Private ruling: FBT - living away from home allowance
Date of advice: 29 May 2025
Published: 21 July 2025
Ruling period: FBT Year Ending 31 March 20YY | FBT Year Ending 31 March 20YY | FBT Year Ending 31 March 20YY | FBT Year Ending 31 March 20YY
Date scheme commenced: 1 April 20YY

Ruling: Q1: Are the return airfares provided for relocation purposes, by the Home Country Employer to the relevant categories of employees deployed to Australia, considered to be exempt residual benefits under section 58F of the Fringe Benefits Tax Assessment Act (FBTAA)? | A1: Yes. | Q2: Are the return airfares provided for home visits, by the Home Country Employer to the relevant categories of employees deployed to Australia, considered to be residual benefits under section 45 of the FBTAA? | A3: No. | Q3: Are the accommodation allowances, provided by the Home Country Employer to the relevant categories of employees deployed to Australia, considered to be living away from home allowance (LAFHA) benefits under section 30 of the FBTAA? | A4: Yes. | Q4: Are the meal allowances provided by the Home Country Employer to the relevant categories of employees deployed to Australia, considered to be LAFHA benefits under section 30 of the FBTAA? | A5: Yes.

Relevant facts and circumstances: The Home Country Employer is in the manufacturing industry and headquartered in XXXX. Due to the specialised nature of its operations, the business model includes the deployment of service technicians, engineers and project managers to project sites around the world on a short-term basis. It would be usual practice for these employees to spend up to 200 days per annum travelling away from their home base and office. The Home Country Employer will require a number of its employees to provide subject matter expertise and support to the delivery of the Project in XXXX. There are four general 'categories' of employees who are required to travel to and from Australia over an 18-month period. The nature of the work performed is specialised and relates to the installation, commissioning, maintenance and operation of equipment at the site in Australia. Each employee deployed in Australia: • Is a salaried full-time employee in-line with their Home Country Employer employment contract; • Is governed by the terms and conditions of their Home Country Employer employment contract; • Ordinarily resides and maintains a primary place of residence in the Home Country whilst deployed in Australia; • Ordinarily performs their employment duties from the Home Country Employer in-line with their employment contract; • Is typically required to travel to support with the delivery of Home Country Employer projects around the world; • Is remunerated entirely from the Home Country Employer payroll throughout their deployment in Australia; • Will have leave entitlements continue to accrue in accordance with the Home Country Employers employment laws; • Remains a member of the Home Country Social Security Scheme whilst deployed to Australia. Certificate of Coverages' (COC) are applied for in order to maintain home country social security contributions. With respect to benefits or allowances provided to support the deployment, each employee deployed to Australia: • Is provided with a daily accommodation and a daily meal allowance whilst on deployment to Australia; • Is provided with business class airfares in respect of their travel to and from Australia. The Home Country Employer does not provide allowances to employees as part of a salary packaging arrangements (i.e. the relevant allowances are provided in addition to the ordinary remuneration). There are a number of other costs that the employees may incur personally. Where these costs are job-related and within policy, they are eligible to receive a reimbursement of these expenses. These expenses are separately analysed as part of the fringe benefits tax return process and are not within the scope of this ruling. Each employee deployed to Australia is provided with a return flight to XXXX every 6 weeks, for 1 week at a time, throughout the duration of their Australian deployment. The flight is not mandatory and where not utilised by the employee, the employee is provided with a payment to recognise the cost saving to the Home Country Employer. This case payment is subject to PAYG withholding in Australia and taxable in the employee's Australian income tax return. When in XXXX, each employee is required to return to the Home Country Employers Headquarters to undertake further project planning and review (i.e, they are required to continue working while in XXXX). The cost of the accommodation, meal allowances and the return airfares are paid directly by the Home Country Employer. The cost of these are borne by the Australian Permanent Establishment (PE). The costs of all remuneration with respect to the deployed employees are borne by the Australian PE. Each employee deployed in Australia is required to undertake the duties of their employment pre-departure in XXXX, during their transit to Australia and upon arrival in Australia. Each employee is obliged to submit 'travel reports' to their superior, outlining the activities performed whilst travelling. Each employee deployed in Australia is prohibited from having their family or friends accompany them to Australia. Each employee is not permitted to combine their Australia deployment with a period of private stay or a holiday. Each employee deployed to Australia is required to seek accommodation in the vicinity of the Project. Each employee has discretion in choosing their type of accommodation. Generally, most employees will choose to stay in in hotel/motel accommodation. Upon finalising their employment duties in Australia, each employee is required to return to XXXX and report back to their superior at the Home Country Employers Headquarters. The Home Country Employer has an Australian Permanent Establishment and will be filing Australian corporate income tax returns. Each employee deployed to Australia will be subject to income taxation in Australia, will register for a Tax File Number (TFN) and lodge an Australia income tax return for each relevant financial year. There is Double Taxation Agreement (DTA) between Australia and XXXX. Assumptions For the purposes of the private ruling, the Commissioner makes the following assumption: • The employees are subject to taxation in Australia, when they are deployed to Australia, because of the application of the DTA. • The Home Country Employer meets the National Employment Standards (NES) in respect of all overseas employees deployed to Australia.

Relevant legislative provisions: Fringe Benefits Tax Assessment Act 1986 section 7 | Fringe Benefits Tax Assessment Act 1986 section 20 | Fringe Benefits Tax Assessment Act 1986 section 24 | Fringe Benefits Tax Assessment Act 1986 section 30 | Fringe Benefits Tax Assessment Act 1986 section 45 | Fringe Benefits Tax Assessment Act 1986 section 51 | Fringe Benefits Tax Assessment Act 1986 section 52 | Fringe Benefits Tax Assessment Act 1986 section 58F | Fringe Benefits Tax Assessment Act 1986 section 136(1) | Fringe Benefits Tax Assessment Act 1986 section 143A | Income Tax Assessment Act 1997 section 8-1 | Taxation Administration Act 1953 section 12-35 of Schedule 1 Agreement between Australia XXXX | OECD Model Tax Convention on Income and Capital, condensed version, 22 July 2010 | Taxation Ruling 2021/1 Income tax: when are deductions allowed for employees' transport expenses? | Taxation Ruling 2021/4 Income tax and fringe benefits tax: employees: accommodation and food and drink expenses travel allowances, and living-away-from-home allowances | Practical Compliance Guideline 2021/3 Determining if allowances or benefits provided to an employee relate to travelling on work or living at a location - ATO compliance approach

Reasons for decision: Summary: The return airfares provided for relocation purposes, by the Home Country Employer to the relevant categories of employees deployed to Australia, are considered to be residual benefits under section 45 and exempt residual benefits under section 58F of the FBTAA, where they are living away from home. Therefore, they are not fringe benefits as defined under subsection 136(1) of the FBTAA. | Detailed Reasoning - Detailed Reasoning: The factual scenario in this case involves employees who are working on secondment in Australia. The employees remain on the payroll of their Home Country Employer whilst they are working here. The Home Country Employer has an Australian PE. There is a legislated DTA in force between Australia and the Home Country. The DTA allocates the taxing rights between the two jurisdictions over different categories of income. For DTA purposes, the type of remuneration paid to the employees whilst they are deployed, is 'income from employment'. This type of income is dealt with under Article 14. We are advised that each employee deployed will be subject to income taxation in Australia, under Australian law. It is assumed that this is due to the operation of the DTA. It is noted that, as the income is deemed to be taxed in Australia, the Australian employer will be deemed to be the employer for the purposes of the DTA. [1] | Detailed Reasoning - Fringe Benefit: A 'fringe benefit' is defined in subsection 136(1) of the FBTAA, which requires, inter alia, the following conditions to be satisfied: 1. A benefit is provided at any time during the year of tax. 2. The benefit is provided to an employee or an associate of the employee. 3. The benefit is provided by: (i) their employer; or (ii) an associate of the employer; or (iii) a third party other than the employer or an associate under an arrangement between the employer or associate of the employer and the third party; or (iv) a third party other than the employer or an associate of the employer, if the employer or an associate of the employer: (A) participates in or facilitates the provision or receipt of the benefit; or (B) participates in, facilitates or promotes a scheme or plan involving the provision of the benefit; and the employer or associate knows, or ought reasonably to know, that the employer or associate is doing so; 4. The benefit is provided in respect of the employment of the employee. 5. The benefit is not one that is specifically excluded as per paragraphs (f) to (s) of the definition of a fringe benefit in subsection 136(1). | Detailed Reasoning - Is a benefit provided?: Subsection 136(1) of the FBTAA provides a broad definition of a 'benefit' as: any right (including a right in relation to, and an interest in, real or personal property), privilege, service or facility and, without limiting the generality of the foregoing, includes a right, benefit, privilege, service or facility that is, or is to be, provided under: (a) an arrangement for or in relation to: (i) the performance of work (including work of a professional nature), whether with or without the provision of property; (ii) the provision of, or of the use of facilities for, entertainment, recreation, or instructions; or (iii) the conferring of rights, benefits or privileges for which remuneration is payable in the form of a royalty, tribute, levy or similar exaction; (b) a contract of insurance; or The definition of 'provide' and 'provider' in subsection 136(1) of FBTAA are as follows: | Detailed Reasoning - provide:: (a) in relation to a benefit - includes allow, confer, give, grant or perform; and (b) ... provider, in relation to a benefit, means the person who provides the benefit. The Home Country Employer provides the relevant categories of employees deployed to Australia, with return airfares for relocation purposes. It is considered that the airfares meet the definition of a benefit and that this condition is satisfied. | Detailed Reasoning - Is a benefit provided to an employee or an associate of an employee?: An employee is defined in subsection 136(1) of the FBTAA to include a current, future and former employee. Subsection 136(1) defines a 'current employee' to mean a person who receives, or is entitled to receive, salary or wages. 'Salary or wages', as defined in subsection 136(1) of the FBTAA, means payments from which an amount must be withheld under section 12-35 of Schedule 1 to the Taxation Administration Act 1953 . Whilst the relevant categories of employees are working on deployment in Australia, they are remunerated entirely from the XXXX payroll. For DTA purposes, the type of remuneration paid to the employees is 'income from employment'. The taxing rights over this income type is dealt with under Article 14 of the DTA. We are advised that in this case the Home Country Employer has a PE in Australia, and that each employee deployed to Australia will be subject to income taxation in Australia. It is therefore, assumed that the PE is deemed to be the employer for the purposes of the DTA. Notwithstanding this, it is considered that the benefits by the Home Country Employer are provided by an employer to an employee. Therefore, this condition is satisfied. | Detailed Reasoning - Is it provided in respect of employment?: 'Employee' is defined in subsection 136(1) of the FBTAA as a current, former, or future employee. In this case, the relevant category of employees are employees of the Home Country Employer and are also deemed to be employees of the PE. The airfares are provided to enable the employees to travel to and from Australian to perform their employment duties. It is considered that the provision of the airfares to the relevant category of employees is sufficiently and materially connected [2] , to their employment, and as such, is considered to be 'in respect of' their employment. Therefore, this condition is satisfied. | Detailed Reasoning - Residual Benefit: Section 45 of the FBTAA defines residual benefits as: | Detailed Reasoning - 45 Residual benefits: A benefit is a residual benefit for the purposes of this Act is the benefit is not a benefit by virtue of a provision of Subdivision A of Divisions 2 to 11 (inclusive) That is, a residual benefit arises when an employee is provided with a benefit that does not fit into any of the other more specific benefit types in the FBTAA. Division 5 and Division 11 are potentially relevant to this ruling. Division 5 of the FBTAA applies to expense payment fringe benefits. In this case, there is no payment made nor was there a reimbursement made for an expenditure incurred by the employee. Therefore, an expense payment fringe benefit will not be provided. Division 11 applies to property fringe benefits. For a property benefit to arise the property must be 'provided'. In the context of property fringe benefit, "provide" is a defined term under subsection 136(1). Provision of property is the disposal of the provider's beneficial interest in the property, or the legal ownership of the property. A residual benefit will arise from the use of the property, instead of a property benefit. In this case the employees are able to use the airfares for relocation purposes however, they cannot transfer or sell them, for example. As they are not given all of the rights of ownership, it is considered that a residual benefit arises from the provision of the airfares. | Detailed Reasoning - Exempt Residual Benefit: A benefit that is an exempt benefit in relation to the year of tax is not a 'fringe benefit'. The provision of a car, expense payment, property or residual benefit which is in respect of 'relocation transport' is an exempt benefit under section 58F of the FBTAA. Section 58F states: | Detailed Reasoning - Exempt benefits - relocation transport: Where: (a) a car benefit, an expense payment benefit, a property benefit or a residual benefit is provided in, or in respect of, a year of tax in respect of the employment of an employee of an employer; (b) the benefit is in respect of relocation transport; ...... The meaning of 'relocation transport' is contained in section 143A of the FBTAA. Relocation transport is transport that enables an employee to relocate to a new residence in circumstances where they are required to live away from home in order to perform employment-related duties or are similarly required to relocate their usual place of residence. Each requirement from paragraphs (a) to (g) of section 143A need to be satisfied for the Return Flights to be relocation benefits. (a) a specified type of benefit is provided to an employee (or their associate) in respect of the employment of the employee which is in respect of or in connection with the provision of transport It is considered that the Home Country Employer is providing the relevant category of employees with a residual benefit, as such, it is a benefit of the type specified in paragraph 143A(a). | Detailed Reasoning - (b) The transport, meals or accommodation is for a family member: Subsection 136(1) of the FBTAA defines 'family member' to mean 'the employee', 'the spouse of the employee', and 'a child of the employee'. The Home Country Employer provides the Return Flights to the relevant category of employees, therefore satisfying the requirements in paragraph 134A(b) of the FBTAA. (c) The transport is required solely because the employee is or was required to live away from their usual place of residence in order to perform the duties of that employment The conditions in paragraph 143A(c) require the transport is required solely because: (i) the employee is required to live away from his or her usual place of residence in order to perform the duties of that employment; (ii) the employee, having lived away from his or her usual place of residence in order to perform the duties of that employment, is required to return to his or usual place of residence: (A) in order to perform those duties; or (B) because the employee has ceased to perform those duties; or (iii) the employee is required to change his or her usual place of residence in order to perform the duties of that employment. | Detailed Reasoning - Are the employees required to live away from home?: To satisfy the conditions in paragraph 143A(c) it needs to be determine if the relevant category of employees are required to live away from home. Guidance for this can be found in TR 2021/4 Income tax and fringe benefits tax: employees: accommodation and food and drink expenses, travel allowances, and living-away-from-home allowances. Paragraph 42 sets out key indicators which would indicate whether an employee is living at a location away from their usual residence or travelling on work: A. Whether there is a change in the employee's regular place of work. B. The length of the overall period the employee will be away from their usual residence C. The nature of the accommodation D. Whether the employee is, or can be, accompanied by or visited by family or friends. Each of these factors is considered in further detail below. | Detailed Reasoning - Change in the employee's regular place of work: Paragraph 45 of TR 2021/4 outlines that where there is a change in the employee's regular place of work and the employee incurs accommodation and meal expenses to be closer to their new regular place of work, the employee will be living at that new location away from their usual residence. Conversely, where there is no change in the employee's regular place of work and the employee incurs accommodation and food and drink expenses when they temporarily attend and stay overnight at another location in the course of carrying out their income-producing activities, the employee will not be living at the location they visit and work at temporarily (paragraph 46 of TR 2021/4). The Commissioner's view of the concept of 'regular place of work' is outlined in paragraphs 24 - 38 of Taxation Ruling TR 2021/1: Income tax: when are deductions allowed for employees' transport expenses ? which states: " 25. Most employees have a regular place of work, being a usual or normal place where the employee starts and finishes their work duties with a particular employer. 26. In most cases, identifying an employee's regular place of work is clear. In circumstances where it isn't clear, it may be necessary to consider in more depth the contract of employment, customary practice, the nature of the work duties, where these duties commence and at what point in time the employee is under the direction and control of their employer in order to determine where the employee's regular place of work is. 32. ...In situations where it is difficult to conclude whether a second or subsequent place of work is also a regular place of work, an actual or anticipated duration of three months or more at the location would usually be sufficient for the location to amount to a regular place of work." | Detailed Reasoning - The length of the period away: Paragraph 48 explains that the 'length of period away' means the overall period of time the employee spends living at a particular location for work. Where an employee is living at one location for work for an extended period, that period is not broken by short trips they take from that location, for example travelling back to their usual residence on weekends or when travelling on work from that location. Generally, the longer an employee spends away from their usual residence for work, the more likely the employee is living at the location. In relation to the 'length of period away' from their usual place of residence and the amount of time spent at the placement location is not indicative of the employee relocating to establishing residence at the location of the placement. An employee generally will not establish residence and be living at a location away from their usual residence where the overall period that they stay away from their usual residence in the course of performing their income-producing activities is reasonably short. | Detailed Reasoning - The nature of the accommodation: Paragraphs 56 and 58 explains that the nature of an employee's accommodation is relevant but does not determine whether the employee is living at a location away from their usual residence. Generally, where an employee works away from home for a considerable period and, for that period, stays in accommodation generally used for longer term accommodation (such as a house, unit, apartment or caravan), this would support a view that they are living at a location away from their usual residence. Paragraph 59 of TR 2021/4 notes that the use of short-term accommodation such as hotels and motels located close to the temporary work location is generally an indication that the employee is travelling on work. | Detailed Reasoning - Whether the employee is, or can be, accompanied by family or visited by family and friends: Paragraph 60 provides that an employee who is living at a location away from their usual residence can generally be accompanied or visited by their family and friends. However, if an employee cannot be accompanied by family or visited by family and friends, this tends to indicate that the employer retains a degree of control over the employee outside their standard workday and which may contribute to an overall impression that the employee is travelling on work during this period. | Detailed Reasoning - Application to your circumstances: Weighing up the four factors above and considering the application to the facts, it is our view that employees are living at a location away from their usual residence when they are deployed. However, for the employees that are in Australia for less than 90 days, whether they are living away from home will depend in their individual facts and circumstances. It is more likely that not the employee's regular place of work has changed, and they are living away from home unless the requirements of Practical Compliance Guideline 2021/3 - Determining if allowances or benefits provided to an employee relate to travelling on work or living at a location - ATO compliance approach (PCG 2021/3) are satisfied. | Detailed Reasoning - Practical Compliance Guideline 2021/3: Under PCG 2021/3, the Commissioner will accept that an employee is travelling on work and will generally not apply compliance resources to determine if benefits received relate to expenses for living at a location when all the following circumstances are satisfied: Table 1: Circumstances to qualify for travel allowances | Detailed Reasoning - The employee: • provides an allowance to an employee or pays or reimburses accommodation and food and drink expenses for the employee • does not provide the reimbursement or payment as part of a salary-packaging arrangement and the employee is not given the option to elect to receive additional remuneration in lieu • includes the travel allowance on the employee's payment summary or income statement and withholds tax, where appropriate, and • obtains and retains the relevant documentation to substantiate the fact that all of these circumstances are met. • is away from their normal residence for work purposes • does not work on a fly-in fly-out or drive-in drive-out basis • is away at the same work location for no more than 21 calendar days at a time continuously • is away at the same work location for no more than 90 calendar days in total in an FBT year, and • must return to their normal residence as soon as practicable when their period away ends. Where the relevant category of employees are living away from their usual residence the condition in subparagraph 143A(c)(i) is met in relation to the first flight to Australia provided by the Home Country Employer. This flight is solely provided because the employee is required to live away from their usual place of residence overseas in order to perform the duties of their employment with the Home Country Employer. Similarly, the condition in subparagraph 143A(c)(ii) is also satisfied in relation to the last flight back to their overseas homes at the end of their assignments. This is because the employee's, having lived away from their usual place of residence in order to perform the duties of that employment, are required to return to their usual place of residence once they have ceased to perform those duties at the Australian locations. | Detailed Reasoning - (d) The transport is provided to enable a family member to take up residence: The conditions in paragraph 143A(d) are met in relation to the: (a) the first flight to Australia to the Australian location in XXXX, as it enables the employee to take up residence near their new assignment location while living away from their usual place of residence overseas per subparagraph 143A(d)(i) and (b) the last flight back overseas at the end of the assignment as it enables the employee to return to their usual place of residence overseas, per subparagraph 143A(d)(ii). This condition would not be met in the instance where an employee elects for the last flight to be to a location other than where their usual place of residence is overseas. In such a case, the transport would not be provided to enable the employee to take up residence at their usual place of residence. | Detailed Reasoning - (e) If the transport is for the spouse, or a child, of the employee: The condition in paragraph 143A(e) requires that the transport provided to a spouse or child of the employee, is not provided to enable the spouse or child to accompany the employee while the employee or the spouse or child is undertaking travel in the course of performing the duties of their employment. In the case of the spouse or child, this is duties of employment with the same employer or as an employee of the employee. The Home Country Employer has advised that no family members are travelling to and from Australia with the employees therefore it is considered that this condition is not relevant. (f) If the transport is for the employee - the transport is not provided while the employee is undertaking travel in the course of performing the duties of that employment Taxation Ruling 2021/1 Income tax: when are deductions allowed for employee's transport expenses? (TR 2021/1) provides guidance on whether travel expenses incurred by an employee are "in the course of" gaining or producing assessable income. TR 2021/1 explains that "other ways that this has been expressed in the context of transport expenses, is that the employee is travelling "on work" [3] , the travel is part of the employment, or the travel is an incident of the employment." [4] As per paragraph 84 of TR 2021/1, where an employee is living at a location away from their usual residence (usually on a temporary basis) for work but retains a connection to their previous home (for example, family remains behind), transport between their new work location and their previous home would not be deductible. This is the case even if the agreement with their employer involves the employer agreeing to provide or fund such transport. As addressed previously, it is considered that the relevant category of employees are living at a location away from their usual residence. Unless the requirements of PCG 2021/3 are satisfied, it is considered that in these circumstances the employees are not travelling while performing the duties of their employment with the Home County Employer and therefore, the condition in paragraph 143(A)(f) is met. | Detailed Reasoning - (g) The benefit is not provided under a non-arm's length arrangement: There is no suggestion on the information provided that the Return Flights are provided under a non-arm's length arrangement therefore the condition in paragraph 134A(g) is met. It is considered that the Return Flights satisfy the conditions therefore are section 143A relocation transport benefits. | Detailed Reasoning - Conclusion: In this instance where the relevant category of employees are living away from home and maintain their usual place of residence, being their customary or habitual place of residence outside of Australia, the benefit cannot be a housing benefit. The benefit provided is therefore a residual fringe benefit under section 45 of the FBTAA as it does not fit within the other specific categories contained in Divisions 2 to 11 of the FBTAA. Having regard to the requirements in sections 143A and 58F of the FBTAA, it is considered that the return flights provided by the Home Country Employer to the relevant category of employees between their overseas home locations and assignment locations in Australia are in respect of 'relocation transport' and are therefore, exempt residual benefits under section 58F. As such they are excluded from being fringe benefits. It is assumed that the necessary evidence as specified under paragraph 58F(c)(ii) is provided to the employer before the FBT return for the year must be lodged. | Detailed Reasoning - Question 2: Are the return airfares provided for home visits, by the Home Country Employer to the relevant categories of employees deployed to Australia, considered to be residual benefits under section 45 of the FBTAA? | Summary: The return airfares provided for home visits by the Home Country Employer to the relevant categories of employees deployed to Australia, are considered to be residual benefits under section 45 of the FBTAA. As all of the requirements are satisfied, the airfares are residual fringe benefits as defined under subsection 136(1) of the FBTAA. | Detailed Reasoning - Detailed Reasoning: The relevant of categories of employees are provided return airfares for the purpose of home visits every 6 weeks, one week at a time, for the duration of their Australian deployment. As per the above discussion, the airfares are a residual benefit under section 45 of the FBTAA. A benefit that is an exempt benefit in relation to a year of tax is not a fringe benefit. A residual benefit which is in respect of relocation transport is an exempt benefit under section 58F. The meaning of 'relocation transport' is contained in section 143A. A residual benefit which is in respect of 'relocation transport' is an exempt benefit under section 58F. As explained above, each requirement of paragraph (a) to (g) of section 143A. It is noted that the conditions in paragraph (c) require the transport is solely because of: (i) the employee is required to live away from his or her usual place of residence in order to perform the duties of that employment; (ii) the employee, having lived away from his or her usual place of residence in order to perform the duties of that employment, is required to return to his or usual place of residence: (A) in order to perform those duties; or (B) because the employee has ceased to perform those duties; or (iii) the employee is required to change his or her usual place of residence in order to perform the duties of that employment. Condition (ii) requires that the transport is to allow the employee, having lived away from their usual place of residence to perform their employment duties, to then return to their usual place of residence. That is, the transport is to allow the employee to relocate. In this case the purpose of the transport is to enable a holiday, not for the purpose of allowing the employee to relocate. It is considered that the conditions are not satisfied and therefore the exemption is not available. As discussed above, the requirements of a fringe benefit under subsection 136(1) are satisfied and therefore a residual fringe benefit arises. | Detailed Reasoning - Question 3: If the return airfares provided for home visits, by the Home Country Employer to the relevant categories of employees deployed to Australia, are considered to be residual fringe benefits as defined under subsection 136(1) of the FBTAA, can the taxable value of the airlines be reduced to nil by the otherwise deductible rule under section 52 of the FBTAA? | Summary: The taxable value of the residual fringe benefits arising from providing the airfares for home visits cannot be reduced to nil by the otherwise deductible rule under section 52 of the FBTAA. | Detailed Reasoning - Detailed Reasoning: As discussed in Question 2, the return airfares provided for home visits are considered to be residual fringe benefits. The 'otherwise deductible rule' operates to reduce the taxable value of a residual fringe benefit where the employee would have been entitled to a once-only deduction under section 8-1 of the ITAA 1997, (or where a specific provision of the tax laws applies to provide the deduction for the expense), had the employee personally incurred and paid the unreimbursed expense. As the employees are living away from their usual residence, the airfare expenses are not considered to have been incurred in the course of gaining or producing their assessable income; they are of a private or domestic nature. Therefore, the employees would not be entitled to a deduction under section 8-1 of the ITAA 1997. As a result, the 'otherwise deductible rule' does not apply. The exception would be where the requirements of PCG 2021/3 are satisfied, and employees are 'travelling on work' rather than living away from home. In this case, the taxable value of the residual fringe benefits arising from providing the airfares for home visits can be reduced to nil by the otherwise deductible rule under section 52 of the FBTAA. | Detailed Reasoning - Question 4: Are the accommodation allowances, provided by the Home Country Employer to the relevant categories of employees deployed to Australia, considered to be living away from home allowance (LAFHA) benefits under section 30 of the FBTAA? | Summary: The accommodation allowances, provided by the Home Country Employer to the relevant categories of employees deployed to Australia, are considered to be LAFHA benefits under section 30 of the FBTAA where the employees are required to live away from home. The other of the requirements are also satisfied therefore, the allowances are LAFHA fringe benefits as defined under subsection 136(1) of the FBTAA. As the LAFHAs are fringe benefits, they are not travel allowances, under subsection 900-30(3) of the Income Tax Assessment Act 1997 (ITAA 97). It is noted that the LAFHAs are not concessionally taxed, as the employees do not maintain a home in Australia, for the purposes of section 31 of the FBTAA; and they do not work on a Fly-in Fly-out (FIFO) or Drive-in Drive-out (DIDO) basis, for the purposes of section 31A of the FBTAA. | Detailed Reasoning - Detailed Reasoning: Subsection 136(1) of the FBTAA defines a LAFHA benefit as a benefit referred to in section 30 of the FBTAA. Subsection 30(1) of the FBTAA sets out the circumstances in which an allowance paid by an employer to an employee will qualify as a LAFHA benefit to an employee and states: Where: (a) At a particular time, in respect of the employment of an employee of an employer, the employer pays an allowance to the employee; and (b) It would be concluded that the whole or a part of the allowance is in the nature of compensation to the employee for: (i) Additional expenses (not being deductible expenses) incurred by the employee during a period; or (ii) Additional expenses (not being deductible expenses) incurred by the employee, and other additional disadvantages to which the employee is subject, during a period; by reason that the duties of that employment require the employee to live away from his or her normal residence; the payment of the whole, or of the part, as the case may be, of the allowance constitutes a benefit provided by the employer to the employee at that time. As previously discussed, the first condition of subsection 30(1) of the FBTAA is satisfied. The second condition of subsection 30(1) of the FBTAA requires that the allowance is paid for additional expenses that are not deductible. If the payment to the relevant group of employees is a travel allowance this condition is not satisfied. A travel allowance is paid to cover additional expenses that are "deductible expenses under section 8-1 of the ITAA 1997. It falls within the definition of 'salary and wages' and is therefore, excluded from being a fringe benefit. | Detailed Reasoning - LAFHA versus Travel Allowance: A payment is a LAFHA if it is reasonable to conclude from all the surrounding circumstances that some or all of the allowance is in the nature of compensation to the employee for additional expenses incurred, or additional expenses incurred and other disadvantages suffered, because the employee is required to live away from his or her usual place of residence in order to perform the duties of employment. Additional expenses do not include expenses for which the employee would be entitled to an income tax deduction. The whole or such part of the allowance that satisfies these tests is a LAFHA fringe benefit, the taxable value of which is calculated in accordance with the rules contained in section 31 of the FBTAA. Taxation Ruling 2021/4 Income tax and fringe benefits tax: employees: accommodation and food and drink expenses travel allowances and living-away-from-home allowances (TR 2021/4) provides guidelines on travel allowances and LAFHA. Paragraph 130 of TR 2021/4 states, the main difference between a travel allowance and a LAFHA is that a: i. travel allowance can only be paid to cover deductible accommodation and food and drink expenses and incidental expenses incurred by an employee when they are travelling on work ii. LAFHA is paid to provide compensation to an employee for the additional living expenses incurred by an employee because their duties of employment require them live at location away from their usual residence. Paragraph 133 of TR 2021/4 further provides, to determine whether an allowance is a travel allowance or a LAFHA, it is first necessary to determine what expenditure the allowance is designed to cover or compensate the employee for and whether those expenses are deductible under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997). | Detailed Reasoning - Usual residence: The term 'normal residence' is defined in subsection 136(1) of the FBTAA as the employee's usual place of residence, when the employee's usual place of residence is in Australia. The FBTAA does not provide a definition of the term 'usual place of residence'. However, subsection 136(1) of the FBTAA defines 'place of residence' to mean: (a) a place at which the person resides; or (b) a place at which the person has sleeping accommodation; whether on a permanent or temporary basis and whether or not a shared basis. In the absence of a legislative reference, it is relevant to refer to the ordinary meaning of the word 'usual'. The Macquarie Dictionary defines 'usual' to mean 'habitual or customary...'. It is accepted that, in the current circumstances, an employee's permanent and settled principal place of residence is the employee's usual place of residence. | Detailed Reasoning - Relevant factors - travelling on work versus living expenses: To be deductible under section 8-1 of the ITAA 1997, the expense must have a sufficiently close connection to the performance of the employment duties and activities through which the employee earns income. [5] It will not be enough to show some general link or causal connection between the expenditure and the production of income. Paragraph 24 of TR 2021/4 provides, if any of the following factors apply, the employee will not be travelling on work and the accommodation and food and drink expenses incurred will be living expenses and therefore not deductible: i. The expenses are incurred because the employee's personal circumstances are such that they live far away from where they gain or produce their assessable income. (personal circumstances - see paragraphs 25 to 37 of this Ruling). ii. The employee incurs the expenses because they are living at a location (living at a location - see paragraphs 38 to 78 of this Ruling). iii. The employee incurs the expenses as a result of relocating from their usual residence (relocation - see paragraphs 79 to 86 of this Ruling). | Detailed Reasoning - Personal circumstances: An employee cannot deduct accommodation and food and drink expenses they have incurred where, due to their personal circumstances, they live far away from where they gain or produce their assessable income. [6] In this case, it is the employee's work requirements and not their personal circumstances that require them to stay away from their usual residence. It is not only the fact they must stay overnight away from their usual residence to earn their assessable income, but also their 'income-producing activities' or 'work activities' which require them to do so. | Detailed Reasoning - Relocation: Where an employee has relocated for work, the costs of accommodation and food and drink will be living expenses; regardless of whether moving to the new location is required by the employer or the work. There is no suggestion that any employees have relocated based on the information provided by the Home Country Employer. It is assumed that the employees will maintain their usual residence in their home locations during the period of their assignment in Australia and return to that home or another location at the end of their assignment in Australia. | Detailed Reasoning - Living at a location: Paragraph 42 provides, the following factors would support a characterisation of an employee as living at a location away from their usual residence: • there is a change in the employee's regular place of work • the length of the overall period the employee will be away from their usual residence is a relatively long one • the nature of the accommodation is such that it becomes their usual residence • whether the employee is, or can be, accompanied by family or visited by family and friends. All the above factors should be considered, and no single factor is necessarily decisive. The weight given to each factor will vary depending on the employee's individual circumstances and is not a mathematical process. Reaching a conclusion as to whether an employee is living at a location away from their usual residence is a matter of judgment which requires a holistic assessment based on a consideration of all the factors. | Detailed Reasoning - Change in regular place of work: Most employees have a regular place of work, being a usual or normal place where the employee starts and finishes their work duties with a particular employer [7] . In most cases, identifying an employee's regular place of work is clear. In circumstances where it is not clear, it may be necessary to consider in more depth the contract of employment, customary practice, the nature of the work duties, where these duties commence and at what point in time the employee is under the direction and control of their employer in order to determine where the employee's regular place of work is. [8] Where there is a change in the employee's regular place of work and the employee incurs accommodation and food and drink expenses to be closer to their new regular place of work, the employee will be living at that new location away from their usual residence. In these circumstances, the expenses incurred are living expenses and are not deductible. In situations where it is difficult to conclude whether a second or subsequent place of work is also a regular place of work, an actual or anticipated duration of three months or more at the location would usually be sufficient for the location to amount to a regular place of work. However, consideration should also be given to matters including: i. The nature of the employment. A briefer period may be sufficient in the context of a short-term contract rather than ongoing employment, ii. The frequency at which the employee attends the workplace. Attending a location once a fortnight for four months would not usually be sufficient to establish a location as a regular place of work, iii. Whether any element of choice on the part of the employee is influential such as the choice of where to live, and iv. Whether the travel to a new workplace occur when the employee is on work time, or substantively under the direction or control of the employer. This would tend to support the characterisation of the travel to the location as being part of the employment rather than a prerequisite to travel to another regular place of work [9] . When on secondment to Australia, it is accepted that there is a change in their regular place of work. As discussed above, where employees are in Australia for less than 90 days, PCG 2021/3 should be considered on a case by case basis to determine if the PCG can be relied on and the period in Australia accepted as travel on work. | Detailed Reasoning - Length of period away from their residence: The 'length of period away' means the overall period of time the employee spends living at a particular location for work. Where an employee is living at one location for work for an extended period, that period is not broken by short trips they take from that location, for example travelling back to their usual residence on weekends or when travelling on work from that location. Generally, the longer an employee spends away from their usual residence for work, the more likely the employee is living at the location. | Detailed Reasoning - The nature of the accommodation: The nature of an employee's accommodation is relevant but does not determine whether the employee is living at a location away from their usual residence. Generally, where an employee works away from home for a considerable period and, for that period, stays in accommodation generally used for longer term accommodation (such as a house, unit or apartment or caravan), this would support a view that they are living at a location away from their usual residence. In this instance the Home Country Employer has advised the employees that are deployed to Australia are required to seek accommodation. Generally, most employees will use hotel/motel accommodation. Having regard to this, hotel accommodation tends towards a conclusion the employees are travelling on work, whereas self-contained accommodation tends to a conclusion the employees are living away from home. | Detailed Reasoning - Whether the employee is or can be accompanied by family or visited by family or friends: The Home Country Employer has advised the employees who are living at a location away from their usual residence are not to be accompanied or visited by their family and friends. In weighing up all the factors, it is concluded that the duties of the employee's employment require them to live away from their normal residence. As such, the second conditions in subsection 30(1) of the FBTAA is satisfied. | Detailed Reasoning - Conclusion: The benefit of the allowance is provided to the relevant categories of employees in respect of their employment. It is in the nature of compensation for additional expenses they might incur, where the duties of their employment require them to live away from their normal residence while they are on assignment. The employee's additional expenses are not deductible expenses. Therefore, the allowance paid to them by the Home Country Employer is a living-away-from-home-allowance fringe benefit under section 30 of the FBTAA. The LAFHA may be concessionally taxed under section 31 of the FBTAA if all of the requirements are satisfied. These are: (a) The employee maintains a home in Australia. (b) The allowance relates to the first 12 months of LAFH (c) Accommodation and food expenses are substantiated, and (d) A declaration that (a) and (b) are satisfied and given to the employer. The relevant categories of employee's do not meet condition (a) above; therefore, their circumstances do not qualify for concessional taxation treatment. Where the requirements of PCG 2021/3 are satisfied, it would be accepted the employees are travelling on work. This must be determined on a case by case basis. | Detailed Reasoning - Question 5: Are the meal allowances provided by the Home Country Employer to the relevant categories of employees deployed to Australia, considered to be LAFHA benefits under section 30 of the FBTAA? | Summary: Where the employees are required to live away from home, the meal allowances, provided by the Home Country Employer to the relevant categories of employees deployed to Australia, are considered to be LAFHA benefits under section 30 of the FBTAA. The other requirements are satisfied therefore, the allowances are LAFHA fringe benefits as defined under subsection 136(1) of the FBTAA. As the LAFHAs are fringe benefits, they cannot be travel allowances under subsection 900-30(3) of the ITAA 97 . It is noted that the LAFHAs are not concessionally taxed, as the employees do not maintain a home in Australia, for the purposes of section 31 of the FBTAA; and they do not work on a FIFO or DIDO basis, for the purposes of section 31A of the FBTAA. | Detailed Reasoning - Detailed reasoning: As discussed in Question 4, the payment of the allowances to the employees were made in respect of their employment, where the duties of the employee's employment require them to live away from their normal residence, and the allowances paid are to compensate for additional 'non-deductible' expenses. Therefore, the meal allowances provided would be considered LAFHA benefits under section 30 of the FBTAA. Where the requirements of PCG 2021/3 are satisfied, it would be accepted the employees are travelling on work. This must be determined on a case by case basis. [1] See paragraph 8.7 of the Commentary to Article 15 of the OECD Model Tax Convention on Income and Capital . Article 15 deals with income from employment and provides guidance to interpreting the DTA. [2] J & G Knowles & Associates v. Federal Commissioner of Taxation [2000] FCA 196, [26]. [3] John Holland Group Pty Ltd v Commissioner of Taxation [2015] FCAFC 82 ( John Holland ) at [45], per Edmonds J. [4] TR 2021/1 [12] [5] Paragraph 16 TR 2021/4 [6] Paragraph 25 TR2021/4 [7] Paragraph 25 TR 2021/1 Income tax: when are deductions allowed for employees' transport expenses [8] Paragraph 26 Ibid. [9] Paragraph 32 Ibid.

If the return airfares provided for home visits, by the Home Country Employer to the relevant categories of employees deployed to Australia, are considered to be residual fringe benefits as definer under subsection 136(1) of the FBTAA, can the taxable value of the airlines be reduced to nil by the otherwise deductible rule under section 52 of the FBTAA?