ATO ID 2004/276: Exempt benefits: remote area housing and residential fuel
Date of decision: 10 March 2004
Year of income: Year ended 31 March 2004
Business line: Superannuation and Employer Obligations

Issue
Where the employer provides an employee with remote area housing, that is an exempt benefit under section 58ZC of the Fringe Benefits Tax Assessment Act 1986 (FBTAA), will the provision of 'residential fuel' in the form of free electricity constitute part of that benefit?

Decision
No. The remote area housing benefit and free electricity are two separate benefits. Only the remote area housing benefit is exempt under section 58ZC of the FBTAA.

Facts
The employer provides housing to an employee. The housing is provided to an employee in a remote area. Under an agreement the employer provides the employee with free electricity in connection with the accommodation provided to the employee.

Reasons for decision
Summary: The provision of gas or electricity to an employee in receipt of a remote area housing benefit can be a property, residual or expense payment fringe benefit. Section 58ZC of the FBTAA provides that a remote area housing benefit will be an exempt benefit from 1 April 2000. At the same time, subsection 59(1) of the FBTAA was rewritten to reflect the new remote area housing exemption under section 58ZC. The explanatory memorandum to the A New Tax System (Fringe Benefits) Bill 2000 explained that, Where an employer provides a remote area housing benefit and supplies, pays for, or reimburses the cost of electricity, gas or other residential fuel for an employee in a remote area, the taxable value of the benefit is reduced by 50%. It is clear that subsection 59(1) intends that the provision of residential fuel is to be treated as a separate benefit. Subsection 136(1) of the FBTAA defines 'residential fuel' to mean any form of fuel (including electricity) for use for domestic purposes. It is considered that the remote area housing and electricity are two separate benefits. Only the remote area housing benefit is exempt under section 58ZC of the FBTAA. A 50% reduction in the taxable value of the electricity applies in accordance with subsection 59(1) of the FBTAA.

Legislative references: Fringe Benefits Tax Assessment Act 1986 section 58ZC subsection 59(1) subsection 136(1)
Other references: Explanatory memorandum to the A New Tax System (Fringe Benefits) Bill 2000
Subject references: Fringe benefits Fringe benefits tax FBT remote area housing FBT exempt housing benefit Reduction of taxable value