Private ruling: Remote area housing benefits
Date of advice: 23 July 2025
Published: 22 September 2025
Ruling period: FBT year ending 31 March 20YY | FBT year ending 31 March 20YY | FBT year ending 31 March 20YY | FBT year ending 31 March 20YY
Date scheme commenced: 1 April 20XX

Ruling: Q1: Will the provision of housing benefits by the Corporation to its employees be exempt from Fringe Benefits Tax (FBT) in accordance with section 58ZC of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)? | A1: Yes. | Q2: Will the provision of an expense payment fringe benefit by the Corporation to an employee, where the employee's expenditure is in relation to rent, be reducible in accordance with subsection 60(2A) of the FBTAA? | A2: Yes. | Q3: Will the provision of an expense payment fringe benefit by the Corporation to an employee, where the employee's expenditure is in relation to interest on a loan, be reducible in accordance with subsection 60(2) of the FBTAA? | A3: Yes. | Q4: Will the provision of an expense payment benefit by the Corporation to an employee, where the employee's expenditure is in relation to expenditure in respect of residential land acquisition costs, residential accommodation extensions and construction of residential property, be reducible in accordance with subsection 60(4) of the FBTAA? | A4: Yes.

Relevant facts and circumstances: 1. The Corporation is one of a number of that provides services to customers within their service areas. 2. The Corporation's service area covers a large area including a large number of towns within Australia. The Employees 3. Some of the Corporation's employees have been recruited locally, whereas some have been recruited from outside the local region. 4. All employees are employed in the Corporation's service area. 5. The employees of the Corporation are engaged in the following roles: • communications, marketing and community relations • customer service • engineering and project management • environment and sustainability • finance and accounting • information technology • planning and development • trades and maintenance. The Arrangements 6. The Corporation currently has the following arrangements with their current and future employees: Arrangement 1 : The employees acquire their own accommodation which is their usual place of residence. The acquisition is funded by way of a loan from a bank. An employee salary sacrifices a portion of their remuneration and seeks reimbursement of interest on the mortgage in relation to this residential property. A formal reimbursement agreement would be put in place to document this arrangement. The residential properties acquired by the employees would be located within XXX service area. The salary sacrifice arrangement would be entered prior to formalising the reimbursement agreement. Arrangement 2 : The employees rent their accommodation directly from an unrelated third party. This accommodation would be their usual place of residence. An employee salary sacrifices a portion of their remuneration and seeks reimbursement of their rent in relation to this accommodation. A formal reimbursement agreement would be put in place to document this arrangement. The residential properties rented by employees would be located within XXX service area. The salary sacrifice arrangement would be entered prior to formalising the reimbursement agreement. Arrangement 3: The employees incur expenditure to do one of the following: a. acquire an estate or interest in land (i.e. the purchase price of the estate or land and any incidental costs) to subsequently construct or complete the construction of a dwelling b. construct, or complete the construction of, a dwelling on land in which the employee holds an estate or interest in land c. acquire an estate or interest in land (i.e. the purchase price of the estate or land and any incidental costs) on which there is a dwelling d. extend a dwelling, for which the employee holds an estate or interest, by adding a room or part of a room. The employee will have incurred the costs in the current or prior FBT years. The Corporation will enter into a salary sacrifice arrangement with the employee to recoup the costs from the employee via pre-tax deductions and then reimburses the employee for the costs during the current FBT period. A formal agreement would be put in place to document this arrangement. The employee will use the dwelling as their usual place of residence within 6 to 18 months of the relevant land acquisition or dwelling construction or extension (or as soon as practicable after such acquisition/construction/extension). The residential properties owned by employees would be located within XXX service area. The salary sacrifice arrangement would be entered prior to formalising the reimbursement agreement. There will be no other connection between XXX and the employees that may lead to a conclusion that they are not acting independently in relation to these matters. Arrangement 4: The employees are provided with residential accommodation owned or leased by XXX. This accommodation would be their usual place of residence. An employee salary sacrifices a portion of their remuneration in relation to this accommodation. A formal agreement would be put in place to document this arrangement. The residential properties rented by employees would be located within XXX service area and the employees would carry out their employment duties in the remote area. The salary sacrifice arrangement would be entered into prior to finalising the formal agreement. Reasoning for the Arrangements 7. In order to attract and retain skilled and qualified employees it is necessary for the Corporation to provide residential accommodation and related benefits to its employees. It has been previously accepted by the ATO that it is customary for employers in the Corporation's industry to provide such benefits to its employees. Other bodies engaged in the Corporation's industry currently provide to their employees. 8. The Corporation faces pressures to retain existing employees from a number of areas. 9. As such, the salary packaging of housing related fringe benefits provides a means for the Corporation to compete for talented employees within their current restricted salary scheme. 10. Additionally, it is necessary for the Corporation to provide accommodation related assistance because: • the nature of employer's business is such that employees are liable to move frequently from one residential location to another • there is insufficient suitable residential accommodation otherwise available at or near the place or places where the employees are employed.

Relevant legislative provisions: Fringe Benefits Tax Assessment Act 1986 Division 14A of Part III | Fringe Benefits Tax Assessment Act 1986 Section 20 | Fringe Benefits Tax Assessment Act 1986 Subsection 20(b) | Fringe Benefits Tax Assessment Act 1986 Section 25 | Fringe Benefits Tax Assessment Act 1986 Section 58ZC | Fringe Benefits Tax Assessment Act 1986 Subsection 58ZC(1) | Fringe Benefits Tax Assessment Act 1986 Subsection 58ZC(2) | Fringe Benefits Tax Assessment Act 1986 Paragraph 58ZC(2)(a) | Fringe Benefits Tax Assessment Act 1986 Paragraph 58ZC(2)(b) | Fringe Benefits Tax Assessment Act 1986 Paragraph 58ZC(2)(d) | Fringe Benefits Tax Assessment Act 1986 Paragraph 58ZC(2)(e) | Fringe Benefits Tax Assessment Act 1986 Subparagraph 58ZC(2)(e)(i) | Fringe Benefits Tax Assessment Act 1986 Subparagraph 58ZC(2)(e)(ii) | 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)(a) | Fringe Benefits Tax Assessment Act 1986 Paragraph 60(2)(b) | Fringe Benefits Tax Assessment Act 1986 Paragraph 60(2)(c) | Fringe Benefits Tax Assessment Act 1986 Paragraph 60(2)(d) | Fringe Benefits Tax Assessment Act 1986 Subsection 60(2A) | Fringe Benefits Tax Assessment Act 1986 Paragraph 60(2A)(a) | Fringe Benefits Tax Assessment Act 1986 Paragraph 60(2A)(b) | Fringe Benefits Tax Assessment Act 1986 Paragraph 60(2A)(c) | Fringe Benefits Tax Assessment Act 1986 Paragraph 60(2A)(d) | Fringe Benefits Tax Assessment Act 1986 Subsection 60(4) | Fringe Benefits Tax Assessment Act 1986 Paragraph 60(4)(a) | Fringe Benefits Tax Assessment Act 1986 Paragraph 60(4)(b) | Fringe Benefits Tax Assessment Act 1986 Subsection 136(1) | Fringe Benefits Tax Assessment Act 1986 Section 140 | Fringe Benefits Tax Assessment Act 1986 Subsection 140(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 142(1A) | Fringe Benefits Tax Assessment Act 1986 Paragraph 142(1A)(a) | Fringe Benefits Tax Assessment Act 1986 Paragraph 142(1A)(b) | Fringe Benefits Tax Assessment Act 1986 Paragraph 142(1A)(d) | Fringe Benefits Tax Assessment Act 1986 Subsection 142(2C) | Fringe Benefits Tax Assessment Act 1986 Paragraph 142(2C)(a) | Fringe Benefits Tax Assessment Act 1986 Paragraph 142(2C)(b) | Fringe Benefits Tax Assessment Act 1986 Paragraph 142(2C)(c) | Fringe Benefits Tax Assessment Act 1986 Paragraph 142(2C)(d) | Fringe Benefits Tax Assessment Act 1986 Paragraph 142(2C)(e) | Fringe Benefits Tax Assessment Act 1986 Paragraph 142(2C)(f) | Fringe Benefits Tax Assessment Act 1986 Paragraph 142(2C)(g) | Fringe Benefits Tax Assessment Act 1986 Paragraph 142(2C)(h) | Fringe Benefits Tax Assessment Act 1986 Paragraph 142(2C)(j) | Fringe Benefits Tax Assessment Act 1986 Subsection 142(2E) | Income Tax Assessment Act 1936 Schedule 2

Reasons for decision: Summary: The provision of the housing benefits by the Corporation to its employees will be exempt from FBT in accordance with section 58ZC of the FBTAA. | Detailed Reasoning - Is a housing benefit provided?: 1. The question of whether a housing benefit is provided by the Corporation is relevant only to Arrangement 4 , as described in the facts. 2. Section 25 of the FBTAA defines a 'housing benefit' as being a housing right granted by a person to another person. 3. A 'housing right' is defined by subsection 136(1) of the FBTAA to mean a lease or license granted to a person to occupy or use a unit of accommodation to the extent that the lease or license subsists at a time when the unit of accommodation is the person's usual place of residence. 4. Subsection 136(1) of the FBTAA defines a 'unit of accommodation' to include a house, flat or home unit, and accommodation in a house, flat or home unit'. The terms 'lease' and 'licence' are not defined in the FBTAA. On their ordinary meaning, these terms would include the granting of a right to use the specified land for accommodation purposes. 5. The FBTAA does not specify what is meant by a 'usual place of residence'. The definition of 'housing right' contemplates that a person can only have one 'usual place of residence' at any one time. 6. A 'place of residence' of a person is defined in subsection 136(1) of the FBTAA to mean: (a) a place at which the person resides, or (b) a place at which the person has sleeping accommodation, whether on a permanent or temporary basis and whether or not on a shared basis. 7. Although the FBTAA does not specify what amounts to a 'usual place of residence', it is an important concept. In the context of the definition of 'place of residence', it can be taken as meaning habitual or customary. While there may be generally no problem in establishing an employee's 'usual place of residence', problems can arise in establishing 'usual place' where there is a choice between two places of residence. 8. The Corporation may provide residential accommodation (a house or unit) that it owns for an employee to occupy or use, which will be the employee's usual place of residence for the full duration of the employee's employment. 9. Based on the facts provided, under Arrangement 4: • the employees will be provided with residential accommodation owned or leased by EGW • the accommodation will be the employee's 'usual place of residence' • the employees will salary sacrifice a portion of their remuneration in relation to the accommodation • a 'formal agreement' would be put into place to document the 'arrangement' • the residential accommodation provided to employees will be located within EGW's service area • the employees will carry out their employment duties within EGW's service area • the salary sacrifice arrangement will be entered into prior to finalising the 'formal agreement'. 10. Accordingly, Arrangement 4 will satisfy the definition of a 'housing benefit' as defined in section 25 of the FBTAA. | Detailed Reasoning - Is the housing benefit provided exempt from FBT?: 11. Under subsection 58ZC(1) of the FBTAA, a housing benefit that is a 'remote area housing benefit' is exempt from FBT. The conditions for a housing benefit to be a 'remote area housing benefit' are set out in subsection 58ZC(2) of the FBTAA, as stipulated below. 12. 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 (c) (Repealed by No 77 of 2005) (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. 13. In order to determine whether housing benefits provided to the Corporation's employees constitute a 'remote area housing benefit', a discussion is provided below in respect of whether each element or condition in subsection 58ZC(2) of the FBTAA will be satisfied. Paragraph 58ZC(2)(a) of the FBTAA 14. A unit of accommodation will be treated as being in a remote area if it is not located in, or adjacent to, an eligible urban area. 15. Pursuant to paragraph 140(1)(a) of the FBTAA, an 'eligible urban area' is an area that is either: • situated in Zone A or Zone B for income tax purposes (as described in Parts I and II respectively in Schedule 2 to the Income Tax Assessment Act 1936 and is an urban centre with a 1981 census population of not less than 28,000, or • not situated in Zone A or Zone B for income tax purposes and is an urban centre with a 1981 census population of not less than 14,000. 16. The towns in Australia which form part of the Corporation's service area are not stipulated in Part I or Part II of Schedule 2 to the Income Tax Assessment Act 1936 (ITAA 1936) as being situated in Zone A or Zone B for income tax purposes. 17. The ATO used to produce lists of remote and non-remote towns for the purposes of subsection 140(1) of the FBTAA 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 . However, that Practice Statement was withdrawn on 11 June 2013, as the ATO now maintains a list of eligible urban areas on its website. The towns in the Corporation's service area are not situated within any of the eligible urban areas currently provided on that list. 18. Therefore, the Corporation's employees (to whom housing benefits are provided) who reside within the Corporation's service area do not reside in an 'eligible urban area.' With specific regard to employees (to whom housing benefits are provided) who reside in close proximity to (and not within) the Corporation's service area, it is assumed for the purposes of this Private Ruling that these employees do not reside within an eligible urban area. 19. According to paragraph 140(1)(b) of the FBTAA, an area that is 'adjacent to an eligible urban area' is an area that is situated either: • less than 40 kilometres by the shortest practicable surface route from the centre of an eligible urban area with a 1981 census population of less than 130,000, or • less than 100 kilometres by the shortest practicable surface route from the centre of an eligible urban area with a 1981 census population of 130,000 or more. 20. The ATO's website [1] specifically classifies a certain number of towns in the Corporation's service area as 'remote areas'. 21. In terms of the remaining towns in the Corporation's service area that are not specifically classified by the ATO as a 'remote area', based on the distance between each of these towns in the Corporation's service area and the closest eligible urban areas, these towns in the Corporation's service area are not adjacent to an eligible urban area pursuant to paragraph 140(1)(b) of the FBTAA 22. Therefore, the Corporation's employees (to whom housing benefits are provided) who reside within the Corporation's service area do not reside adjacent to an eligible urban area. With specific regard to employees (to whom housing benefits are provided) who reside in close proximity to (and not within) the Corporation's service area, it is assumed for the purposes of this Private Ruling that these employees do not reside adjacent to an eligible urban area as defined in subsection 140(1) of the FBTAA. 23. As the Corporation's employees residing under Arrangement 4 within or in close proximity to the Corporation's service area do not reside within, or adjacent to, an eligible urban area, the condition in paragraph 58ZC(2)(a) of the FBTAA will be satisfied. Paragraph 58ZC(2)(b) of the FBTAA 24. Based on the facts provided, it is accepted that during the relevant tenancy period, employees who occupy the residential properties referred to in Arrangement 4 will be current employees of the Corporation, and the usual place of employment is in the Corporation's service area which, as concluded above, is not located within or adjacent to an eligible urban area. 25. Therefore, the condition in paragraph 58ZC(2)(b) of the FBTAA will be satisfied. Paragraph 58ZC(2)(d) of the FBTAA 26. From the facts provided, subparagraphs 58ZC(2)(d)(i) and 58ZC(2)(d)(ii) of the FBTAA are not required to be considered. 27. 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? explains what is meant by the phrase 'customary for employees in the industry' in subparagraph 58ZC(2)(d)(iii). Paragraph 2 of TD 94/97 states: 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. 28. It is accepted that it is necessary for the Corporation to provide residential accommodation to its employees working in remote areas, as it is customary for employers in the Corporation's industry to provide residential accommodation to its employees working in remote areas free of charge or for a rent that is less than market value. 29. Therefore, the condition in paragraph 58ZC(2)(d) of the FBTAA will be satisfied. Paragraph 58ZC(2)(e) of the FBTAA 30. Subsection 136(1) defines a 'non-arm's length arrangement' to mean an arrangement other than an arm's length arrangement. As the term 'arm's length arrangement' is not defined in the FBTAA, the Commissioner determined the term's meaning in ATO Interpretative Decision ATO ID 2005/156 Exempt benefits: remote area housing - non-arm's length arrangement for the purposes of subparagraph 58ZC(2)(e)(i) as follows: • Subsection 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. • Parties will be dealing with each other 'at arm's length' in relation to the transaction, where: ­ they are not connected in such a way as to bring into question the ability of one to act independently of the other, and ­ they have behaved in the manner in which parties at arm's length would be expected to behave in conducting their affairs. 31. All employees who elect to be subject to Arrangement 4 will do so by entering into a salary sacrifice agreement with the Corporation where they forego an amount of salary in relation to the amount of the housing benefits granted by the Corporation. Therefore, it is accepted that the Corporation will grant the housing benefits to its employees under Arrangement 4 under an arm's length arrangement. 32. Paragraph 58ZC(2)(e) of the FBTAA also requires consideration of whether Arrangement 4 is entered into by the Corporation and its employees for the purpose of enabling the Corporation to obtain the benefit of the application of section 58ZC of the FBTAA. 33. In ATO Interpretative Decision ATO ID 2010/183 Fringe benefits tax: exempt benefits - remote area housing benefits - new novated lease arrangement , the Commissioner considered that the provision of housing benefits by an employer to an employee under a new novated lease arrangement to be for the purpose of enabling the employer to provide the benefit of housing to its employee as an ordinary business requirement of the employer, and not for the purpose of obtaining the benefit of the application of section 58ZC of the FBTAA. 34. 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. 35. The Commissioner considers that there are no overt acts by which one could predicate that Arrangement 4 has been implemented by any of the parties for the purpose of allowing the Corporation to enjoy the benefits of the tax exemption. The arrangement can be explained as being one of ordinary business dealings as is customary in the Corporation's industry. 36. In particular, where the Corporation and certain employees enter into Arrangement 4, such arrangements are entered into by each of the relevant parties for the purpose of enabling the Corporation to provide the benefit of housing to its employee whilst the employee remains currently employed. 37. Therefore, it is accepted that when Arrangement 4 is entered into by the Corporation and its employees, they are not entered into for the purpose of obtaining the benefit of section 58ZC of the FBTAA. As such, the condition in paragraph 58ZC(2)(e) of the FBTAA will be satisfied. | Detailed Reasoning - Conclusion: 38. In circumstances where the Corporation and certain employees enter into a housing arrangement under Arrangement 4, a 'housing benefit' is provided pursuant to section 25 of the FBTAA. 39. As per the discussion above, each of the conditions for such housing benefits to constitute a 'remote area housing benefit' - as set out in subsection 58ZC(2) of the FBTAA - are satisfied. Therefore, such a remote area housing benefit provided by the Corporation to an employee in respect of Arrangement 4 is exempt from FBT pursuant to subsection 58ZC(1) of the FBTAA. | Detailed Reasoning - Question 2: Will the provision of an expense payment fringe benefit by the Corporation to an employee, where the employee's expenditure is in relation to rent, be reducible in accordance with subsection 60(2A) of the FBTAA? | Summary: The provision of an expense payment fringe benefit by the Corporation to an employee, where the employee's expenditure is in relation to rent, will be reducible in accordance with subsection 60(2A) of the FBTAA. | Detailed Reasoning - Detailed reasoning: Subsection 136(1) of the FBTAA defines an ' expense payment fringe benefit' to mean a ' fringe benefit that is an expense payment benefit '. Emphasis added A ' fringe benefit ' is defined in subsection 136(1) of the FBTAA, which requires the following conditions to be satisfied: 1. A benefit is provided at any time during the year of tax. 2. The benefit is provided to an employee or an associate of the employee. 3. The benefit is provided by: (i) their employer; or (ii) an associate of the employer; or (iii) a third party other than the employer or an associate under an arrangement between the employer or associate of the employer and the third party; or (iv) a third party other than the employer or an associate of the employer, if the employer or an associate of the employer: (A) participates in or facilitates the provision or receipt of the benefit; or (B) participates in, facilitates or promotes a scheme or plan involving the provision of the benefit; and the employer or associate knows, or ought reasonably to know, that the employer or associate is doing so; 4. The benefit is provided in respect of the employment of the employee. 5. The benefit is not one that is specifically excluded as per paragraphs (f) to (s) of the definition of a fringe benefit in subsection 136(1). An ' expense payment benefit ' is defined in subsection 136(1) of the FBTAA to mean a benefit referred to in section 20 of the FBTAA. An 'expense payment benefit' is defined in section 20 of the FBTAA as follows: 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. | Detailed Reasoning - Is an expense payment benefit provided?: 1. The question of whether an expense payment benefit is provided by the Corporation to the employee, where the employee's expenditure is in relation to rent, is relevant only to Arrangement 2 , as described in the facts. 2. A reimbursement by the Corporation under a salary sacrifice agreement of an employee for rent that the employee has paid to an unrelated third party will constitute an expense payment benefit pursuant to subsection 20(b) of the FBTAA. 3. It is accepted that such a benefit is provided by the Corporation to an employee in respect of the employee's employment, and that it is not specifically excluded from the definition of a 'fringe benefit' in subsection 136(1) of the FBTAA. As such, it is considered that a 'fringe benefit' as defined in subsection 136(1) of the FBTAA has been provided in these circumstances. 4. Therefore, it is considered that an 'expense payment fringe benefit' as defined in subsection 136(1) of the FBTAA would be provided. | Detailed Reasoning - Is the taxable value of an expense payment benefit (in relation to rent) reducible?: 5. Subsection 60(2A) of the FBTAA provides that the taxable value of an expense payment benefit shall be reduced by 50% where the following conditions apply: 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 recipient's 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 recipient's expenditure as relates to the occupation period. 6. In order to determine whether the amount of the reimbursement by the Corporation under a salary sacrifice agreement of an employee for rent that the employee has paid to an unrelated third party will be reducible, a discussion is provided below in respect of whether each element or condition in subsection 60(2A) of the FBTAA will be satisfied. Paragraph 60(2A)(a) of the FBTAA 7. Based on the facts provided, the recipient of an expense payment fringe benefit (as provided by the Corporation) will be an employee of the Corporation. 8. Therefore, the condition in paragraph 60(2A)(a) of the FBTAA will be satisfied. Paragraph 60(2A)(b) of the FBTAA 9. In determining whether the amount of the reimbursement by the Corporation under a salary sacrifice agreement of an employee for rent that the employee has paid to an unrelated third party is 'in respect of a remote area housing rent connected with a unit of accommodation', it is necessary to consider subsection 142(1A) of the FBTAA which sets out the requisite conditions. 10. Subsection 142(1A) of the FBTAA is set out below: 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. | Detailed Reasoning - Paragraph 142(1A)(a) of the FBTAA: 11. Based on the facts provided, under Arrangement 2, employees who rent their accommodation (which is their usual place of residence) directly from an unrelated third party, where rent paid to the unrelated third party is reimbursed to employee by the Corporation under a salary sacrifice arrangement, will be employees of the Corporation. 12. Further, the applicant states that all of the accommodation rented by the Corporation's employees will be within the Corporation service area. 13. As concluded in the response to Question 1 above (with specific regard to paragraph 58ZC(2)(a) of the FBTAA), the Corporation's employees who reside within the Corporation's service area do not reside in, or adjacent to, an eligible urban area. With specific regard to employees who reside in close proximity to (and not within) the Corporation's service area, it will be assumed for the purposes of this Private Ruling that these employees do not reside in, or adjacent to, an eligible urban area as defined in subsection 140(1) of the FBTAA. Such a conclusion also applies to the condition at paragraph 142(1A)(a) of the FBTAA in respect of Arrangement 2. 14. Therefore, the condition in paragraph 142(1A)(a) of the FBTAA will be satisfied. | Detailed Reasoning - Paragraph 142(1A)(b) of the FBTAA: 15. The 'common conditions' as set out in subsection 142(2E) of the FBTAA are iterated below: 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; (iii) 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 (iv) 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. 16. As per the Facts, the objective of the Corporation in providing housing benefits (i.e. reimbursement to employees for housing rent that the employee has paid to an unrelated third party) to its employees is to attract staff and retain staff that have already been recruited. The facts also provide that other employers engaged in the Corporation's industry currently offer similar benefits to their employees in order to attract and retain skilled and qualified employees. 17. It has previously been accepted by the ATO that it was necessary for entities in the Corporation's industry to provide residential accommodation to its employees working in remote areas, as it was customary for employers in the Corporation's industry to provide residential accommodation to its employees working in remote areas free of charge or for a rent less than market value. 18. Accordingly, it is accepted that it is necessary for the Corporation to provide 'housing assistance' to its employees working in remote areas, as it is customary for employers in the Corporation's industry to provide housing assistance to its employees working in remote areas. 19. Therefore, the 'common conditions' in subsection 142(2E) of the FBTAA will be satisfied. As such, paragraph 142(1A)(b) of the FBTAA will be satisfied. | Detailed Reasoning - Paragraph 142(1A)(d) of the FBTAA: 20. A discussion surrounding the definition of a 'non-arm's length arrangement' and an 'arm's length transaction' is provided in the response to Question 1 above (with specific regard to paragraph 58ZC(2)(e) of the FBTAA). 21. All employees who elect to be subject to Arrangement 2 will do so by entering into a salary sacrifice agreement with the Corporations where they forego an amount of salary in relation to the amount that they are reimbursed for housing rent that they pay to an unrelated third party. Therefore, it is accepted that the Corporation will grant an expense payment benefit to its employees under Arrangement 2 under an arm's length arrangement. 22. The response to Question 1 above discussed - pursuant to paragraph 58ZC(2)(e) of the FBTAA - whether Arrangement 4 will be entered into by the Corporation and its employees for the purpose of enabling the Corporation to obtain the benefit of the application of this section 58ZC of the FBTAA. With respect to Arrangement 2, it is similarly necessary to consider whether an arrangement under Arrangement 2 is entered into by the Corporation and its employees for the purpose of enabling the Corporation to obtain the benefit of the application of section 60 of the FBTAA (which pertains to the reduction in taxable value of fringe benefits associated with remote area housing). 23. The Commissioner considers that there are no overt acts by which one could predicate that Arrangement 2 has been implemented by any of the parties for the purpose of allowing the Corporation to enjoy the benefits of the tax reduction under section 60 of the FBTAA. The arrangement can be explained as being one of ordinary business dealings as is customary in the Corporation's industry. 24. In particular, where the Corporation and certain employees enter into Arrangement 2, such an arrangement is entered into by each of the relevant parties for the purpose of enabling the Corporation to provide the benefit of housing to its employee whilst the employee remains currently employed. 25. Therefore, it is accepted that when Arrangement 2 is entered into by the Corporation and its employees, they are not entered into for the purpose of obtaining the benefit of section 60 of the FBTAA. As such, the condition in paragraph 142(1A)(d) of the FBTAA will be satisfied. 26. Based on the above discussion, the conditions in subsection 142(1A) of the FBTAA are satisfied, which means that the reimbursement by the Corporation under a salary sacrifice agreement of an employee for rent that the employee has paid to an unrelated third party (under Arrangement 2) will be 'in respect of a remote area housing rent connected with a unit of accommodation'. As such, the condition in paragraph 60(2A)(b) of the FBTAA will be satisfied. Paragraph 60(2A)(c) of the FBTAA 27. The Commissioner's view on what is meant by 'usual place of residence' is considered in the response to Question 1 above. 28. The applicant has stated that under Arrangement 2, rental expense reimbursements will only be provided to employees in relation to units of accommodation used as the 'usual place of residence' during the period that the eligible rent is accrued. 29. Therefore, the condition in paragraph 60(2A)(c) of the FBTAA will be satisfied. Paragraph 60(2A)(d) of the FBTAA 30. The same principles/reasons underlying the conclusion formed above in respect of paragraph 142(1A)(d) of the FBTAA are also applicable to paragraph 60(2A)(d) of the FBTAA. 31. Further, in ATO Interpretative Decision ATO ID 2003/159 Remote area housing: reduction of taxable value - remote area housing rent , the Commissioner considered that paragraph 60(2A)(d) of the FBTAA did not apply to a similar arrangement to Arrangement 2. 32. Therefore, the condition in paragraph 60(2A)(d) of the FBTAA will be satisfied. | Detailed Reasoning - Conclusion: 33. In circumstances where the Corporation and certain employees enter into a housing arrangement under Arrangement 2, an 'expense payment fringe benefit' is provided pursuant to the definition of that term in subsection 136(1) of the FBTAA. 34. As per the discussion above, each of the conditions in subsection 60(2A) of the FBTAA - which assist in determining whether the payment of an employee's rent by the Corporation to an unrelated third party under a salary sacrifice agreement is reducible - are satisfied. Therefore, the taxable value of the applicable expense payment benefit under Arrangement 2 is reducible by 50% pursuant to subsection 60(2A) of the FBTAA. Note: 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. | Detailed Reasoning - Question 3: Will the provision of an expense payment fringe benefit by the Corporation to an employee, where the employee's expenditure is in relation to interest on a loan, be reducible in accordance with subsection 60(2) of the FBTAA? | Summary: The provision of an expense payment fringe benefit by the Corporation to an employee, where the employee's expenditure is in relation to interest on a loan, will be reducible in accordance with subsection 60(2) of the FBTAA. | Detailed Reasoning - Is an expense payment fringe benefit provided?: 1. The question of whether an expense payment fringe benefit is provided by the Corporation to the employee, where the employee's expenditure is in relation to interest on a loan, is relevant only to Arrangement 1 , as described in the facts. 2. As iterated in the response to Question 2 above, an 'expense payment fringe benefit' is defined in subsection 136(1) of the FBTAA to mean a 'fringe benefit that is an expense payment benefit'. The definitions of a 'fringe benefit' and an 'expense payment benefit' are provided in the response to Question 2 above. 3. A reimbursement by the Corporation under a salary sacrifice agreement of an employee for interest that the employee has incurred on a housing loan will constitute an 'expense payment benefit' pursuant to subsection 20(b) of the FBTAA. 4. It is accepted that such a benefit is provided by the Corporation (the employer) to an employee in respect of the employee's employment, and that it is not specifically excluded from the definition of a 'fringe benefit' in subsection 136(1) of the FBTAA. As such, it is considered that a 'fringe benefit' as defined in subsection 136(1) of the FBTAA has been provided in these circumstances. 5. Therefore, it is considered that an 'expense payment fringe benefit' as defined in subsection 136(1) of the FBTAA would be provided. | Detailed Reasoning - Is the taxable value of an expense payment benefit (in relation to interest on a loan) reducible?: 6. Subsection 60(2) of the FBTAA provides that the taxable value of an expense payment benefit shall be reduced by 50% where the following conditions apply: 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 subsection called 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. 7. In order to determine whether reimbursements by the Corporation under a salary sacrifice agreement of an employee for interest that the employee has incurred on a housing loan is reducible, a discussion is provided below in respect of whether each element or condition in subsection 60(2) of the FBTAA will be satisfied. Paragraph 60(2)(a) of the FBTAA 8. Based on the facts provided, the recipient of an expense fringe payment benefit (as provided by the Corporation) will be an employee of the Corporation. 9. Therefore, the condition in paragraph 60(2)(a) of the FBTAA will be satisfied. Paragraph 60(2)(b) of the FBTAA 10. In determining whether the reimbursement to an employee by the Corporation under a salary sacrifice agreement of interest incurred by the employee under a mortgage is 'in respect of a remote area housing loan', it is necessary to consider subsection 142(1) of the FBTAA which sets out the requisite conditions. 11. Subsection 142(1) of the FBTAA is set out below: 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 (iii) 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. | Detailed Reasoning - Paragraph 142(1)(a) of the FBTAA: 12. Based on the facts provided, under Arrangement 1, employees who own their own accommodation (which is their usual place of residence), and are reimbursed by the Corporation for the interest component of the employee's housing loan under a salary sacrifice agreement, will be employees of the Corporation 13. Further, the applicant states that the accommodation owned by the Corporation's employees will be within the Corporation's service area. 14. As concluded in the response to Question 1 above (with specific regard to paragraph 58ZC(2)(a) of the FBTAA), the Corporation employees who reside within the Corporation's service area do not reside in, or adjacent to, an eligible urban area. With specific regard to employees who reside in close proximity to (and not within) the Corporation's service area, it is assumed for the purposes of this Private Ruling that these employees do not reside in, or adjacent to, an eligible urban area as defined in subsection 140(1) of the FBTAA. Such a conclusion also applies to the condition at paragraph 142(1)(a) of the FBTAA in respect of Arrangement 1. 15. Therefore, the condition in paragraph 142(1)(a) of the FBTAA will be satisfied. | Detailed Reasoning - Paragraph 142(1)(b) of the FBTAA: 16. The 'common conditions' as set out in subsection 142(2E) of the FBTAA are iterated in the response to Question 2 above. 17. As per the Facts, the objective of the Corporation in providing housing benefits (ie reimbursement to employees for interest that the employee has incurred on a housing loan) to its employees is to attract staff, and retain staff that have already been recruited. The facts provide that other employers in this industry businesses offer similar benefits to their employees in order to attract and retain skilled and qualified employees. 18. It has previously been accepted by the ATO that it was necessary for entities in the Corporation's industry to provide residential accommodation to its employees working in remote areas, as it was customary for employers in the Corporation's industry to provide residential accommodation to its employees working in remote areas free of charge or for a rent less than market value. 19. Accordingly, it is accepted that it is necessary for the Corporation to provide 'housing assistance' to its employees working in remote areas, as it is customary for employers in the Corporation's industry to provide housing assistance to its employees working in remote areas. 20. Therefore, the 'common conditions' in subsection 142(2E) of the FBTAA will be satisfied. As such, paragraph 142(1A)(b) of the FBTAA will be satisfied. | Detailed Reasoning - Paragraph 142(1)(d) of the FBTAA: 21. A discussion surrounding the definition of a 'non-arm's length arrangement' and an 'arm's length transaction' is provided in the response to Question 1 above (with specific regard to paragraph 58ZC(2)(e) of the FBTAA). 22. All employees who elect to be subject to Arrangement 1 do so by entering into a salary sacrifice agreement with the Corporation where they forego an amount of salary in relation to the amount of the interest reimbursed by the Corporation in respect of the employee's housing loan. Therefore, it is accepted that the Corporation will grant an expense payment fringe benefit to its employees under Arrangement 1 under an arm's length arrangement. 23. The response to Question 1 above discussed - pursuant to paragraph 58ZC(2)(e) of the FBTAA - whether Arrangement 4 was entered into by the Corporation and its employees for the purpose of enabling the Corporation to obtain the benefit of the application of this section 58ZC of the FBTAA. With respect to Arrangement 1, it is similarly necessary to consider whether an arrangement under Arrangement 1 is entered into by the Corporation and its employees for the purpose of enabling the Corporation to obtain the benefit of the application of section 60 of the FBTAA (which pertains to the reduction in taxable value of fringe benefits associated with remote area housing). 24. The Commissioner considers that there are no overt acts by which one could predicate that Arrangement 1 has been implemented by any of the parties for the purpose of allowing the Corporation to enjoy the benefits of the tax reduction under section 60 of the FBTAA. The arrangement can be explained as being one of ordinary business dealings as is customary in the Corporation's industry. 25. In particular, where the Corporation and certain employees enter into Arrangement 1, such an arrangement is entered into by each of the relevant parties for the purpose of enabling the Corporation to provide the benefit of housing to its employee whilst the employee remains currently employed. 26. Therefore, it is accepted that when Arrangement 1 is entered into by the Corporation and its employees, they are not entered into for the purpose of obtaining the benefit of section 60 of the FBTAA. As such, the condition in paragraph 142(1)(d) of the FBTAA will be satisfied. 27. Based on the above discussion, the conditions in subsection 142(1) of the FBTAA are satisfied, which means that the reimbursement to an employee by the Corporation under a salary sacrifice agreement of interest incurred by the employee under a mortgage (under Arrangement 1) is 'in respect of a remote area housing loan connected with a dwelling'. As such, the condition in paragraph 60(2)(b) of the FBTAA will be satisfied. Paragraph 60(2)(c) of the FBTAA 28. Subsection 136(1) of the FBTAA defines a 'unit of accommodation' to include a house, flat or home unit, and accommodation in a house, flat or home unit. 29. A discussion surrounding the Commissioner's view on what is meant by 'usual place of residence' is provided in the response to Questions 1. 30. The applicant has stated that under Arrangement 1, mortgage interest expense reimbursements will only be provided to employees in relation to units of accommodation used as the 'usual place of residence' during the period that the eligible rent is accrued. 31. Therefore, the condition in paragraph 60(2A)(c) of the FBTAA will be satisfied. Paragraph 60(2)(d) of the FBTAA 32. The same principles/reasons underlying the conclusion formed above in respect of paragraph 142(1)(d) of the FBTAA are also applicable to paragraph 60(2)(d) of the FBTAA. 33. Further, in ATO Interpretative Decision ATO ID 2003/157 Remote area housing: reduction of taxable value - remote area housing loan interest , the Commissioner considered that paragraph 60(2)(d) of the FBTAA did not apply to a similar arrangement to Arrangement 1. 34. Therefore, the condition in paragraph 60(2)(d) of the FBTAA will be satisfied. | Detailed Reasoning - Conclusion: 35. In circumstances where the Corporation and certain employees enter into an arrangement under Arrangement 1, an 'expense payment fringe benefit' is provided pursuant to the definition of that term in subsection 136(1) of the FBTAA. 36. As per the discussion above, each of the conditions in subsection 60(2) of the FBTAA - which assist in determining whether the amount of reimbursement by the Corporation under a salary sacrifice agreement of an employee for interest that the employee has incurred under a housing mortgage is reducible - are satisfied. Therefore, the taxable value of the applicable expense payment fringe benefit under Arrangement 1 is reducible by 50% pursuant to subsection 60(2) of the FBTAA. | Detailed Reasoning - Question 4: Will the provision of an expense payment fringe benefit by the Corporation to an employee, where the employee's expenditure is in relation to residential land acquisition costs, residential accommodation extensions and construction of residential property, be reducible in accordance with subsection 60(4) of the FBTAA? | Summary: The provision of an expense payment fringe benefit by the Corporation to an employee, where the employee's expenditure is in relation to residential land acquisition costs, residential accommodation extensions and construction of residential property, will be reducible in accordance with subsection 60(4) of the FBTAA. | Detailed Reasoning - Is an expense payment fringe benefit provided?: 1. The question of whether an expense payment fringe benefit is provided by the Corporation to the employee, where the employee's expenditure is on residential land acquisition costs, residential accommodation extensions and construction of residential property, is relevant only to Arrangement 3 , as described in the facts. 2. As iterated in the response to Question 2 above, an 'expense payment fringe benefit' is defined in subsection 136(1) of the FBTAA to mean a 'fringe benefit that is an expense payment benefit'. The definitions of a 'fringe benefit' and an 'expense payment benefit' are provided in the response to Question 2 above. 3. A reimbursement by the Corporation under a salary sacrifice agreement of an employee for expenditure incurred by an employee on residential land acquisition costs, residential accommodation expenses and construction of residential property, will constitute an 'expense payment benefit' pursuant to paragraph 20(b) of the FBTAA. 4. It is accepted that such a benefit is provided by the Corporation (the employer) to an employee in respect of the employee's employment, and that it is not specifically excluded from the definition of a 'fringe benefit' in subsection 136(1) of the FBTAA. As such, it is considered that a 'fringe benefit' as defined in subsection 136(1) of the FBTAA has been provided in these circumstances. 5. Therefore, it is considered that an 'expense payment fringe benefit' as defined in subsection 136(1) of the FBTAA would be provided. Is the taxable value of an expense payment benefit (in relation to expenditure on residential land acquisition costs, residential accommodation extensions and construction of residential property) reducible? 6. Subsection 60(4) of the FBTAA provides that the taxable value of an expense payment benefit shall be reduced by 50% where the following conditions apply: 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; and (b) the recipients expenditure is in respect of remote area residential property; 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%. 7. In order to determine whether reimbursements by the Corporation under a salary sacrifice agreement of an employee for expenditure incurred on residential land acquisition costs, residential accommodation expenses and construction of residential property will be reducible, a discussion is provided below in respect of whether each element or condition in subsection 60(4) of the FBTAA will be satisfied. Paragraph 60(4)(a) of the FBTAA 8. Based on the facts provided, the recipient of an expense payment fringe benefit (as provided by the Corporation) will be an employee of the Corporation. 9. Therefore, the condition in paragraph 60(4)(a) of the FBTAA will be satisfied. Paragraph 60(4)(b) of the FBTAA 10. In determining whether reimbursements by the Corporation under a salary sacrifice agreement of an employee for expenditure incurred on residential land acquisition costs, residential accommodation expenses and construction of residential property will be 'in respect of remote area residential property', it is necessary to consider subsection 142(2C) of the FBTAA which sets out the requisite conditions. 11. Subsection 142(2C) of the FBTAA is set out below: In this Act, a reference, in relation to an expense payment fringe benefit in relation to a year of tax in relation to an employee of an employer, to recipients expenditure in respect of remote area residential property is a reference to recipients expenditure that is incurred wholly: (a) to enable the employee to acquire an estate or interest in land on which a dwelling was subsequently to be constructed or to acquire an estate or interest in land and construct, or complete the construction of, a dwelling on the land; (b) to enable the employee to construct, or complete the construction of, a dwelling on land in which the employee holds an estate or interest; (c) to enable the employee to acquire an estate or interest in land on which there is a dwelling; or (d) to enable the employee to extend a dwelling, being a dwelling constructed on land in which the employee holds an estate or interest, by adding a room or part of a room to the dwelling, as the case may be; where: (e) if paragraph (a) or (b) applies: (i) at the time the recipients expenditure was incurred, the employee proposed to occupy or use the dwelling as his or her usual place of residence; and (ii) the Commissioner is satisfied that the employee has pursued sustained reasonable efforts to: (A) commence the construction, or commence the completion of the construction, of the building constituting or containing the dwelling within 6 months after the time the recipients expenditure was incurred; and (B) occupy or use the dwelling concerned as his or her usual place of residence within 18 months after the time the recipients expenditure was incurred; (f) if paragraph (c) or (d) applies - as soon as reasonably practicable after the time the recipients expenditure was incurred, the dwelling concerned was occupied or used by the employee as his or her usual place of residence; (g) at the time the recipients expenditure was incurred: (i) the land 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; (a) the common conditions set out in subsection (2E) are satisfied in relation to the time the recipients expenditure was incurred; and (b) the fringe benefit was not provided to the employee 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 or Division 14A of Part III . Paragraphs142(2C)(a) - (f) of the FBTAA 12. Based on the facts provided, under Arrangement 3, employees who incur expenditure on residential property and are reimbursed by the Corporation under a salary sacrifice agreement will be employees of the Corporation. 13. Further, the applicant states that under Arrangement 3 employees will wholly incur expenditure to do one of the following: • acquire an estate or interest in land (i.e. the purchase price of the estate or land and any incidental costs) to subsequently construct or complete the construction of a dwelling • construct, or complete the construction of, a dwelling on land in which the employee holds an estate or interest in land • acquire an estate or interest in land (i.e. the purchase price of the estate or land and any incidental costs) on which there is a dwelling • extend a dwelling, for which the employee holds an estate or interest, by adding a room or part of a room. 14. In addition, the applicant states that employees eligible to enter into Arrangement 3 will, as applicable: • use the dwelling as their usual place of residence within 6 or 18 months, as required under paragraph 142(2C)(e), or • use the dwelling as their usual place of residence as soon as practical after the expenditure on the relevant land extension or dwelling extension is incurred as required under paragraph 142(2C)(f). 15. A discussion surrounding the Commissioner's view on what is meant by 'usual place of residence' is provided in the response to Question 1 above. 16. Therefore, based on the facts provided, the conditions in paragraphs 142(2C)(a) - (f) of the FBTAA will be satisfied. Paragraphs 142(2C)(g) of the FBTAA 17. The applicant states that at the time the employee's expenditure will be incurred all of the relevant employee's land will be within the Corporation's service area. 18. As concluded in the response to Question 1 above (with specific regard to paragraph 58ZC(2)(a) of the FBTAA), the Corporation's employees who reside within the Corporation's service area do not reside in, or adjacent to, an eligible urban area. With specific regard to employees who reside in close proximity to (and not within) the Corporation's service area, it will be assumed for the purposes of this Private Ruling that these employees do not reside in, or adjacent to, an eligible urban area as defined in subsection 140(1) of the FBTAA. Such a conclusion also applies to the condition at paragraph 142(2C)(g) of the FBTAA in relation to 'the land' and 'the usual place of employment of the employee' in respect of Arrangement 3. 19. Therefore, the condition in paragraph 142(2C)(g) of the FBTAA will be satisfied. Paragraph 142(2C)(h) of the FBTAA 20. The 'common conditions' as set out in subsection 142(2E) of the FBTAA are iterated in the response to Question 2 above. 21. As per the Facts, the objective of the Corporation in providing housing benefits (ie reimbursement to employees in relation to expenditure on residential land acquisition costs, residential accommodation extensions and construction of residential property) to its employees is to attract staff and retain staff that have already been recruited. You have stated that other employers in this industry offer similar benefits to their employees in order to attract and retain skilled and qualified employees. 22. It has previously been accepted by the ATO that it was necessary for entities in the Corporation's industry to provide residential accommodation to its employees working in remote areas, as it was customary for employers in the Corporation's industry to provide residential accommodation to its employees working in remote areas free of charge or for a rent less than market value. 23. Accordingly, it is accepted that it is necessary for the Corporation to provide 'housing assistance' to its employees working in remote areas, as it is customary for employers in the Corporation's industry to provide housing assistance to its employees working in remote areas. 24. Therefore, the 'common conditions' in subsection 142(2E) of the FBTAA will be satisfied. As such, paragraph 142(2C)(h) of the FBTAA will be satisfied. Paragraph 142(2C)(j) of the FBTAA 23. A discussion surrounding the definition of a 'non-arm's length arrangement' and an 'arm's length transaction' is provided in the response to Question 1 above (with specific regard to paragraph 58ZC(2)(e) of the FBTAA). 24. All employees who elect to be subject to Arrangement 3 will do so by entering into a salary sacrifice agreement with the Corporation where they forego an amount of salary in relation to the amount that they are reimbursed for expenditure they incur in respect of residential land acquisition costs, residential accommodation extensions and construction of residential property. Therefore, it is accepted that the Corporation will grant an expense payment fringe benefit to its employees under Arrangement 3 under an arm's length arrangement. 25. The response to Question 1 above discussed - pursuant to paragraph 58ZC(2)(e) of the FBTAA - whether Arrangement 4 will be entered into by the Corporation and its employees for the purpose of enabling the Corporation to obtain the benefit of the application of this section 58ZC of the FBTAA. With respect to Arrangement 3, it is similarly necessary to consider whether an arrangement under Arrangement 3 is entered into by the Corporation and its employees for the purpose of enabling the Corporation to obtain the benefit of the application of section 60 of the FBTAA (which pertains to the reduction in taxable value of fringe benefits associated with remote area housing), and additionally Division 14A of Part III of the FBTAA (which pertains to amortisation of taxable value of fringe benefits relating to remote area home ownership schemes). 26. The Commissioner considers that there are no overt acts by which one could predicate that Arrangement 3 has been implemented by any of the parties for the purpose of allowing the Corporation to enjoy the benefits at the tax reduction under section 60 or Division 14A of Part III of the FBTAA. The arrangement can be explained as being one of ordinary business dealings as is customary in the Corporation's industry. 27. In particular, where the Corporation and certain employees enter into Arrangement 3, such an arrangement is entered into by each of the relevant parties for the purpose of enabling the Corporation to provide the benefit of housing to its employee whilst the employee remains currently employed. 28. Therefore, it is accepted that when Arrangement 3 is entered into by the Corporation and its employees, they are not entered into for the purpose of obtaining the benefit of section 60 or Division 14A of Part III of the FBTAA. As such, the condition in paragraph 142(2C)(j) of the FBTAA will be satisfied. 29. Based on the above discussion, the conditions in subsection 142(2C) of the FBTAA are satisfied, which means that the reimbursement by the Corporation under a salary sacrifice agreement of an employee for expenditure incurred in respect of residential land acquisition costs, residential accommodation extensions and construction of residential property (under Arrangement 3) will be 'in respect of a remote area residential property'. As such, the condition in paragraph 60(4)(b) of the FBTAA will be satisfied. | Detailed Reasoning - Conclusion: 30. In circumstances where the Corporation and certain employees enter into a housing arrangement under Arrangement 3, an 'expense payment fringe benefit' is provided pursuant to the definition of that term in subsection 136(1) of the FBTAA. 31. As per the discussion above, each of the conditions in subsection 60(4) of the FBTAA - which assist in determining whether reimbursements to an employee by the Corporation under a salary sacrifice agreement for expenditure in relation to residential land acquisition costs, residential accommodation extensions and construction of residential property is reducible - are satisfied. Therefore, the taxable value of the applicable expense payment benefit under Arrangement 3 is reducible by 50% pursuant to subsection 60(4) of the FBTAA. 32. In the circumstances where the Corporation and an employee have a housing arrangement as described in Arrangement 3 in a year prior to the current year the taxable value of the applicable expense payment will also be reducible by 50% pursuant to subsection 60(4) of the FBTAA.