Private ruling: FBT-Provision of subsidised accommodation
Published: March 2013
Ruling period: 01 April 2013 to 31 March 2017

Ruling: Q1: Is the supply of subsidised accommodation by entity A to its employees a fringe benefit? | A1: Yes

Relevant facts and circumstances: Entity A is a not-for-profit (NFP) organisation registered for GST and is a charitable institution endorsed to access GST concessions. Entity A is planning to build a residential facility in Z, with additional funding for the project being provided by a business through a community sponsorship contract. Entity A was granted the land for a nominal amount with the strict condition that it will only be used for NFP purposes. Market rents for residential premises in the particular are extremely high due to the significant shortage of accommodation in the region. To maintain charitable services, the project aims to provide affordable accommodation to both Entity A employees and also employees of the other NFPs working there. The project will see the construction of a number of dwellings comprising of a mixture of units. It is also envisioned that an area of communal open space containing a shaded barbecue facilities and outdoor fitness stations will be built as part of the complex. It is anticipated the units will be allocated for use as follows: · X units providing subsidised accommodation for Entity A staff · Y units available for subsidised accommodation for other NFP staff (and potentially Entity A staff if required) The discounted rent charged for similar accommodation is the same for both Entity A employees and employees of the other charities. No advantages or higher discount for Entity A employees than employees of the other charities. The eligibility criteria for the discounted accommodation are the same for both Entity A employees and employees of other charities. No difference. Entity A employees do not enjoy preferential treatment/first preference over employees of other charities in the allocation of the subsidised accommodation. There is no application/selection process. Under the scheme to provide affordable accommodation to both Entity A employees and employees of other charities in Z, a number of dwellings will be constructed and Y units will be allocated to Entity A employees and a number of dwellings will be available for employees of the other charities. The subsidy provided to employees of charities, including Entity A employees, will see tenants paying less than 75% of GST inclusive market value of rent.

Relevant legislative provisions: Fringe Benefits Tax Assessment Act 1986, Section 25 | Fringe Benefits Tax Assessment Act 1986, Section 136 | Fringe Benefits Tax Assessment Act 1986, Section 148

Reasons for decision: Detailed Reasoning - Provision of subsidised accommodation to Entity A employees: In accordance with the definition of 'fringe benefit' in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA), a fringe benefit includes a benefit provided by an employer or by another person under an arrangement with the employer, to one of their employees, in respect of the employment of the employee. The definition of 'in respect of' in subsection 136(1) of the Fringe FBTAA states: in respect of , in relation to the employment of an employee by reason of, by virtue of, or for or in relation directly or indirectly to, that employment. Further paragraph 148(1)(a) of the FBTAA states that a benefit is provided 'in respect of' employment even if it is also provided directly or indirectly in respect of any other matter or thing. In this case the subsidised accommodation is not provided to any other person(s) other than the employees of Entity A or another not for profit organisation. Had the recipients of the benefit, the subsidised accommodation, not been an employee of Entity A or another not for profit organisation, they would not have received the benefit. Hence there is sufficient or material relationship or connection between the benefit provided to Entity A employees and their employment with Entity A. Accordingly, the provision of the subsidised accommodation to employees of Entity A would constitute a housing fringe benefit as defined in section 25 and section 136 FBTAA