ATO ID 2005/109: Exempt benefits: vouchers - property consumed by employee on employer's business premises
Date of decision: 30 March 2005
Year of income: Year ended 31 March 2006
Business line: Superannuation and Employer Obligations

Issue
If an employer provides an employee with a voucher that entitles the employee to receive massage services during a working day on the employer's business premises, is this an exempt benefit under section 41 of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

Decision
No. Section 41 of the FBTAA does not apply to exempt the property benefit as the benefit provided is not consumed by the employee.

Facts
The employer on a working day provides a current employee with a voucher which entitles that employee to receive massage services. The voucher entitles the holder to receive a massage from a third party provider (masseuse) on the employer's business premises during the course of a working day. The vouchers are purchased by the employer from the masseuse and provided by the employer to its employees prior to the provision of the massage services. Any employee in possession of a voucher may use it to obtain a massage from the masseuse on the employer's business premises during the course of a working day. The voucher is a property benefit in accordance with section 40 of the FBTAA. The voucher is provided to the employee by the employer 'in respect of' the employment of the employee pursuant to subsection 136(1) of FBTAA.

Reasons for decision
Summary: The general effect of section 41 of the FBTAA is to exempt a property benefit where the property is provided to, and consumed by, an employee on a working day on the employer's business premises. There is no definition of 'consume' in the FBTAA and as such it takes on its ordinary meaning. The Macquarie Dictionary, [Multimedia], version 5.0.0, 1/10/01. defines 'consume' as: The explanatory memorandum to the Fringe Benefits Tax Assessment Bill 1986 in relation to section 41 explained that, Goods supplied on a working day and consumed on the employer's premises, e.g., a daily ration of beer consumed at work by brewery workers, will not attract tax. Given the context and the policy intent, it is considered that the meaning of 'consumed' in section 41 of the FBTAA is limited to that which can be eaten, drunk or otherwise devoured. The act of redeeming a voucher does not fall within this definition of consume. Consequently the voucher is not capable of being consumed for the purposes of section 41 of the FBTAA. Accordingly, section 41 of the FBTAA does not apply to exempt the property benefit as the benefit provided is not consumed by the employee.

Legislative references: Fringe Benefits Tax Assessment Act 1986 section 41
Other references: The Macquarie Dictionary, [Multimedia], version 5.0.0, 1/10/01. Explanatory memorandum to the Fringe Benefits Tax Assessment Bill 1986.
Subject references: Exempt benefits Exempt property benefits Fringe benefits tax Property fringe benefits