBT dwellings
FBT unit of accommodation
Non remote housing fringe benefits.
Date reviewed: 21 June 2016
ISSN: 1445-2782