Private ruling: Fringe benefits tax - remote area housing
Published: February 2013
Ruling period: A number of fringe benefits tax years commencing in the 2013 fringe benefits year
Date scheme commenced: Not yet commenced

Ruling: Q1: Can the value of the expense payment benefit that arises from the payment of rental expenses be reduced under subsection 60(2A) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)? | A1: Yes | Q2: Will the provision of housing to employees at a reduced rate, be an exempt benefit under subsection 58ZC(1) of the FBTAA? | A2: Yes

Relevant facts and circumstances: You have employees throughout Australia, including many employees working in areas that are defined as 'remote' in Law Administration Practice Statement PS LA 2000/6 Fringe benefits tax: what is considered to be remote for the purposes of the remote area housing benefit (PS LA 2000/6). Many of your employees working in remote areas are working in an industry in which it is customary for employees to work in remote areas and for their employers to provide them with housing assistance. You are experiencing difficulties in attracting and retaining staff to work in these remote areas. You attribute part of this difficulty to a shortage of available accommodation in the remote areas due. As a result of these difficulties, you intend to offer housing assistance to employees working in remote areas. A number of new employees have requested housing assistance from you as they were in receipt of housing assistance in their previous jobs in the same field of work. Housing assistance will be offered in the first instance to certain current employees who live and work in remote areas; a specific number of employees who live and work in one remote town (town 1), a specific number of employees who live and work in a second remote town (town 2) and a specific number of employees who live and work in a third remote town (town 3). You intend to offer the housing assistance under two separate arrangements. Both types of housing assistance will be offered under effective salary sacrifice arrangements. Under the first arrangement: · each of the employees living and working in town 2 will rent accommodation and live in it as their usual place of residence. · you will then reimburse the employee 50% of their gross rent. Under the second arrangement; · you will lease a unit of accommodation · the employees living and working in town 1 and town 3, will live in the unit of accommodation as their usual place of residence · your employees salary will be reduced by a nominal amount, below the market rent, via a salary sacrifice arrangement Housing assistance may also be offered to other employees in the future.

Relevant legislative provisions: Fringe Benefits Tax Assessment Act 1986 , section 20 | Fringe Benefits Tax Assessment Act 1986 , section 25 | Fringe Benefits Tax Assessment Act 1986 , subsection 58ZC(1) | Fringe Benefits Tax Assessment Act 1986 , subsection 58ZC(2) | Fringe Benefits Tax Assessment Act 1986 , subsection 60(2A) | Fringe Benefits Tax Assessment Act 1986 , subsection 136(1) | Fringe Benefits Tax Assessment Act 1986 , section 140 | Fringe Benefits Tax Assessment Act 1986 , subsection 142 (1A) | Fringe Benefits Tax Assessment Act 1986 , subsection 142(2E) | Fringe Benefits Tax Assessment Act 1986 , subsection 142(3)

Reasons for decision: Summary: Can the value of the expense payment benefit that arises from the payment of rental expenses be reduced under subsection 60(2A) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)? You intend to offer housing assistance to your employees under an effective salary sacrifice arrangement whereby your employee will rent accommodation and you will provide the employee with a reimbursement of 50% of their gross rent. Section 20 of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) describes when a reimbursement made to an employee will constitute an expense payment benefit. Section 20 states: Where a person (in this section referred to as the provider ): (a) makes a payment in discharge, in whole or in part , of an obligation of another person (in this section referred to as the recipient) to pay an amount to a third person in respect of expenditure incurred by the recipient; or (b) reimburses another person (in this section also referred to as the recipient ), in whole or in part, in respect of an amount of expenditure incurred by the recipient; the making of the payment referred to in paragraph (a), or the reimbursement referred to in paragraph (b), shall be taken to constitute the provision of a benefit by the provider to the recipient. The reimbursements you will provide to your employees under the arrangement will be expense payment benefits according to the requirements of subsection 20(b) of the FBTAA. Subsection 60(2A) of the FBTAA allows for the reduction of the taxable value of certain expense payment fringe benefits in respect of remote area housing rent where certain conditions are satisfied. Subsection 60(2A) states: (2A) 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. In summary, the taxable value of the expense payment benefits you will provide to your employees will be reduced by 50% of your employee's expenditure if the following requirements are met: 1.1 the recipient of the expense payment benefit is your employee 1.2 the expenditure by the employee is in respect of remote area housing rent connected with a unit of accommodation 1.3 your employee occupied or used the unit of accommodation as their usual place of residence during the period in which the rent accrued 1.4 the fringe benefit was not provided under a non-arm's length arrangement or 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 you to obtain reduction in taxable value provided by section 60 | Detailed Reasoning - 1.1 Will the recipient of the expense payment benefit be your employee?: You have stated that the arrangement will be provided to current employees. | Detailed Reasoning - 1.2 Will the expenditure by your employee be in respect of remote area housing rent connected with a unit of accommodation?: The term 'remote area housing' is defined in the FBTAA in subsection 142 (1A) as follows: | Detailed Reasoning - 142 Remote area housing: (1A) 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 (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 the purposes that included the purpose, of enabling the employer to obtain the benefit of the application of section 60. The common conditions referred to in paragraph 142(1A)(b) above, are set out in subsection 142(2E) of the FBTAA as follows: (2E) 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 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. Therefore, according to the requirements of subsection 142(1A) and subsection 142(2E), the expenditure by your employee will be in respect of remote area housing rent connected with a unit of accommodation if the following factors exist: 1.2.1 your employee will pay rent or other consideration for a lease or licence to occupy or use a unit of accommodation 1.2.2 your employee will use or occupy the accommodation as their usual place of residence 1.2.3 for the whole of the period in which your employee will use the unit of accommodation as their usual place of residence, the accommodation will be located in a State or internal Territory and not at a location in, or adjacent to, an eligible urban area 1.2.4 for the whole of the period in which your employee will use the unit of accommodation as their usual place of residence, the employee will be a current employee whose usual place of employment is not at a location in, or adjacent to, an eligible urban area; 1.2.5 it is customary for employers in the industry in which your employees are employed to provide housing assistance for their employees 1.2.6 one of the following three conditions is satisfied making it necessary for you to provide or arrange for the provision of the accommodation: · the nature of your business is such that employees are liable to frequently change their places of residence, or · there is insufficient suitable residential accommodation otherwise available for your employees at or near the place or places where the employees are employed, or · it is customary for employers in the industry in which your employees are employed, to provide housing assistance for their employees 1.2.7 the lease or licence is not granted under a non-arm's length arrangement or, under an arrangement that was entered into for the purpose, or for purposes that included the purpose, of enabling you to obtain the benefit of the application of section 60 | Detailed Reasoning - 1.2.1 Will your employee be paying rent or other consideration for a lease or licence to occupy or use a unit of accommodation?: You have stated that your employees will be paying rent for the accommodation. | Detailed Reasoning - 1.2.2 Will your employee use or occupy the accommodation as their usual place of residence?: You have stated that your employees will occupy the units of accommodation as their usual places of residence during the occupation period. 1.2.3 For the whole of the period in which your employee will use the unit of accommodation as their usual place of residence, will the accommodation be located in a State or internal Territory and not at a location in, or adjacent to, an eligible urban area? A location is considered remote for the purposes of paragraph 142(1A)(a) if it is situated in a State or internal Territory and was not at a location in, or adjacent to, an eligible urban area. Section 140 of the FBTAA provides a definition of the term 'eligible urban area' and sets out the criteria for a location to be considered a remote area. Chapter 19 of ATO Fringe benefits tax - a guide for employers (NAT 1054) summarises the requirements applicable to most employers for a location to be considered remote as follows: It is located in a remote area if it is not in or near an urban centre. This means the accommodation must be located at least 40 kilometres from a town with a census population between 14,000 and 130,000, and at least 100 kilometres from a town with a census population of 130,000 or more (population figures based on the 1981 Census). If the accommodation is in Zone A or B (for income tax purposes), it must be located at least 40 kilometres from a town with a census population between 28,000 and 130,0000, and at least 100 kilometres from a town with a census population of 130,000 or more. Where the shortest practical surface route between a locality and an eligible urban area includes a route by water, the distance travelled by water is doubled for the purposes of working out how remote that locality is from the eligible urban area. Lists of towns that are in remote areas according to these criteria can be found in the ATO fact sheet Fringe benefits tax - remote areas and PS LA 2000/6. List one of the ATO fact sheet and attachment one of PS LA 2000/6 is the relevant list for your circumstances. You intend to offer housing assistance under this arrangement to a specified number of employees who live and work in town 2. Town 2 is listed as a remote area on the relevant lists in the ATO fact sheet Fringe benefits tax - remote areas and PS LA 2000/6 and therefore fulfils the requirements of subparagraph 142(1A)(a)(i) of the FBTAA. 1.2.4 For the whole of the period in which your employee will use the unit of accommodation as their usual place of residence, will the employee be a current employee whose usual place of employment is located in a remote area? You advise that the housing assistance under this arrangement will be provided to current employees who live and work in town 2. As established above at question 1.2.3, town 2 is a 'remote area'. | Detailed Reasoning - 1.2.5 Is it customary for employers in the industry in which your employees are employed to provide housing assistance for their employees?: 'Housing assistance' is defined in subsection 142(3) of the FBTAA to include … (aa) the making of payments in discharge or reimbursement of rent or other consideration incurred by a person in respect of the subsistence of a lease or licence in respect of a unit of accommodation; … Under your proposed arrangement you will be providing housing assistance to your employees. | Detailed Reasoning - Customary in the industry to provide housing assistance:: The meaning of the phrase 'customary for employers in the industry' is discussed in 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 ? (TD 94/97). 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. It is accepted that it is customary for employees working in remote locations in the industry in which the relevant employees are working to be in receipt of housing assistance from their employer. Certain new employees in particular, have requested housing assistance from you as they had been in receipt of housing assistance in their previous jobs, and their field of work has not changed. | Detailed Reasoning - 1.2.6 Is it necessary for you to provide or arrange for the provision of the housing assistance?: Paragraph 142(2E)(b) requires that it must be necessary for you to provide or arrange for the provision of the housing assistance because at least one of the following three conditions is satisfied: · the nature of your business is such that employees are liable to frequently change their places of residence, or · there is insufficient suitable residential accommodation otherwise available for your employees at or near the place or places where the employees are employed, or · it is customary for employers in the industry in which your employees are employed, to provide housing assistance for their employees As established above, it is customary for employers in the industry in which your employees are employed, to provide housing assistance for their employees. Further, as there is a shortage of suitable accommodation in town 2, it can also be concluded that it is necessary for you to provide or arrange for the provision of the housing assistance to these employees. 1.2.7 Will the lease or licence be granted under a non-arm's length arrangement or, under an arrangement that was entered into for the purpose, or for purposes that included the purpose, of enabling you to obtain the benefit of the application of section 60? | Detailed Reasoning - Non-arms length:: ATO Interpretative Decision ATO ID 2005/156 Fringe Benefits Tax: Exempt Benefits: remote area housing - non-arm's length arrangement (ATO ID 2005/156) discusses what is meant by the expression non-arm's length arrangement and states: Within subsection 136(1) of the FBTAA, the expression 'non-arm's length arrangement' is defined to mean an arrangement other than an arm's length arrangement. The term 'arm's length arrangement' is not defined in the FBTAA. However section 136(1) 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. The expression 'at arm's length' is defined in 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. In 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. Under the proposed arrangement you will provide housing assistance to attract employees to work in remote locations where there is a shortage of available rental accommodation and where it is customary in the industry in which the employees work to receive housing assistance. Therefore it is accepted that a lease or licence under the arrangement proposed will not be granted under a non-arm's length arrangement | Detailed Reasoning - For the purpose of obtaining the benefit:: Guidance on what is meant by an arrangement that was entered into by any of the parties of the arrangement for the purpose, or for purposes that included the purpose, of enabling the employer to obtain the benefit of the section, is provided in ATO Interpretative Decision ATO ID 2010/182 Fringe Benefits Tax: exempt benefits - remote area housing benefits - salary sacrifice arrangement (ATO ID 2010/182). Although ATO ID 2010/182 discusses the phrase in regards to obtaining the benefit of section 58ZC of the FBTAA, the interpretation is applicable to your situation as the phrase is used in the same way in both section 58ZC and section 60. In discussing the meaning of the phrase ATO ID 2010/182 states: In Newton v. Federal Commissioner of Taxation (1958) 98 CLR 1; (1958) 11 ATD 442; (1958) 7 AITR 298, the Privy Council examined the meaning of the word 'purpose'. Lord Denning said at page number CLR 8; ATD 445; AITR 304, The word "purpose" means, not motive, but the effect which is sought to achieve - the end in view. Lord Denning also said (at the same page), In order to bring an arrangement within the section, you must be able to predicate by looking at the overt acts by which it was implemented that it was implemented in that particular way so as to avoid tax. If you cannot so predicate, but have to acknowledge that the transactions are capable of explanation by reference to ordinary business or family dealing, without necessarily being labelled as a means to avoid tax, then the arrangement does not come within the section. In this arrangement which provides or grants the 'recipient's overall housing right', the arrangement is entered into by each of the parties for the purpose of enabling the employer to provide the benefit of housing its employee. There are no overt acts by which one could predicate that the arrangement has been implemented by any of the parties for the purpose of allowing the employer to enjoy the benefits of the tax exemption. The arrangement can be explained as being one of ordinary business dealings as it is customary in the employer's industry. The proposed arrangement is one that is customary in the industry in which the relevant employees work. You intend to offer the arrangement in order to overcome the difficulty you are having in recruiting and retaining staff to work in the remote areas in which you operate. You have stated that a certain number of employees that you intend to offer the housing assistance to have received similar assistance from previous employers and have requested the same assistance from you. As discussed in ATO ID 2010/182 there are no overt acts that imply that the arrangement is being implemented by any of the parties for the purpose of allowing you to obtain the benefit of section 60. The arrangement can be explained as being one of ordinary business dealings as is customary in the industry of the class of employees who will be receiving the assistance. As all of the requirements of subsection 142 (1A) and the common conditions contained in subsection 142(2E) are satisfied, the expenditure by your employee will be considered to be in respect of remote area housing rent connected with a unit of accommodation. | Detailed Reasoning - 1.3 Will your employee occupy or use the unit of accommodation as their usual place of residence during the period in which the rent accrued?: As discussed above in relation to question 1.2.2 above, you have stated that the relevant employee will occupy or use the unit of accommodation as their usual place of residence during the relevant period. 1.4 Will the lease or licence be provided under a non-arm's length arrangement or 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 you to obtain the reduction in taxable value provided by section 60? Refer to the discussion at question 1.2.7 above. It has been established that the lease or licence will not be provided under a non-arm's length arrangement or 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 you to obtain the reduction in taxable value provided by section 60. | Detailed Reasoning - Conclusion: Your proposed arrangement meets all of the requirements of subsection 60(2A) of the FBTAA. And therefore you will be entitled to reduce the taxable value of the expense payment fringe benefits in accordance with the subsection. | Detailed Reasoning - Will the provision of accommodation at a reduced rate, be an exempt benefit under subsection 58ZC(1) of the FBTAA?: You intend to provide a specified number of employees in town 1 and town 3 with the use of accommodation through the following arrangement: · You will lease a property directly from a third party. · Your employee will then live in the accommodation and their salary will be reduced by a nominal amount that is below market rent in a salary sacrifice arrangement as consideration for the accommodation. The provision of accommodation in this way may be a housing fringe benefit. Section 25 of the FBTAA sets out the circumstances in which a housing benefit will be provided. It states: 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. Subsection 136(1) of the FBTAA provides the following definition of a 'housing right': 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. You have stated that under the proposed arrangement your employees will be occupying the unit of accommodation as their usual place of residence during the occupation period. Therefore under the proposed arrangement you will be providing a housing benefit to your employee. Subsection 58ZC of the FBTAA provides that a housing benefit will be exempt from fringe benefits tax if it is a remote area housing benefit. Subsection 58ZC(1) states: | Detailed Reasoning - Remote area housing benefit to be exempt: (1) A housing benefit that is a remote area housing benefit is an exempt benefit. Subsection 58ZC(2) then sets out the requirements for a housing benefit to be considered a remote area housing benefit as follows: | Detailed Reasoning - What constitutes remote area housing benefit: (2) A housing benefit in relation to an employer for a year of tax and for a unit of accommodation, being a benefit provided to an employee of the employer in respect of the employee's employment, is a remote area housing benefit if: (a) during the whole of the tenancy period, the unit of accommodation was located in a State or internal Territory and was not at a location in, or adjacent to, an eligible urban area; and (b) during the whole of the tenancy period, the recipient was a current employee of the employer and the usual place of employment of the recipient was not at a location in, or adjacent to, an eligible urban area; and (d) it would be concluded that it was necessary for the employer, during the year of tax, to provide, or to arrange for the provision of, residential accommodation 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; or (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 recipient was employed during the tenancy period to provide residential accommodation for their employees free of charge or for a rent or other consideration that is less than the market value of the right to occupy or use the accommodation concerned; and (e) the recipients overall housing right was not granted to the recipient 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. In summarising the provision of accommodation to your employees will be remote area housing benefits if the following requirements are satisfied: 2.1 you provide your employees with a housing benefit 2.2 for the whole of the tenancy period the unit of accommodation is located in a State or internal Territory and was not at a location in, or adjacent to, an eligible urban area; and 2.3 for the whole of the tenancy period the unit of accommodation is occupied by a current employee who's usual place of employment was not at a location in, or adjacent to, an eligible urban area 2.4 it is necessary for you to provide or arrange for the provision of the accommodation because one of the following three conditions is satisfied: · the nature of your business is such that employees are liable to frequently change their place of residence, or · there is insufficient suitable residential accommodation otherwise available at or near the place or places where the employees are employed, or · it is customary for employers in the industry in which your employees are employed, to provide accommodation for their employees free of charge or for rent or other consideration that is less than market value 2.5 the accommodation is not provided under a non-arm's length arrangement or, as part of an arrangement entered into for the purpose, or for purposes that included the purpose, of enabling you to obtain the benefit of the application of the exemption provided in subsection 58ZC | Detailed Reasoning - 2.1 Will you be providing a housing benefit?: As discussed above you will be providing your employees with a housing benefit. | Detailed Reasoning - 2.2 Will the unit of accommodation be located in a State or internal Territory and not at a location in, or adjacent to, an eligible urban area?: A location is considered to remote for the purposes of subsection 58ZC(2) of the FBTAA if it is situated in a State or internal Territory and not at a location in, or adjacent to, an eligible urban area. Under this arrangement you will be providing accommodation to employees in town1 and town 3. Refer to the discussion of the term 'eligible urban area' and the criteria of what constitutes a remote area in question 1.2.3 above. Town 1 and Town 3 are considered to be 'remote areas' in accordance with the requirements of subsection 58ZC(2) of the FBTAA. 2.3 Will the accommodation be provided to a current employee whose usual place of employment was not at a location in, or adjacent to, an eligible urban area? You will offer housing assistance under this arrangement to current employees who live and work in town 1 and town 3. By applying the reasoning discussed above it can therefore be concluded that for the whole of the period in which your employee will use the unit of accommodation as their usual place of residence, the employee will be a current employee whose usual place of employment is located in a remote area in accordance with the requirements of subsection 58ZC(2) of the FBTAA. | Detailed Reasoning - 2.4 Is it necessary for you to provide residential accommodation to the employees?: Paragraph 58ZC(2)(d) of the FBTAA requires that it must be necessary for you to provide or arrange for the provision of the accommodation because one of the following three conditions is satisfied: · the nature of your business is such that employees are liable to frequently change their place of residence, or · there is insufficient suitable residential accommodation otherwise available at or near the place or places where the employees are employed, or · it is customary for employers in the industry in which your employees are employed, to provide accommodation for their employees free of charge or for rent or other consideration that is less than market value Refer to the discussion at question 1.2.6 above. The same reasoning can be used to conclude that it is customary in the industry for employers to provide accommodation for their employees free of charge or for rent or other consideration that is less than market value. Further, you have advised that there is a shortage of suitable accommodation available. Therefore according to paragraph 58ZC, it is necessary for you to provide or arrange for the provision of the accommodation. 2.5 Will the accommodation be provided under a non-arm's length arrangement or, as part of an arrangement entered into for the purpose, or for purposes that included the purpose, of enabling you to obtain the remote area housing benefit exemption? Refer to the discussion at 1.2.7 above regarding the meaning of non-arms length arrangement and, an arrangement entered into for the purpose, or for purposes that included the purpose, of enabling you to obtain the remote area housing benefit exemption. The same reasoning can be applied to conclude that the accommodation that will be provided under this proposed arrangement will not be provided under a non-arms length arrangement or for a purpose, or purposes that includes the purpose, of enabling you to obtain the remote area housing benefit exemption. | Detailed Reasoning - Conclusion: Your proposal meets all of the requirements of section 58ZC(2) of the FBTAA. The provision of the housing benefits to your employees under the proposed arrangement will be exempt benefits as per subsection 58ZC(1). | Detailed Reasoning - Disclaimer: You cannot rely on the rulings in the Register of private binding rulings in your tax affairs. You can only rely on a private ruling that we have given to you or to someone acting on your behalf. The Register of private binding rulings is a public record of private rulings issued by the ATO. 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