ATO ID 2011/57: Housing fringe benefits: house destroyed in natural disaster
Date of decision: 1 June 2011
Year of income: Year ended 31st March 2012
Business line: Superannuation and Employer Obligations

Issue
Will a housing fringe benefit, as defined in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) still exist where an employee has been previously granted a housing right, but is unable to continue to occupy the house as it has been destroyed in a natural disaster?

Decision
No. A housing fringe benefit, as defined in subsection 136(1) of the FBTAA, no longer exists from the date the house was destroyed.

Facts
An employer grants an employee the right to occupy a house on a rent-free basis during the FBT year. The house is the employee's usual place of residence. Part-way through the FBT year the house is destroyed in a bushfire. The house is uninhabitable from the date of the bushfire.

Reasons for decision
Summary: A housing fringe benefit is defined in subsection 136(1) of the FBTAA as a fringe benefit that is a housing benefit. A housing benefit is defined in subsection 136(1) of the FBTAA as a benefit referred to in section 25 of the FBTAA. Section 25 of the FBTAA provides that a housing benefit will arise when an employee is provided with a housing right. A housing right is defined in subsection 136(1) of the FBTAA as, in relation to a person, means a lease or licence granted to the person to occupy or use a unit of accommodation, insofar as that lease or licence subsists at a time when the unit of accommodation is the person's usual place of residence. A unit of accommodation is defined widely in subsection 136(1) of the FBTAA and includes a house, flat or home unit. A housing fringe benefit will not arise unless the employee is provided with the right to use or occupy a unit of accommodation and the accommodation is the employee's usual place of residence. Where a house has been destroyed due to a natural disaster a 'housing right' will not exist from that point in time, as there is no unit of accommodation that can be used or occupied. Accordingly, a housing fringe benefit will no longer exist from the date the house was destroyed for the purposes of subsection 136(1) of the FBTAA.

Legislative references: Fringe Benefits Tax Assessment Act (1986) section 25 subsection 136(1)
Subject references: Fringe benefits tax Housing fringe benefit FBT accommodation FBT dwellings FBT unit of accommodation Non remote housing fringe benefits.