ATO ID 2002/412: Exempt remote area housing benefits
Date of decision: 6 June 2001
Year of income: Year ended 31 March 2002
Business line: Superannuation and Employer Obligations

Issue
Whether the provision of a housing benefit to the employee in a remote area by the employer who enters into a rental agreement with a landlord for a residential property immediately after the termination of a previous rental agreement of that same property between the employee and the landlord, will invoke the application of subparagraph 58ZC(2)(e)(ii) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

Decision
No, the provision of a housing benefit to the employee in a remote area by an employer who enters into a rental agreement with a landlord for a residential property immediately after the completion of a previous rental agreement of that same property between the employee and the landlord, will not invoke the application of subparagraph 58ZC(2)(e)(ii) of the FBTAA.

Facts
An employer customarily provides residential accommodation to staff in remote areas. The employer employs a manager under a contract basis. The employee currently leases a house privately and pays the rent from after tax earnings. The employer proposes to enter into a new rental agreement with the landlord immediately after the completion of the employee's rental agreement on the same property with the same landlord and provide a housing benefit to the employee as the employee's usual place of residence.

Reasons for decision
Summary: Where the employer is located in a remote area, the employer provides accommodation to its employees as their usual place of residence and the requirements of section 58ZC of the FBTAA are satisfied, the housing benefit is an exempt remote housing benefit. A housing benefit provided to an employee by an employer, as a result of the completion of an existing rental agreement between the employee and the landlord and entering into a new lease agreement between the employer and the same landlord on an arm's length basis on the same property, will not invoke the application of subparagraph 58ZC(2)(e)(ii) of the FBTAA to disentitle the remote area housing benefit exemption provided under section 58ZC of the FBTAA. The housing right acquired by the employer through the new rental agreement entered into with the landlord and subsequently provided to the employee will not represent an arrangement that was entered into for the purpose or for the purposes that included the purpose of enabling the employer to obtain the benefit of the application of this section.

Legislative references: Fringe Benefits Tax Assessment Act 1986 Section 58ZC Subparagraph 58ZC(2)(e)(ii)
Related ATO interpretative decisions: ATO ID 2001/761
Subject references: Housing benefit Fringe benefits Remote area housing exemption Remote housing fringe benefits