ATO ID 2014/9: Remote area holiday transport fringe benefit: gross taxable value - recipients contribution
Date of decision: 13 February 2014
Year of income: Year ended 31 March 2014
Business line: Private Groups and High Wealth Individuals

Issue
For the purposes of working out the amount of the reduction of a remote area holiday transport fringe benefit under section 60A of the Fringe Benefits Tax Assessment Act1986 (FBTAA), is '50% of the gross taxable value' of the fringe benefit calculated under paragraph 60A(1)(c) of the FBTAA before deducting any recipients contribution?

Decision
No, for the purposes of working out the amount of the reduction of a remote area holiday transport fringe benefit under section 60A of the FBTAA, '50% of the gross taxable value' of the fringe benefit is not calculated under paragraph 60A(1)(c) of the FBTAA before deducting any recipients contribution. The 'gross taxable value' is the amount that would be the taxable value of the fringe benefit if any reduction under subsection 60A(1) and section 62 of the FBTAA was ignored. The amount that would otherwise be the taxable value has already taken the recipients contribution into account.

Facts
An employee works in a remote area of Australia. His employer pays $1,500 for the employee's return travel between the work locality and the employee's holiday destination in Australia. The employee contributes $250 towards the cost of the travel. The payment of the employee's travel cost by the employer constitutes an external expense payment fringe benefit under paragraph 20(a) and subsection 136(1) of the FBTAA. The provision of the expense payment fringe benefit is a remote area holiday transport fringe benefit for the purposes of subsection 143(2) of the FBTAA. The employee's holiday destination is not the place where he resided before commencing his employment in the remote area or the capital city of the state in which the workplace is located. Therefore, subsection 143(3) of the FBTAA applies to the fringe benefit. The employee is not provided with any other fringe benefit in relation to the holiday.

Reasons for decision
Summary: All legislative references are to the FBTAA. Section 60A provides a reduction in the taxable value of remote area holiday transport fringe benefits to which subsection 143(3) applies. To work out the amount of the reduction under section 60A, paragraph 60A(1)(c) requires you to calculate '50% of the gross taxable value' of the remote area holiday transport fringe benefit(s). In this case, where only one remote area holiday transport fringe benefit is provided, the 'gross taxable value' is determined under paragraph 60A(1)(a). Under that paragraph the 'gross taxable value' is so much of the taxable value of the fringe benefit as is attributable to transport, meals or accommodation in relation to a particular holiday for a particular family member, ignoring any reduction under subsection 60A(1) and section 62. Section 62 does not apply in this situation. The taxable value of an external expense payment fringe benefit is worked out under section 23. Under that section the taxable value of a fringe benefit to which paragraph 20(a) applies is the amount of the expense payment reduced by the amount of the recipients contribution. Under section 23 the taxable value of the external expense payment fringe benefit provided to the employee would be the cost of the travel less the recipients contribution. Therefore, the amount that would be the taxable value of the remote area holiday transport fringe benefit, ignoring any reduction under subsection 60A(1), is the cost of the travel less the recipients contribution. This is the 'gross taxable value' of the fringe benefit. As the recipients contribution has already been taken into account in working out what would otherwise be the taxable value of the remote area holiday transport fringe benefit, for the purposes of working out the amount of the reduction under section 60A, '50% of the gross taxable value' of the fringe benefit is not calculated under paragraph 60A(1)(c) before deducting any recipients contribution. Under section 23 the taxable value of the fringe benefit provided to the employee is $1,250 ($1,500 less $250). Therefore, the 'gross taxable value' of the fringe benefit for the purposes of paragraph 60A(1)(a) is also $1,250. Under paragraph 60(A)(1)(c) '50% of the gross taxable value' of the fringe benefit is $625.

Legislative references: Fringe Benefits Tax Assessment Act 1986 paragraph 20(a) section 23 section 60A subsection 60A(1) paragraph 60A(1)(a) paragraph 60A(1)(b) paragraph 60A(1)(c) section 62 subsection 136(1) subsection 143(2) subsection 143(3)
Subject references: Expense payment fringe benefits Fringe benefits tax Remote area holiday transport fringe benefits FBT taxable value Recipients contributions FBT employee contributions