ATO ID 2004/293: Exempt benefits: relocation transport benefits provided to an employee prior to actual relocation taking place
Date of decision: 3 March 2004
Year of income: Year ended 31 March 2004
Business line: Superannuation and Employer Obligations

Issue
If an employee and their family undertake a journey in order to arrange suitable accommodation prior to their actual employment relocation, will the costs associated with that journey, that are paid by the employer, be exempt from FBT under section 58F of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

Decision
Yes. The costs of a journey that enables an employee and their family to relocate will be exempt from FBT under section 58F of the FBTAA, as the employee has already accepted an offer to transfer.

Facts
During the FBT year the employee accepted a temporary employment transfer. This would require the employee to live away from their usual place of residence in order to perform the duties of that employment. Under the employer's relocation policy, the employer provided the employee and their family with reimbursed airline tickets and other associated expenses in order to find suitable accommodation prior to the actual relocation taking place. These 'other expenses' included accommodation and meals en route to visit real estate agents and view rental properties in the town where they will be temporarily employed. The employee was not required to perform any employment duties whilst undertaking the travel.

Reasons for decision
Summary: Section 58F of the FBTAA exempts from fringe benefits tax 'benefits in respect of relocation transport'. The requirements for a benefit to be treated as a 'benefit in respect of relocation transport' are specified in section 143A of the FBTAA. In particular subparagraph 143A(d)(i) requires that the transport (including meals and accommodation whilst undertaking the journey) is provided to an employee and their family to enable them to take up residence near the locality of the new workplace. It is accepted that a journey undertaken prior to relocation in order to seek accommodation (where the employee and their family are definitely relocating) does 'enable' the employee to take up residence in the new locality. As the benefits provided by the employer satisfy the requirements specified in section 143A of the FBTAA, they will be exempt from FBT under section 58F of the FBTAA.

Legislative references: Fringe Benefits Tax Assessment Act 1986 section 58F section 143A subparagraph 143A(d)(i)
Subject references: Fringe benefits tax FBT relocation transport Exempt benefits