ATO ID 2013/8: Employee required to change usual place of residence in order to perform duties of employment
Date of decision: 24 January 2013
Year of income: Year ending 31 March 2013
Business line: Superannuation and Employer Obligations

Issue
If an employee changes their usual place of residence to be closer to where they perform the duties of their employment, even though it is not required by their employer, is the employee still 'required' to change their usual place of residence in order to perform the duties of their employment for the purposes of subparagraph 58B(1)(b)(iii) of the Fringe Benefits Tax Assessment Act 1986 ( FBTAA)?

Decision
Yes. Even though the employer does not require the employee to change their usual place of residence, it is considered that the duties of the employee's employment are such that the employee is 'required' to change their usual place of residence in order to perform the duties of their employment for the purposes of subparagraph 58B(1)(b)(iii) of the FBTAA.

Facts
All legislative references are to the FBTAA. An employee accepts a promotion from their employer. The employee is required to perform their new duties of employment over 3,000 kilometres away from their usual place of residence. Under the applicable enterprise bargaining agreement, the employer cannot require the employee to change their usual place of residence in order to live closer to where the employee is required to perform their new duties of employment ('the new place of employment'). However, the employee is not permitted to perform their new duties of employment from where they performed their former duties of employment ('the former place of employment'). The employer will not provide transport for the employee to commute between their usual place of residence and the new place of employment. The employee is required to be on call at certain times. The employee must sign on for duty within two hours of being contacted by their employer. The employee changes their usual place of residence to a location near the new place of employment. The employer reimburses the employee for the costs of the removal of the employee's household effects to the new residence. The reimbursement is an expense payment benefit within the meaning in section 20.

Reasons for decision
Summary: Under section 58B, expense payment and residual benefits provided in respect of the removal or storage of household effects of an employee are exempt benefits under certain conditions. Subparagraph 58B(1)(b)(iii) applies to the situation where an employee changes their usual place of residence. That subparagraph provides that the removal or storage must be required solely because the employee is 'required' to change their usual place of residence in order to perform the duties of their employment. The term 'required' is not defined in the FBTAA. Therefore, it must take its ordinary meaning in the context in which it is used. Relevantly , The Macquarie Dictionary [ Multimedia], version 5.0.0, 01/10/01, defines 'require' as: 'to have need of; need; to impose need or occasion for; make necessary or indispensable; to place under an obligation or necessity.' Therefore, it is considered that the term 'required' as it is used in subparagraph 58B(1)(b)(iii) does not mean that the change of usual place of residence must be compulsory. Rather, the change may be one that is necessary in the circumstances in order for the employee to perform the duties of their employment. In the Administrative Appeals Tribunal case of Re Compass Group (Vic) Pty Ltd (as trustee for White Roche & Associates Hybrid Trust) v. FC of T [ 2008] AATA 845; 2008 ATC 10-051; (2008) 71 ATR 720 (Compass), the Tribunal examined the meaning of the word 'required' in the context of living-away-from-home allowance benefits under former subsection 30(1). In Compass an employee temporarily accepted a more senior position from his employer. The position required him to work an additional five and a half hours each week. The employee's usual place of residence was 60 kilometres from his place of employment. As a result of his extended working hours, the employee rented premises closer to his place of employment and stayed there during the week. His employer did not require him to do so. The employee intended to return to his home when the extended working arrangements came to an end. The employee was paid a weekly allowance by his employer for the additional costs he incurred in renting the property. The Tribunal considered whether the employee was required to live away from his usual place of residence in order to perform the duties of his employment and, therefore, whether the allowance was a living-away-from-home allowance within the meaning in former subsection 30(1). The Tribunal said in Compass: 63. ...it would seem that the agent requiring the employee to live away from his or her usual place of residence must be the employer, the inherent nature of the employment or a mixture of the two. It would seem that regard must be had to both in order to answer whether the employee is so required... 65. The word 'require' does not contemplate choice... 70. ...I come to the conclusion that a reasonable person would conclude that he was not required to rent premises...but chose to...there is no evidence that suggests that his employer required or even requested that he do so in order that he could perform his duties...The work itself does not seem to have demanded or required it...the hours were not so extended and the commuting distance...not so great that it could be thought that the work itself required it so that he could perform the duties of his employment. In this case, the employee is not required by their employer to change their usual place of residence. However, it is considered that the duties of the employee's employment are such that it is necessary for the employee to change their usual place of residence to effectively perform those duties. This is because: Therefore, it is considered that the employee is 'required' to change their usual place of residence in order to perform the duties of their employment for the purposes of subparagraph 58B(1)(b)(iii).

Legislative references: Fringe Benefits Tax Assessment Act 1986 section 20 subsection 30(1) section 58AA section 58B subparagraph 58B(1)(b)(iii) section 58C section 58D section 61C section 143A
Case references: Re Compass Group (Vic) Pty Ltd (as trustee for White Roche & Associates Hybrid Trust) v FC of T [2008] AATA 845 2008 ATC 10-051 (2008) 71 ATR 720
Other references: The Macquarie Dictionary [Multimedia], version 5.0.0, 01/10/01
Subject references: Expense payment fringe benefits FBT living-away-from-home FBT place of residence FBT relocation transport Fringe benefits tax Removal & relocation expenses Residual fringe benefits