Private ruling: Remote Area Housing
Published: December 2013
Ruling period: 1 April 2013 to 31 March 2014
Date scheme commenced: 1 April 2013

Ruling: Q1: Will the taxable value of an expense payment fringe benefit arising from the payment or reimbursement by the employer of the housing loan interest of an employee working and residing in any one of Cairns, Mackay, Townsville or Mount Isa be reduced by 50% under subsection 60(2) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)? | A1: No, for the payment or reimbursement of the housing loan interest of an employee working and living in any one of Cairns, Mackay or Townsville. Yes, for the payment or reimbursement of the housing loan interest of an employee working and living in Mount Isa. | Q2: Will the employee's expenditure (the gross rent) in relation to an expense payment fringe benefit arising from the payment or reimbursement by the employer of the rent for rental accommodation of an employee working and residing in any one of Cairns, Mackay, Townsville or Mount Isa be reduced by 50% under subsection 60(2A) of the FBTAA? | A2: No, for the payment or reimbursement of the rent of an employee working and living in any one of Cairns, Mackay or Townsville. Yes, for the payment or reimbursement of the rent of an employee working and living in Mount Isa. | Q3: If the answer to Question 1 is 'yes', is the remaining 50% of the taxable value of the expense payment fringe benefit exempt under subsection 57A(1) of the FBTAA up to the $30,000 capping threshold? | A3: Whether the benefit is effectively exempt under subsection 57A(1) of the FBTAA depends on whether the 'aggregate non-exempt amount' in relation to the relevant employee remains at no more than the $30,000 capping threshold for that particular individual. | Q4: If the answer to Question 2 is 'yes', is the remainder of the taxable value of the expense payment fringe benefit exempt under subsection 57A(1) of the FBTAA up to the $30,000 capping threshold? | A4: Again, whether the benefit is effectively exempt under subsection 57A(1) of the FBTAA depends on whether the 'aggregate non-exempt amount' in relation to the relevant employee remains at no more than the $30,000 capping threshold for that particular individual.

Relevant facts and circumstances: The employer is registered as a charitable institution. The employer is also registered as a public benevolent institution (PBI) endorsed for the purposes of section 123C of the FBTAA. The employer has an ABN. Employees work for the employer in any one of Cairns, Mackay, Townsville or Mount Isa. These locations are the usual place of employment for those employees. The employees reside in the towns in which they work for the employer. Some employees have taken out housing loans in respect of housing located at Cairns, Mackay, Townsville or Mount Isa (as applicable). The housing loans are provided by independent third party providers not directly associated with the employer. The employer has, or will, enter into valid salary sacrifice arrangements (SSAs -Taxation Ruling TR 2001/10, Income tax: fringe benefits tax and superannuation guarantee: salary sacrifice arrangements , provides guidance on what constitutes an 'effective SSA') with certain employees to either pay or reimburse the employees' housing loan interest. Where the employer either pays or reimburses the employees' housing loan interest these are the only benefits received by those employees from the employer. Some employees pay rent in respect of rental accommodation located at Cairns, Mackay, Townsville or Mount Isa (as applicable). The rental accommodation is provided by independent third party providers not directly associated with the employer. The employer has, or will, enter into valid SSAs with certain employees to either pay or reimburse the employees' rent of the rental accommodation. Where the employer either pays or reimburses the employees' rent of rental accommodation these are the only benefits received by those employees from the employer. Such SSAs are only available whilst the employees are still employed by the employer. The employees occupy or use the housing or rental accommodation (as applicable) as the employee's usual place of residence. The employer's stated objective for offering this assistance is to attract new employees and also to retain its existing employees. The housing constitutes a 'dwelling' as that term is defined in subsection 136(1) of the FBTAA. The rental accommodation constitutes a 'unit of accommodation' as that term is defined in subsection 136(1) of the FBTAA. The rent is, or will be, in respect of the subsistence of a lease or licence in respect of the rental accommodation. It is customary for employers in the industry to provide housing assistance to their employees.

Relevant legislative provisions: Fringe Benefits Tax Assessment Act 1986 Subsection 5B(1D) | Fringe Benefits Tax Assessment Act 1986 Subsection 5B(1E) | Fringe Benefits Tax Assessment Act 1986 Subsection 5B(1F) | Fringe Benefits Tax Assessment Act 1986 Subsection 5B(1H) | Fringe Benefits Tax Assessment Act 1986 Subsection 5B(1K) | Fringe Benefits Tax Assessment Act 1986 Subsection 5B(1L) | Fringe Benefits Tax Assessment Act 1986 Subsection 5E(3) | Fringe Benefits Tax Assessment Act 1986 Section 20 | Fringe Benefits Tax Assessment Act 1986 Section 25 | Fringe Benefits Tax Assessment Act 1986 Section 57 | Fringe Benefits Tax Assessment Act 1986 Subsection 57A(1) | Fringe Benefits Tax Assessment Act 1986 Section 60 | Fringe Benefits Tax Assessment Act 1986 Subsection 60(2) | Fringe Benefits Tax Assessment Act 1986 Paragraph 60(2)(d)(i) | Fringe Benefits Tax Assessment Act 1986 Subsection 60(2A) | Fringe Benefits Tax Assessment Act 1986 Paragraph 60(2A)(d)(i) | Fringe Benefits Tax Assessment Act 1986 Section 123C | Fringe Benefits Tax Assessment Act 1986 Section 135Q | Fringe Benefits Tax Assessment Act 1986 Subsection 135Q(1) | Fringe Benefits Tax Assessment Act 1986 Subsection 135Q(3) | Fringe Benefits Tax Assessment Act 1986 Subsection 136(1) | Fringe Benefits Tax Assessment Act 1986 Paragraph 140(1)(a) | Fringe Benefits Tax Assessment Act 1986 Paragraph 140(1)(b) | Fringe Benefits Tax Assessment Act 1986 Subsection 140(1A) | Fringe Benefits Tax Assessment Act 1986 Subsection 140(1B) | Fringe Benefits Tax Assessment Act 1986 Paragraph 140(1B)(d) | Fringe Benefits Tax Assessment Act 1986 Subsection 140(1C) | Fringe Benefits Tax Assessment Act 1986 Subsection 140(1CA) | Fringe Benefits Tax Assessment Act 1986 Subsection 140(1D) | Fringe Benefits Tax Assessment Act 1986 Subsection 142(1) | Fringe Benefits Tax Assessment Act 1986 Subsection 142(1A) | Fringe Benefits Tax Assessment Act 1986 Subsection 142(2E) | Fringe Benefits Tax Assessment Act 1986 Paragraph 142(2E)(a) | Fringe Benefits Tax Assessment Act 1986 Paragraph 142(2E)(b)

Reasons for decision: Summary: Detailed reasoning 1. Subsection 60(2) of the FBTAA provides for a reduction of 50% of the taxable value of expense payment fringe benefits arising in respect of remote area housing loan interest provided certain conditions are met. Subsection 60(2) of the FBTAA states: 60(2) [Recipient of expense payment fringe benefit] Where: (a) the recipient of an expense payment fringe benefit in relation to an employer in relation to a year of tax is an employee of the employer; (b) the recipients expenditure is in respect of interest in respect of a remote area housing loan connected with a dwelling; (c) the recipient occupied or used the dwelling as his or her usual place of residence during a period (in this section referred to as the ``occupation period'' ) during which the interest accrued; and (d) the fringe benefit was not provided under: (i) a non-arm's length arrangement; or (ii) an arrangement that was entered into by any of the parties to the arrangement for the purpose, or for purposes that included the purpose, of enabling the employer to obtain the benefit of the application of this section; the amount that, but for this subsection, would be the taxable value of the fringe benefit in relation to the year of tax shall be reduced by 50% of so much of that amount as relates to the occupation period. 2. Therefore, the reduction afforded by subsection 60(2) of the FBTAA is available where all of the following conditions are met: (a) There is an expense payment fringe benefit in relation to an employer. (b) The recipient of the expense payment fringe benefit is an employee of the employer. (c) The employee's expenditure is in respect of interest in respect of a remote area housing loan connected with a dwelling. (d) The dwelling is used as the employee's usual place of residence. (e) The fringe benefit is not provided under a non-arm's length arrangement. (f) The fringe benefit is not entered into by any of the parties for the purpose, or for purposes that included the purpose, of enabling the employer to obtain the benefit of the application of subsection 60(2) of the FBTAA. | Detailed Reasoning - (a) Is there an expense payment fringe benefit?: 3. In basic terms, an expense payment benefit, under section 20 of the FBTAA, is either where an employer (or associate) reimburses an employee (or associate) for expenses incurred by the employee (or associate) or where an employer (or associate) pays a third party in satisfaction of expenses incurred by an employee (or associate). 4. Therefore, as the employer has, or will, either pay or reimburse the employees' housing loan interest these employees are, or will be, being provided with an expense payment benefit under section 20 of the FBTAA. 5. Subsection 136(1) of the FBTAA defines an 'expense payment fringe benefit' as meaning 'a fringe benefit that is an expense payment benefit'. 6. Also in basic terms, a fringe benefit, as defined in subsection 136(1) of the FBTAA, is a benefit provided to an employee (or associate) by an employer (or associate) or a third party under an arrangement with the employer (or associate) in respect of the employee's employment and such benefit is not otherwise exempted. 7. The employer has, or will, enter into valid SSAs with the employees to either pay or reimburse the employees' housing loan interest, therefore, it is considered that under such circumstances the relevant benefits are being provided in respect of the employee's employment. 8. Consequently, in such circumstances, the employer will be providing those employees with expense payment fringe benefits (unless otherwise exempted). 9. This condition is regarded as being met (for the purposes of determining further whether a reduction under subsection 60(2) of the FBTAA can apply in this case). | Detailed Reasoning - (b) Is the recipient of the expense payment fringe benefit an employee of the employer?: 10. It is only the employees of the employer who enter into the relevant SSAs who receive the relevant fringe benefits. 11. Such SSAs are only available whilst the employees are still employed by the employer. 12. This condition is met. | Detailed Reasoning - (c) Is the employee's expenditure in respect of interest in respect of a remote area housing loan connected with a dwelling?: 13. To satisfy this condition the following two basic prerequisites must be met: (a) The employee's expenditure is in respect of housing loan interest. (b) The housing loan is a remote area housing loan connected with a dwelling. (a) Is the employee's expenditure is in respect of housing loan interest? 14. This requirement is met as the expenditure by the employees is in respect of housing loan interest. (b) Is the housing loan a remote area housing loan connected with a dwelling? 15. The expression 'remote area housing loan connected with a dwelling' is defined in subsection 142(1) of the FBTAA. Subsection 142(1) of the FBTAA states: 142(1) [Remote area housing loan] In this Act, a reference, in relation to a year of tax in relation to an employee of an employer, to a remote area housing loan connected with a dwelling is a reference to a housing loan relating to the dwelling where: (a) during the whole of the period (in this subsection referred to as the ``occupation period'' ) in the year of tax when the employee occupied or used the dwelling as his or her usual place of residence: (i) the dwelling was situated in a State or internal Territory and was not at a location in, or adjacent to, an eligible urban area; and (ii) the employee was a current employee of the employer and the usual place of employment of the employee was not at a location in, or adjacent to, an eligible urban area; (b) the common conditions set out in subsection (2E) are satisfied in relation to the occupation period; and (c) (Omitted by No 95 of 1988) (d) the loan was not made to the employee pursuant to: (i) a non-arm's length arrangement; or (ii) an arrangement that was entered into by any of the parties to the arrangement for the purpose, or for purposes that included the purpose, of enabling the employer to obtain the benefit of the application of section 60. 16. Therefore, there is a 'remote area housing loan connected with a dwelling' under subsection 142(1) of the FBTAA, where all of the following conditions are met: (a) There is a housing loan related to a dwelling. (b) The dwelling is occupied or used by a current employee of the employer as the employee's usual place of residence. (c) The dwelling is situated in a State or Territory and is not at a location in, or adjacent to, an eligible urban area. (d) The usual place of employment of the employee was not at a location in, or adjacent to, an eligible urban area. (e) The common conditions set out in subsection 142(2E) of the FBTAA are met. (f) The loan is not provided to the employee under a non-arm's length arrangement. (g) The loan is not made to the employee pursuant to an arrangement entered into by any of the parties for the purpose, or for purposes that included the purpose, of enabling the employer to obtain the benefit of the application of section 60 of the FBTAA. (a) Is there a housing loan related to a dwelling? 17. The housing constitutes a 'dwelling' as that term is defined in subsection 136(1) of the FBTAA. 18. The housing loans are, or will be, in relation to such housing. 19. This condition is met. (b) Is the dwelling is occupied or used by a current employee of the employer as the employee's usual place of residence 20. This condition is met as the housing is occupied or used by current employees of the employer as the employee's usual place of residence. (c) Is the dwelling not at a location in, or adjacent to, an eligible urban area? 21. Paragraph 140(1)(a) of the FBTAA sets out what is comprises an 'eligible urban area' and paragraph 140(1)(b) of the FBTAA sets out what comprises 'a location that is adjacent to an eligible urban area'. 22. Paragraph 140(1)(a) of the FBTAA provides that an 'eligible urban area' is a reference to an area that is an urban centre with a census population (according to the 1981 Census) of not less than 14,000 or 28,000 for an urban centre located in Zone A or Zone B for income tax purposes. 23. Paragraph 140(1)(b) of the FBTAA provides that 'a location that is adjacent to an eligible urban area' is either: (i) situated less than 40 kilometres, by the shortest practicable surface route, from the centre point of an eligible urban area with a census population (according to the 1981 Census) of less than 130,000; or (ii) situated less than 100 kilometres, by the shortest practicable surface route, from the centre point of an eligible urban area with a census population (according to the 1981 Census) of at least 130,000. 24. Therefore, a location will be in a remote area (and not near an eligible urban area), under paragraphs 140(1)(a) and 140(1)(b) of the FBTAA, where it is: · At least 40 kilometres from an urban centre with a census population of 14,000 to less than 130,000 (according to the 1981 Census) if that town or city is not in Zone A or Zone B for income tax purposes. · At least 40 kilometres from an urban centre with a census population of 28,000 to less than 130,000 (according to the 1981 Census) if that town or city is in Zone A or Zone B for income tax purposes; and · At least 100 kilometres from an urban centre with a census population of 130,000 or more (according to the 1981 Census). 25. However, subsection 140(1A) of the FBTAA allows a different definition of 'a location which is adjacent to an eligible urban area'. Under the limited circumstances outlined in subsection 140(1A) of the FBTAA, a location is 'remote' where it is 100 kilometres or more, by the shortest practicable surface route, from an urban centre with a census population (according to the 1981 Census) of 130,000 or more. 26. Nevertheless, subsection 140(1A) of the FBTAA only applies where: (i) The benefit is in respect of the employment of an employee of an employee of an employer described in subsection 140(1B) of the FBTAA or in respect of the employment of an employee described in subsection 140(1C), 140(1CA) or 140(1D) of the FBTAA; and (ii) The benefit is a 'housing benefit'. (i) Is the relevant benefit in respect the employment of an employee of an employer described in subsection 140(1B) or in respect of the employment of an employee described in subsection 140(1C), 140(1CA) or 140(1D)? 27. It is considered that the employees' employment does not fall within any of subsections 140(1C), 140(1CA) or 140(1D) of the FBTAA. 28. However, paragraph 140(1B)(d) of the FBTAA states that subsection 140(1A) of the FBTAA can apply to 'an employer that is a registered charity'. 29. Therefore, as the employer is a registered charity, subsection 140(1A) of the FBTAA prima facie applies in this particular case. (ii) Is the relevant benefit a 'housing benefit'? 30. Subsection 136(1) of the FBTAA defines the term 'housing benefit' as meaning a benefit referred to in section 25 of the FBTAA. Section 25 of the FBTAA states: | Detailed Reasoning - 25 HOUSING BENEFITS: The subsistence during the whole or a part of a year of tax of a housing right granted by a person (in this section referred to as the provider ) to another person (in this section referred to as the recipient ) shall be taken to constitute a benefit provided by the provider to the recipient in respect of the year of tax. 31. The term 'housing right' is defined in subsection 136(1) of the FBTAA as follows: housing right , 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. 32. However, the benefit provided by the employer, in this particular instance, is the payment or reimbursement of the employees' housing loan interest and not the grant of a lease or license for the employees' to occupy or use the relevant accommodation. 33. The benefit being provided is, therefore, not a 'housing right', as defined in subsection 136(1) of the FBTAA. Consequently, as no 'housing right' is being provided there cannot be a 'housing benefit' and if there is no 'housing benefit' then subsection 140(1A) of the FBTAA cannot apply in this instance (irrespective of the fact that the employer is a registered charity). 34. The answer to the question of whether the housing is situated at a location in, or adjacent to, an eligible urban area is to be determined, in this particular case, only under paragraphs 140(1)(a) and 140(1)(b) of the FBTAA (and not subsection 140(1A) of the FBTAA). 35. It is considered that the application of paragraph 140(1)(a) of the FBTAA means that the housing located in any one of Cairns, Mackay and Townsville is located in an eligible urban area. That is, for the purposes of this case, Cairns, Mackay and Townsville are treated as being 'non-remote'. 36. However, it is also considered that after the application of paragraphs 140(1)(a) and 140(1)(b) of the FBTAA the housing located in Mount Isa is not within an eligible urban area nor is such housing adjacent to an eligible urban area. That is, for the purposes of this case, Mount Isa is treated as being 'remote'. 37. The ATO Publication 'Fringe benefits tax - remote areas' (See 'Fringe benefits tax - remote areas' www.ato.gov.au/General/Fringe-benefits-tax/In-detail/Exemptions-and-concessions/FBT---remote-areas/) (Remote Area Guide), contains guidance to what are considered to be the eligible urban areas in Queensland and elsewhere in Australia. The Remote Area Guide also contains a list of towns and cities in Queensland and elsewhere in Australia divided into those that are considered to be 'remote'; and those that are considered not to be 'non-remote'. 38. The Remote Area Guide contains two lists for each state and territory where 'List 2' is used by 'certain regional employers' who provide housing benefits to their employees and 'List 1' is used for all other employers and 'certain regional employers' who provide non-housing benefits to their employees. 39. The Remote Area Guide includes 'charitable institutions' within the category of 'certain regional employers' for the purposes of both List 1 and List 2. The employer, as a registered charity, would, therefore, be considered to be within the category of 'certain regional employers' for the purposes of the Remote Area Guide. 40. However, the 'certain regional employers' are only to use List 2 in the limited circumstances where they are providing a 'remote area housing exemption'. As determined previously (at paragraph 33) the employer is not providing a housing benefit. 41. Therefore, the employer should use List 1 rather than List 2 in the Remote Area Guide. It also may be seen from the 'listing summary' provided in the Remote Area Guide, that the 'certain regional employers' are to use List 1 where they are providing 'Remote area interest' or where they are providing 'Remote area rent' (and not to use List 2 in either case). 42. Under 'List 1' in the Remote Area Guide, Cairns, Mackay and Townsville are all considered to be eligible urban areas (that is, 'non-remote') but Mount Isa is considered to be 'remote'. 43. The determinations made previously (at paragraphs 35 and 36 as applicable) that Cairns, Mackay and Townsville are all 'non-remote' and that Mount Isa is 'remote' for the purposes of this particular case is, therefore, congruent with the guidance provided by ('List 1' and the 'listing summary') of the Remote Area Guide. Conclusion on whether the dwelling is not at a location in, or adjacent to, an eligible urban area? 44. The housing located in any one of Cairns, Mackay and Townsville is situated in an eligible urban area for the purposes of this particular case. 45. The housing located in Mount Isa is neither in, or adjacent to, an eligible urban area for the purposes of this particular case. 46. Therefore, this condition is not met for the housing located in any one of Cairns, Mackay and Townsville. 47. However, this condition is met for the housing located in Mount Isa. (d) Is the usual place of the employment of the employee not at a location in, or adjacent to, an eligible urban area? 48. The usual place of employment of the employees is in the same area where the employees usually reside. 49. Therefore, for the reasons it was determined previously (at paragraph 35) that the housing located in any one of Cairns, Mackay and Townsville was in an eligible urban area, it is also considered that the usual place of employment of the employees employed in those localities is similarly in an eligible urban area for the purposes of this particular case. 50. However, for the reasons it was determined previously (at paragraph 36) that the housing located in Mount Isa is not within an eligible urban area nor is such housing adjacent to an eligible urban area, it is further considered that the usual place of employment of the employees employed at that particular locality is also not within an eligible urban area nor is such housing adjacent to an eligible urban area for the purposes of this particular case. (e) Are the common conditions set out in subsection 142(2E) of the FBTAA met? 51. Subsection 142(2E) of the FBTAA states: 142(2E) [Common conditions] For the purposes of the application of this section to a fringe benefit in relation to a year of tax in relation to an employee of an employer, the common conditions in relation to a particular period or in relation to a particular time are as follows: (a) it is customary for employers in the industry in which the employee was employed during that period or at that time, as the case may be, to provide housing assistance for their employees; (b) it would be concluded that it was necessary for the employer, during the year of tax, to provide or arrange for the provision of housing assistance for employees of the employer because: (i) the nature of the employer's business was such that employees of the employer were liable to be frequently required to change their places of residence; (ii) there was not, at or near the place or places at which the employees of the employer were employed, sufficient suitable residential accommodation for those employees (other than residential accommodation provided by or on behalf of the employer); or (iii) it is customary for employers in the industry in which the employee was employed during that period or at that time, as the case may be, to provide housing assistance for their employees. 52. Therefore, the 'common conditions' of subsection 142(2E) of the FBTAA that must be satisfied are: (i) It is customary in the particular industry for employers to provide housing assistance to their employees. (ii) It can be concluded that it is necessary for the employer to provide or arrange housing assistance for employees because of one (or more) of the reasons set out in subparagraphs (i), (ii) or (iii) of paragraph 142(2E)(b) of the FBTAA. (i) Is it customary in the industry for employers to provide housing assistance to their employees? 53. Taxation Determination TD 94/97 Fringe benefits tax: what does the phrase 'customary for employers in the industry' mean in relation to the provision of fringe benefits to employees? provides guidance on what the phrase 'customary for employers in the industry' means. TD 94/97 states: 2. A benefit will be accepted as being customary where it is normal or common for employees of that class or job description in that industry to be provided with the same or similar benefits. It is not necessary that all or even the majority of employees in the industry receive the benefit. Where the provision of the benefit is unique, rare or unusual within an industry it would not be accepted as being customary. 54. This condition is met as, per the given facts, it is customary in the industry for employers to provide housing assistance to their employees. (ii) Is it necessary for the employer to provide or arrange housing assistance to employees because of one (or more) of the reasons set out in subparagraphs (i), (ii) or (iii) of paragraph 142(2E)(b) of the FBTAA ? 55. It is considered that, in the given circumstances, both subparagraph 142(2E)(b)(i) and subparagraph 142(2E)(b)(ii) of the FBTAA have no application to the circumstances of this case. 56. Subparagraph 142(2E)(b)(iii) of the FBTAA has similar requirements to that of paragraph 142(2E)(a) of the FBTAA. 57. Therefore, this condition is met as, per the given facts, it is customary in the industry for employers to provide housing assistance to their employees. (f) Is the loan provided to the employee under a non-arm's length arrangement? 58. It is considered that this condition is met as the housing loans are provided by independent third party providers not directly associated with the employer. (g) Is the loan made pursuant to an arrangement entered into by any of the relevant parties for the purpose of enabling the employer to benefit from the application of the section 60 of the FBTAA? 59. The housing loans are provided by independent third party providers not directly associated with the employer. 60. It is considered that, in the absence of any evidence to the contrary, none of the parties are entering into the arrangements for the purpose of enabling the employer to benefit from the application of the section 60 of the FBTAA. 61. This condition is met. Conclusion on whether there is a 'remote area housing loan' 62. As determined previously (at paragraph 35), the housing located in any one of Cairns, Mackay and Townsville is located in an eligible urban area (that is, these locations are 'non-remote') for the purposes of this particular case. Therefore, the relevant housing loans for the housing located in those areas are not 'remote area housing loans' under subsection 142(1) of the FBTAA. 63. However, as determined previously (at paragraph 36), the housing located at Mount Isa is not within an eligible urban area nor adjacent to an eligible urban area (that is, Mount Isa is a 'remote area') for the purposes of this particular case. 64. Consequently, the housing loans in relation to the housing located at Mount Isa are remote area housing loans under subsection 142(1) of the FBTAA as all the necessary conditions are met. | Detailed Reasoning - (d) Is the dwelling used as the employee's usual place of residence?: 65. The housing is the employee's usual place of residence and, therefore, this condition is met. | Detailed Reasoning - (e) Is the fringe benefit provided under a non-arm's length arrangement?: 66. The expression 'non-arm's length arrangement' is defined in subsection 136(1) of the FBTAA to mean an arrangement other than an arm's length arrangement. The term 'arm's length arrangement' is not defined in the FBTAA. However subsection 136(1) of the FBTAA defines 'arm's length transaction' to mean a transaction where the parties to the transaction are dealing with each other at arm's length in relation to the transaction. 67. The expression 'at arm's length' is defined in The CCH Macquarie Concise Dictionary of Modern Law (The CCH Macquarie Concise Dictionary of Modern Law , 1988, CCH Australia Ltd/ Macquarie Library Pty Ltd, Sydney.) as meaning that the parties to a transaction are not connected in such a way as to bring into question the ability of one to act independently of the other. 68. In Granby Pty Ltd v. FCT (Granby Pty Ltd v. FCT (1995) 30 ATR 400; 95 ATC 4240) where the expression 'dealing with each other at arm's length' in section 160ZH of the Income Tax Assessment Act 1936 was in question, Lee J said (at ATR 403; ATC 4243): The expression "dealing with each other at arm's length" involves an analysis of the manner in which the parties to a transaction conducted themselves in forming that transaction. What is asked is whether the parties behaved in the manner in which parties at arm's length would be expected to behave in conducting their affairs. Of course, it is relevant to that enquiry to determine the nature of the relationship between the parties, for if the parties are not parties at arm's length the inference may be drawn that they did not deal with each other at arm's length. 69. Even though the employer and the employees are not at arm's length, the employer is providing the fringe benefits under the terms of SSAs available to any of its employees who may wish to enter into such arrangements. As such, it is considered that such fringe benefits are being granted under arm's length arrangements for the purposes of subparagraph 60(2)(d)(i) of the FBTAA. 70. As the fringe benefits are not being granted under non-arm's length arrangements this condition is satisfied. (f) Is the fringe benefit being entered into by any of the parties for the purpose, or for purposes that included the purpose, of enabling the employer to obtain the benefit from the application of subsection 60(2) of the FBTAA? 71. The employer's objective for offering this assistance is to attract new employees and also to retain its existing employees. 72. It is considered that, in the absence of any evidence to the contrary, none of the parties are entering into the arrangements for the purpose of enabling the employer to benefit from the application of the section. 73. This condition is satisfied. 74. It is also considered that the above view is not altered by the fact that the occasion for the application of subsection 60(2) of the FBTAA arises in this particular case due to salary sacrifice arrangements between the parties. | Detailed Reasoning - Conclusion on reduction of taxable value under subsection 60(2) of the FBTAA: 75. There will be no reduction of the taxable values, under subsection 60(2) of the FBTAA, of any expense payment fringe benefits arising from the payment or reimbursement by the employer of the housing loan interest of employees working and residing at any one of Cairns, Mackay or Townsville as none of the employees' expenditure is in respect of remote area housing loans. 76. There will be a 50% reduction of the taxable values, under subsection 60(2) of the FBTAA, of any expense payment fringe benefits arising from the payment or reimbursement by the employer of the housing loan interest of employees working and residing at Mount Isa. Detailed reasoning 1. Unlike the reduction contained in subsection 60(2) of the FBTAA, the 50% reduction contained in subsection 60(2A) of the FBTAA refers to 50% of the employee's expenditure (the gross rent) not to 50% of the taxable value (ATO Interpretative Decision ATO ID 2003/159 Fringe Benefits Tax Remote area housing: reduction of taxable value - remote area housing rent .) 2. Subsection 60(2A) of the FBTAA states: 60(2A) [Recipient of remote area housing rent] Where: (a) the recipient of an expense payment fringe benefit in relation to an employer in relation to a year of tax is an employee of the employer; (b) the recipients expenditure is in respect of remote area housing rent connected with a unit of accommodation; (c) the recipient occupied or used the unit of accommodation as his or her usual place of residence during a period (in this subsection called the ``occupation period'' ) during which the rent accrued; and (d) the fringe benefit was not provided under: (i) a non-arm's length arrangement; or (ii) an arrangement that was entered into by any of the parties to the arrangement for the purpose, or for purposes that included the purpose, of enabling the employer to obtain the benefit of the application of this section; the amount that, but for this subsection, would be the taxable value of the fringe benefit in relation to the year of tax shall be reduced by 50% of so much of the recipients expenditure as relates to the occupation period. 3. Therefore, the reduction afforded by subsection 60(2A) of the FBTAA is available where all of the following conditions are met: (a) There is an expense payment fringe benefit in relation to an employer. (b) The recipient of the expense payment fringe benefit is an employee of the employer. (c) The employee's expenditure is in respect of remote area housing rent connected with a unit of accommodation. (d) The unit of accommodation is used as the employee's usual place of residence. (e) The fringe benefit is not provided under a non-arm's length arrangement. (f) The fringe benefit is not entered into by any of the parties for the purpose, or for purposes that included the purpose, of enabling the employer to obtain the benefit of the application of subsection 60(2A) of the FBTAA. | Detailed Reasoning - (a) Is there an expense payment fringe benefit?: 4. It is considered that this condition is met for similar reasons to that used previously (at paragraphs 3 to 12 inclusive of Question 1) to determine that expense payment fringe benefits would arise (unless otherwise exempted) by the employer paying or reimbursing an employee's housing loan interest. | Detailed Reasoning - (b) Is the recipient of the expense payment fringe benefit an employee of the employer?: 5. It is only the employees of the employer who enter into the relevant SSAs who receive the relevant fringe benefits. 6. Such SSAs are only available whilst the employees are still employed by the employer. 7. This condition is met. | Detailed Reasoning - (c) Is the employee's expenditure in respect of remote area housing rent connected with a unit of accommodation?: 8. To satisfy this condition the following two basic prerequisites must be met: (a) The employee's expenditure is in respect of rent. (b) The rent is remote area housing rent connected with a unit of accommodation. (a) Is the employee's expenditure is in respect of rent? 9. This requirement is met as the expenditure by the employees is in respect of the rent of rental accommodation. (b) Is the rent remote area housing rent connected with a unit of accommodation? 10. The expression 'remote area housing rent connected with a unit of accommodation' is defined in subsection 142(1A) of the FBTAA. Subsection 142(1A) of the FBTAA states: 142(1A) [Remote area housing rent connected with a unit of accommodation] In this Act, a reference, in relation to a year of tax in relation to an employee of an employer, to remote area housing rent connected with a unit of accommodation is a reference to rent or other consideration payable in respect of the subsistence of a lease or licence in respect of the unit of accommodation where: (a) during the whole of the period (in this subsection referred to as the ``occupation period'' ) in the year of tax when the employee occupied or used the unit of accommodation as his or her usual place of residence: (i) the unit of accommodation was situated in a State or internal Territory and was not at a location in, or adjacent to, an eligible urban area; and (ii) the employee was a current employee of the employer and the usual place of employment of the employee was not at a location in, or adjacent to, an eligible urban area; (b) the common conditions set out in subsection (2E) are satisfied in relation to the occupation period; and (c) (Omitted by No 95 of 1988) (d) the lease or licence was not granted under: (i) a non-arm's length arrangement; or (ii) an arrangement that was entered into by any of the parties to the arrangement for the purpose, or for purposes that included the purpose, of enabling the employer to obtain the benefit of the application of section 60. 11. Therefore, there is 'remote area housing rent' under subsection 142(1A) of the FBTAA, where all of the following conditions (as applicable here) are met: (a) There is rent payable in respect of the subsistence of a lease or licence in respect of a unit of accommodation. (b) The unit of accommodation is occupied or used by a current employee of the employer as the employee's usual place of residence. (c) The unit of accommodation is situated in a State or Territory and is not at a location in, or adjacent to, an eligible urban area. (d) The usual place of employment of the employee was not at a location in, or adjacent to, an eligible urban area. (e) The common conditions set out in subsection 142(2E) of the FBTAA are met. (f) The lease or licence was not granted under a non-arm's length arrangement. (g) The lease or licence is not granted under an arrangement entered into by any of the parties for the purpose, or for purposes that included the purpose, of enabling the employer to obtain the benefit of the application of section 60(2A) of the FBTAA. (a) Is the rent payable in respect of the subsistence of a lease or licence in respect of a unit of accommodation? 12. The rental accommodation constitutes a 'unit of accommodation' as that term is defined in subsection 136(1) of the FBTAA. 13. The rent is, or will be, in respect of the subsistence of a lease or licence in respect of the rental accommodation. 14. This condition is met. (b) Is the unit of accommodation occupied or used by a current employee of the employer as the employee's usual place of residence. 15. This condition is met as the rental accommodation is occupied or used by current employees of the employer as the employee's usual place of residence. (c) Is the unit of accommodation not at a location in, or adjacent to, an eligible urban area? 16. It is considered that, for similar reasons it was determined previously (at paragraph 35 of Question 1) that the housing located in any one of Cairns, Mackay and Townsville is located in an eligible urban area, the relevant rental accommodation located in the same areas is also located in an eligible urban area (that is, such rental accommodation is 'non-remote'). 17. It is also considered that, for similar reasons it was determined previously (at paragraph 36 of Question 1) that the housing located in Mount Isa is not within an eligible urban area nor adjacent to an eligible urban area, the rental accommodation located in the same area is also not located within an eligible urban area nor is such housing adjacent to an eligible urban area (that is, such rental accommodation is 'remote'). (d) Is the usual place of the employment of the employee not at a location in, or adjacent to, an eligible urban area? 18. The usual place of employment of the employees is in the same area where the employees usually reside. 19. Therefore, for the reasons it was determined previously (at paragraph 16) that the rental accommodation located in any one of Cairns, Mackay and Townsville was in an eligible urban area it is also considered that the usual place of employment of the employees employed in those localities is similarly in an eligible urban area for the purposes of this particular case. 20. However, for the reasons it was determined above (at previously 17) that the rental accommodation located in Mount Isa is not within an eligible urban area nor is such rental accommodation adjacent to an eligible urban area, it is further considered that the usual place of employment of the employees employed in this locality is similarly not within an eligible urban area nor adjacent to an eligible urban area for the purposes of this particular case. (e) are the common conditions set out in subsection 142(2E) of the FBTAA met? 21. As determined previously (at paragraph 52 of Question 1) the 'common conditions' of subsection 142(2E) of the FBTAA that must be satisfied are: (i) It is customary in the particular industry for employers to provide housing assistance to their employees. (ii) It can be concluded that it is necessary for the employer to provide or arrange housing assistance for employees because of one (or more) of the reasons set out in subparagraphs (i), (ii) or (iii) of paragraph 142(2E)(b) of the FBTAA. (i) Is it customary in the industry for employers to provide housing assistance to their employees? 22. This condition is met as, per the given facts, it is customary in the industry for employers to provide housing assistance to their employees. (ii) Is it necessary for the employer to provide or arrange housing assistance to employees because of one (or more) of the reasons set out in subparagraphs (i), (ii) or (iii) of paragraph 142(2E)(b) of the FBTAA ? 23. It is considered that, in the absence of any evidence to the contrary, both subparagraph 142(2E)(b)(i) and subparagraph 142(2E)(b)(ii) of the FBTAA have no application to the circumstances of this case. 24. Subparagraph 142(2E)(b)(iii) of the FBTAA has similar requirements to that of paragraph 142(2E)(a) of the FBTAA. 25. Therefore, this condition is met as, per the given facts, it is customary in the industry for employers to provide housing assistance to their employees. (f) Is the lease or licence granted under a non-arm's length arrangement? 26. It is considered that this condition is met as the rental accommodation is provided by independent third party providers not directly associated with the employer. (g) Is the lease or licence granted an arrangement entered into by any of the relevant parties for the purpose, or purposes, that included the purpose of enabling the employer to benefit from the application of the subsection 60(2A) of the FBTAA? 27. The rental accommodation is provided by independent third party providers not directly associated with the employer. 28. It is considered that, in the absence of any evidence to the contrary, none of the parties are entering into the arrangements for the purpose of enabling the employer to benefit from the application of the subsection 60(2A) of the FBTAA. 29. This condition is met. Conclusion on whether there is a 'remote area housing rent' 30. As determined previously (at paragraph 16), the rental accommodation located in any one of Cairns, Mackay and Townsville is located in an eligible urban area (that is, rental accommodation in those localities is 'non-remote') for the purposes of this particular case. Therefore, the rent for the rental accommodation in those localities is not 'remote area housing rent' under subsection 142(1A) of the FBTAA. 31. However, as determined previously (at paragraph 17), the rental accommodation located at Mount Isa is not within an eligible urban area nor adjacent to an eligible urban area (that is, Mount Isa is a 'remote area') for the purposes of this particular case. 32. Consequently, the rent for the rental accommodation located at Mount Isa is remote area housing rent under subsection 142(1A) of the FBTAA as all the necessary conditions are met. | Detailed Reasoning - (d) Is the unit of accommodation used as the employee's usual place of residence?: 33. The units of accommodation are the employee's usual place of residence and, therefore, this condition is met. | Detailed Reasoning - (e) Is the fringe benefit provided under a non-arm's length arrangement?: 34. Even though the employer and the employees are not at arm's length, the employer is providing the fringe benefits under the terms of SSAs available to any of its employees who may wish to enter into such arrangements. As such, it is considered that such fringe benefits are being granted under arm's length arrangements for the purposes of subparagraph 60(2A)(d)(i) of the FBTAA. 35. As the fringe benefits are not being granted under non-arm's length arrangements this condition is satisfied. (f) Is the fringe benefit being entered into by any of the parties for the purpose, or for purposes that included the purpose, of enabling the employer to obtain the benefit from the application of subsection 60(2A) of the FBTAA? 36. The employer's objective for offering this assistance is to attract new employees and also to retain its existing employees. 37. It is considered that, in the absence of any evidence to the contrary, none of the parties are entering into the arrangements for the purpose of enabling the employer to benefit from the application of the section. 38. This condition is satisfied. 39. It is also considered that the above view is not altered by the fact that the occasion for the application of subsection 60(2A) of the FBTAA arises in this particular case due to salary sacrifice arrangements between the parties. | Detailed Reasoning - Conclusion on the reduction under subsection 60(2A) of the FBTAA: 40. There will be no reduction, under subsection 60(2A) of the FBTAA, of the employee's expenditure (the gross rent) in relation to an expense payment fringe benefit arising from the payment or reimbursement by the employer of the rent for rental accommodation of an employee working and residing in any one of Cairns, Mackay or Townsville as the employee's expenditure is not in respect of remote area housing rent. 41. There will be a reduction by 50%, under subsection 60(2A) of the FBTAA, of the employee's expenditure (the gross rent) in relation to an expense payment fringe benefit arising from the payment or reimbursement by the employer of the rent for rental accommodation of an employee working and residing in Mount Isa as the employee's expenditure is in respect of remote area housing rent. Detailed reasoning 1. Both section 57 and section 57A of the FBTAA exempt benefits provided to employees depending on, amongst other things, the status of the employer and the employee. 2. However, section 57 of the FBTAA can only apply where the employer of the employee is a registered religious institution and the employee is a religious practitioner. It is considered that section 57 of the FBTAA does not apply to this case under the given circumstances. 3. Nonetheless, subsection 57A(1) of the FBTAA states that where the employer of an employee is a registered PBI endorsed under section 123C of the FBTAA a benefit provided in respect of the employment of the employee is an exempt benefit. 4. The employer is a registered PBI and is endorsed under section 123C of the FBTAA. Therefore, benefits provided by the employer fall for consideration under subsection 57A(1) of the FBTAA. 5. An employer's 'fringe benefits taxable amount' is worked out under section 5B of the FBTAA. Where benefits fall for consideration under subsection 57A(1) of the FBTAA the employer's 'fringe benefits taxable amount', if any, is effectively determined under subsection 5B(1D) of the FBTAA. Subsection 5B(1D) of the FBTAA states (as relevant here): 5B(1D) Increase in fringe benefits taxable amount for year of tax 2000-2001 and later years. If any benefits provided in respect of the employment of an employee of an employer are exempt benefits under section 57A, the employer's fringe benefits taxable amount for the year of tax... worked out under [subsection 5B(1A) of the FBTAA] is increased by the employer's aggregate non-exempt amount for the year of tax concerned. 6. The method statement of how to work out the 'employer's aggregate non-exempt amount' is given in subsection 5B(1E) of the FBTAA. Step 1 of the method statement in subsection 5B(1E) of the FBTAA states (as relevant here): 5B(1E) How to work out aggregate non-exempt amount. An employer's aggregate non-exempt amount for the year of tax is worked out as follows. | Detailed Reasoning - Step 1.: For each employee, add: (a) the individual grossed-up type 1 non-exempt amount [see subsection 5B(1F) of the FBTAA] in relation to the employer for the year of tax; and (b) ... The result is the individual grossed-up non-exempt amount for the employee. 7. The 'individual grossed-up type 1 non-exempt amount' is determined under subsection 5B(1F) of the FBTAA. Subsection 5B(1F) of the FBTAA states: For the purposes of step 1 in the method statement in subsection (1E), the individual grossed-up type 1 non-exempt amount of an employee in relation to the employer for the year of tax is: Type 1 individual base non-exempt amount × FBT rate + GST rate (1 - FBT rate) × (1 + GST rate) × FBT rate 8. The multiplier in the formula in subsection 5B(1F) of the FBTAA is the 'gross-up factor' (for GST-creditable transactions). 9. Subsection 5B(1H) of the FBTAA states that the 'type 1 individual base non-exempt amount' is determined by adding the amounts worked out under step 3 of the method statement in subsection 5B(1K) of the FBTAA and step 3 of the method statement in subsection 5B(1L) of the FBTAA. 10. Subsection 5B(1L) of the FBTAA deals with the taxable values of various 'excluded fringe benefits'. 11. Subsection 5B(1L) of the FBTAA states: 5B(1L) Working out the subsection (1L) amounts. An employee's subsection (1L) amounts for the year of tax are worked out as follows. | Detailed Reasoning - Step 1.: Work out for each employee his or her share (if any) of the amounts that, if section 57A did not apply, would be the taxable values of the excluded fringe benefits for the year of tax in respect of the employee's employment by the employer if those benefits were not excluded fringe benefits, but disregarding benefits: (a) that constitute the provision of meal entertainment as defined in section 37AD (whether or not the employer made an election under section 37AA); or (b) that are car parking fringe benefits; or (c) whose taxable values are wholly or partly attributable to entertainment facility leasing expenses. | Detailed Reasoning - Step 2.: Identify the benefits taken into account in step 1 that are GST-creditable benefits (see section 149A). | Detailed Reasoning - Step 3.: So much of the amount worked out under step 1 that relates to the benefits identified under step 2 is the step 3 of subsection (1L) amount for the individual. | Detailed Reasoning - Step 4.: ... 12. What comprises 'excluded fringe benefits' is specified in subsection 5E(3) of the FBTAA and also regulations 4 to 9 inclusive of the Fringe Benefits Tax Regulations 1992 . Paragraph (f) of subsection 5E(3) of the FBTAA includes within the category of 'excluded benefits' a fringe benefit 'whose taxable value is reduced under section 60 (about remote area housing)'. 13. It has been determined previously (at paragraph 76 of Question 1 and paragraph 41 of Question 2) that the fringe benefits provided in respect of housing and rental housing located at Mt Isa falls within subsection 60(2) and subsection 60(2A) of the FBTAA respectively. Therefore, it is only the fringe benefits provided in relation to the housing and rental housing located at Mount Isa that will be 'excluded fringe benefits' for the purposes of Paragraph (f) of subsection 5E(3) of the FBTAA. 14. As the fringe benefits provided to the employees in Mount Isa are none of the types to be 'disregarded' under paragraphs (a) to (c) inclusive in step 1 of the Method Statement in 5B(1L) of the FBTAA, the taxable values of those fringe benefits will, consequently, constitute 'the step 3 of subsection (1L) amount' for the relevant employee. 15. Subsection 5B(1K) of the FBTAA deals with the taxable values of various fringe benefits and 'quasi-fringe benefits' (that are not 'excluded fringe benefits'). 16. Subsection 5B(1K) of the FBTAA states: 5B(1K) Working out the subsection (1K) amounts. An employee's subsection (1K) amounts for the year of tax are worked out as follows. | Detailed Reasoning - Step 1.: Work out under subsection 135Q(3) for each of the employer's employees the amount that would be the employee's individual fringe benefit amount for the year of tax in respect of the employee's employment by the employer if subsection 135Q(1) were amended: (a) by omitting "or 58"; and (b) by omitting "one of those sections" from paragraph (b) and "those sections" from paragraph (c) and substituting in each case "that section". | Detailed Reasoning - Step 2.: Identify the benefits taken into account in step 1 that are GST-creditable benefits (see section 149A). | Detailed Reasoning - Step 3.: So much of the amount worked out under step 1 that relates to the benefits identified under step 2 is the step 3 of subsection (1K) amount for the individual. | Detailed Reasoning - Step 4.: The remainder of the amount is the step 4 of subsection (1K) amount for the individual. 17. Therefore, step 1 of the method statement in subsection 5B(1K) of the FBTAA notionally alters the wording of subsection 135Q(1) of the FBTAA to read as follows: 135Q(1) Overview. This section explains how to work out whether an employee has a reportable fringe benefits amount for a year of income in respect of the employee's employment by an employer described in section 57A [of the FBTAA] and the size of that amount, if: (a) a benefit is provided in respect of the employee's employment by the employer; and (b) the benefit is an exempt benefit because of that section; and (c) apart from that section, the benefit would be a fringe benefit relating to the employee, the employer and the year of tax ending on 31 March in the employee's year of income. 18. Subsection 135Q(3) of the FBTAA states: 135Q(3) What is the employee's individual quasi-fringe benefits amount ? The employee's individual quasi-fringe benefits amount is the amount that would be the employee's individual fringe benefits amount for the year of tax in respect of the employee's employment by the employer if: (a) each benefit described in [subsection 135Q(1) of the FBTAA] in relation to the employee, employer and year of tax were a fringe benefit; and (b) there were no other fringe benefits relating to the employee, the employer and the year of tax. 19. Therefore, in the determination of the extent to which exemption under subsection 57A(1) of the FBTAA applies to the provision of benefits you effectively treat 'quasi-fringe benefits' in a similar manner to that of the relevant 'fringe benefits' for the purposes of determining the appropriate taxable values. 20. The determination of the taxable values of the relevant expense payment fringe benefits (see paragraph 8 of Question 1 and paragraph 4 of Question 2) in relation to the housing and rental housing located at any one of Cairns, Mackay or Townsville will provide the 'individual quasi-fringe benefit amount' for the employee for the purposes of subsections 135Q(1) and 135Q(3) of the FBTAA and also, subsequently, the 'the step 3 of subsection of subsection (1K) amount' for the relevant employee. 21. When the amount worked out under step 3 of the Method Statement in subsection 5B(1L) of the FBTAA (see paragraph 14) is added to the amount worked out under step 3 of the Method Statement in subsection 5B(1K) of the FBTAA (see paragraph 20) this will give the 'Type 1 individual base non-exempt amount' for the employee for the purposes of subsection 5B(1F) of the FBTAA. 22. Multiplying the 'Type 1 individual base non-exempt amount' by the 'gross-up factor' will give the 'individual grossed-up type 1 non-exempt amount' for the employee under subsection 5B(1F) of the FBTAA. This, in turn, will give (in this case) the 'individual grossed-up non-exempt amount' for the employee under step 1 of the Method Statement in subsection 5B(1E) of the FBTAA. 23. After the 'individual grossed-up non-exempt amount' for the employee for the purposes of Step 1 of the Method Statement in subsection 5B(1E) of the FBTAA is determined you next proceed to step 2 of the Method Statement in that same subsection. 24. However, it is considered that step 2 of the Method Statement in subsection 5B(1E) of the FBTAA has no application to this case as the employer is not one of the types of employer listed in that particular step. 25. If step 2 of the Method Statement in subsection 5B(1E) of the FBTAA has no application you then proceed to step 3 of the Method Statement of that same subsection. 26. Step 3 of the Method Statement in subsection 5B(1E) of the FBTAA states (as relevant here): | Detailed Reasoning - Step 3.: ... (a) ... (b) reduce the individual grossed-up non-exempt amount for each such employee for a later year of tax by $30,000, but not below zero. 27. Under paragraph (b) of Step 3 of the Method Statement in subsection 5B(1E) of the FBTAA, an amount of $30,000 is subtracted from the 'individual grossed-up non-exempt amount' for the employee. If there remains any positive amount after the subtraction of the '$30,000 cap' this amount will be (in a case such as this) the employer's 'aggregate non-exempt amount' in relation to that employee under step 4 of the Method Statement in subsection 5B(1E) of the FBTAA. 28. Therefore, where the 'aggregate non-exempt amount' in respect of a particular employee remains at no more than $30,000 then exemption under subsection 57A(1) of the FBTAA effectively applies to such benefits. 29. However, where the 'aggregate non-exempt amount' in relation to a particular employee is more than $30,000 a liability to FBT arises for the employer on the excess. 30. In this particular case, it is the full taxable values of the relevant expense payment fringe benefits that are to be used in ultimately determining the 'aggregate non-exempt amount' in relation to those employees who reside and work in any one of Cairns, Mackay or Townsville. 31. Nevertheless, it is only 50% of the taxable values of the relevant expense payment fringe benefits that are to be used in ultimately determining the 'aggregate non-exempt amount' in relation to those employees who reside and work in Mount Isa. Detailed reasoning 1. Once again, where the 'aggregate non-exempt amount' in respect of a particular employee remains at no more than $30,000 then exemption under subsection 57A(1) of the FBTAA effectively applies to such benefits. 2. However, again, where the 'aggregate non-exempt amount' in relation to a particular employee is more than $30,000 a liability to FBT arises for the employer on the excess. 3. For similar reasons it was determined previously (at paragraph 30 of Question 3) that it is the full taxable values of the expense payment fringe benefits arising from the payment or reimbursement of the housing loan interest that are to be used when determining the 'aggregate non-exempt amount' in relation to those employees who reside and work in any one of Cairns, Mackay or Townsville, it is also concluded that there be no reduction of the employees' expenditures (the gross rents) in relation to the expense payment fringe benefits arising from the payment or reimbursement of the rents of the rental accommodation when determining the 'aggregate non-exempt amount' in relation to those employees who reside and work in any one of Cairns, Mackay or Townsville. 4. For similar reasons it was determined previously (at paragraph 31 of Question 3) that it is only 50% of the taxable values of the expense payment fringe benefits arising from the payment or reimbursement of the housing loan interest that are to be used when determining the 'aggregate non-exempt amount' in relation to those employees who reside and work in Mount Isa, it is also concluded that there be a 50% reduction of the employees' expenditures (the gross rents) in relation to the expense payment fringe benefits arising from the payment or reimbursement of the rents of the rental accommodation when determining the 'aggregate non-exempt amount' in relation to those employees who reside and work in Mount Isa.