ATO ID 2009/24: Reportable fringe benefits: excluded fringe benefit - 'occasional' travel
Date of decision: 24 March 2009
Year of income: Year ended 31 March 2009
Business line: Superannuation and Employer Obligations

Issue
Are the fringe benefits provided to an employee, being travel between their present place of residence in a remote area and their home city, excluded fringe benefits as prescribed by paragraph 5E(3)(j) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

Decision
No. Paragraph 5E(3)(j) of the FBTAA can only apply where occasional travel is undertaken.

Facts
An employee has a house in a major Australian population centre (city X) The employer seconded the employee to a country location (location Y) where they took up residence. Location Y was not in or adjacent to an eligible urban area. The employee was provided with flights back to city X where their family resided. In the six months they were a resident at location Y they made seven return flights to city X. Each journey occurred at least once a month and always started on a Friday. For the rest of the time, they remained a resident of location Y.

Reasons for decision
Summary: Paragraph 5E(3)(j) of the FBTAA states that an excluded fringe benefit is a fringe benefit: that relates to occasional travel to a major population centre in Australia provided to employees and family members resident in a location that is not in or adjacent to an eligible urban area. The FBTAA does not include a definition of 'occasional', therefore it takes its ordinary meaning. The Macquarie Dictionary , [Multimedia], version 5.0.0, 1/1001 defines 'occasional' as: 1. occurring or appearing from time to time, not at regular intervals: an occasional visitor. There is no explanation of the intended operation of paragraph 5E(3)(j) of the FBTAA in the Explanatory Memorandum which accompanied the Bill [A New Tax System (Fringe Benefits Reporting) Bill 1998] that introduced the legislation. At the time it moved through the Senate however, as provided in the Historic House Hansard Database on 29 March 1999 at pages 3442- 3445, in successfully amending the Bill to include present paragraph 5E(3)(j), the following was recorded: Senator Crossin - the fares entitle these people and their families who are resident in remote localities to paid travel- either by air or by motor vehicle at 49c a kilometre- to Alice Springs or Darwin two or three times a year, depending on their location. So the benefit is specifically designed to assist these people to get out of these isolated communities two or three times a year. Taken together the dictionary meaning and the apparent intent stated above, 'occasional' in this context means something that occurs from time to time and not at regular intervals, for example two or three times a year. The employee's travel is not considered to be 'occasional' as they made seven return trips by plane which happened at regular intervals, that is each journey occurred at least once a month and always started on a Friday. Accordingly, as the employee's travel is not 'occasional' the fringe benefits are not excluded fringe benefits as specified by paragraph 5E(3)(j) of the FBTAA.

Legislative references: Fringe Benefits Tax Assessment Act 1986 paragraph 5E(3)(j)
Other references: Australia, Senate, Debates 29 March 1999, at pp 3442-3445 The Macquarie Dictionary [Multimedia] version 5.0.0 1/1001
Subject references: Fringe benefits tax Fringe benefits Excluded fringe benefits