ATO Interpretative Decision

ATO ID 2011/60

Fringe Benefits Tax

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Issue

If an employer makes an emergency relief cash payment to an employee who is a victim of a natural disaster, is that payment a benefit that is exempt under section 58N of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

Decision

Yes. The emergency relief cash payment provided by the employer to the employee who was a victim of a natural disaster is an exempt benefit under section 58N of the FBTAA.

Facts

Part-way through the FBT year an employee's house is destroyed in a flood.

The house is uninhabitable from the date of the flood.

The employee has no other accommodation following the natural disaster.

The employer subsequently made an emergency relief cash payment to the employee to cover the immediate expenses for meals and food supplies, clothing and hire of household goods. This emergency relief cash payment also covered anticipated rent for a reasonable period of time to enable the employee to find alternative permanent accommodation.

The emergency relief cash payment to the employee is not a payment of 'salary or wages' as defined in subsection 136(1) of the FBTAA.

The emergency relief cash payment to the employee is a property benefit in accordance with section 40 of the FBTAA.

Reasons for Decision

Section 58N of the FBTAA provides an exemption for 'emergency assistance' provided to an employee or to an associate of an employee.

In this situation in order for the benefit to be exempt under section 58N of the FBTAA, the following two conditions must be satisfied:

(a)

a benefit is provided in respect of the employment of an employee of an employer; and

(b)

the benefit is provided solely by way of the grant of emergency assistance to the recipient.

The emergency relief cash payment is a benefit provided in respect of the employment of the employee of the employer as required by paragraph 58N(a) of the FBTAA.

For the purposes of the exemption provided by section 58N an 'emergency' is defined in subsection 136(1) of the FBTAA to mean:

an emergency involving any of the following matters:

(a)

a natural disaster;

(b)

a conflict involving an armed force;

(c)

a civil disturbance;

(d)

an accident;

(e)

a serious illness;

(f)

any similar matter.

The flood was an emergency involving a natural disaster as defined in paragraph (a) of the definition of 'emergency' in subsection 136(1) of the FBTAA.

The definition of 'emergency assistance' in subsection 136(1) of the FBTAA states:

in relation to a person, means assistance granted to the person where:

(a)

the person is, or is at immediate risk of becoming, the victim of an emergency;

(b)

the assistance is granted to the person solely in order to provide immediate relief;

(c)

the assistance is in respect of all or any of the following matters:

(i)

first aid or other emergency health care;

(ii)

emergency meals or food supplies;

(iii)

emergency clothing;

(iv)

emergency transport;

(v)

emergency accommodation;

(vi)

emergency use of household goods;

(vii)

temporary repairs;

(viii)

any similar matter.

The emergency relief cash payment to the employee is 'emergency assistance' as defined in subsection 136(1) of the FBTAA as:

(a)

the payment has been made to an employee whose house was destroyed in the flood and therefore was granted to a person who is a victim of an emergency;

(b)

the payment was to cover immediate expenses for meals and food supplies, hire of household goods and rent for a reasonable period of time to enable an employee to find alternative permanent accommodation. Therefore, the assistance was granted to the employee solely to provide immediate relief as a victim of an emergency; and

(c)

the assistance is in respect of emergency meals or food supplies, emergency clothing, emergency use of household goods and emergency accommodation.

Accordingly, the emergency relief cash payment by the employer to the employee who was a victim of a natural disaster is an exempt benefit under section 58N of the FBTAA.

Amendment History

Year of income:  Year ended 31st March 2012

Legislative References:
Fringe Benefits Tax Assessment Act 1986
   section 58N
   paragraph 58N(a)
   paragraph 58N(b)
   subsection 136(1)

Keywords
Fringe benefits tax
Exempt benefits
FBT emergency assistance

Siebel/TDMS Reference Number:  1-2U1NDVA, 1-BJ4O89W

Business Line:  Private Groups and High Wealth Individuals

Date of publication:  29 July 2011
Date reviewed:  2 June 2017

ISSN: 1445-2782