Private ruling: Fringe benefits tax - Housing benefits - other
Date of advice: 21 July 2017
Published: August 2017
Ruling period: 1 April 2017 to 31 March 2018
Date scheme commenced: 1 April 2017

Ruling: Q1: Is the provision of on-site accommodation to the employee, in scenario 1, a housing benefit under section 25 of the Fringe Benefits Tax Assessment Act 1986 (' FBTAA ')? | A1: No | Q2: Is the provision of on-site accommodation to the employee, in scenario 2 a housing benefit under section 25 of the FBTAA? | A2: No. | Q3: Is the provision of on-site accommodation to the employee, in scenario 3, a housing benefit under section 25 of the FBTAA? | A3: Yes | Q4: Is the provision of on-site accommodation to the employee, in scenario 4, a housing benefit under section 25 of the FBTAA? | A4: No | Q5: Is the provision of on-site accommodation to the employee, in scenario 5, a housing benefit under section 25 of the FBTAA? | A5: No | Q6: Is the provision of on-site accommodation to the employee, in scenario 6, a housing benefit under section 25 of the FBTAA? | A6: No | Q7: Is the provision of on-site accommodation to the employee, in scenario 7, a housing benefit under section 25 of the FBTAA? | A7: No | Q8: Is the provision of on-site accommodation to the employee, in scenario 8, a housing benefit under section 25 of the FBTAA? | A8: Yes | Q9: Is the provision of on-site accommodation to the employee, in scenario 9, a housing benefit under section 25 of the FBTAA? | A9: Yes | Q10: Is the provision of on-site accommodation to the employee, in scenario 10, a housing benefit under section 25 of the FBTAA? | A10: Yes | Q11: Is the provision of on-site accommodation to the employee, in scenarios 11 to 17, a housing benefit under section 25 of the FBTAA? | A11: Yes

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. The School accepts both day and boarding students but a significant portion of the students are enrolled as boarding students. The School has an additional duty of care with regards to these boarding students; providing supervision, mentoring and health care as well as food and education. As a consequence, specific employees must be in attendance on the School site 24 hours a day. The School owns a number of residential properties, located both on and off the site, in which it allows these employees to reside. The residential properties vary in size and occupant capacity, however each property comprises self-contained living accommodation and are either detached residences or apartments connected to or located within the boarding houses. This accommodation is located in a non-remote area. Some employee's roles specifically require them to reside on site permanently or during the hours of work and other roles do not, however their duties do require them to undertake work out of standard hours. Duties fall into one of two categories: ● permanent employees who are required to reside in Taxpayer provided accommodation as a consequence of their employment as a school teacher and to fulfil other requirements of their roles ('non boarding duties'); ● employees who may also be school teachers but are only be required to reside in Taxpayer accommodation by virtue of their separate, fixed term, roles and duties ('boarding duties') Employees are encouraged to immerse themselves into everyday school life, involving themselves with boarding students and as mentors, playing games with them on weekends and when not on duty. Specific obligations are imposed in some cases to have a dedicated area within the accommodation they occupy which is freely accessed by students at certain times, to be used for talking with students and meeting with families of students or third parties where required. In addition, the accommodation is affected by noise from students and school bells and other disturbances caused by institutional routine. These factors exist not only during standard school hours, but also during the evening when students play extra-curricular sports and attend various clubs. Visitors are generally not able to stay in the accommodation overnight. The employees fit into the following scenarios: Scenario 1 ● the employee is engaged to undertake non-boarding duties ● the term of employment is ongoing, rather than for a fixed term ● the employee's spouse and children reside with them on-site ● the employee has another residence available for their immediate use ● the employee's belongings (other than clothes and precious objects) are kept at the other residence ● the employee intends to return to their other residence when not on duty, at weekends, on school holidays and at the end of their term of employment. Scenario 2 ● the employee is engaged to undertake boarding duties on a fixed term contract of between 12 and 24 months ● the employee also has an ongoing role in relation to non-boarding duties ● the employee is required to reside on-site in relation to their boarding duties ● the employee's spouse and children reside with them on-site ● the employee has another residence available for their immediate use ● the employee's belongings (other than clothes and precious objects) are kept at the other residence ● the employee intends to return to their other residence during school holidays and at the end of their contract. Scenario 3 ● the employee is engaged to undertake non-boarding duties ● the term of employment is ongoing, rather than for a fixed term ● the employee's spouse and children reside with them on-site ● the employee has another residence available for their immediate use ● the employee's belongings (other than clothes and precious objects) are kept at the other residence ● the employee intends to return to their other residence during school holidays and at the end of their contract. Scenario 4 ● the employee is engaged to undertake non-boarding duties ● the term of employment is ongoing, rather than for a fixed term ● the employee has another residence available for their immediate use ● the employee's belongings (other than clothes and precious objects) are kept at the other residence ● the employee intends to return to their other residence during school holidays and at the end of their contract ● the employee does not have a spouse or children with whom they would habitually reside. Scenario 5 ● the employee is engaged to undertake boarding duties on a fixed term contract of between 12 and 24 months ● the employee left most of his or her belonging's at their parents' home, where they lived before taking up this employment ● the employee intends to return to their parents' home during school holidays and at the end of their contract ● the employee does not have a spouse or children with whom they would habitually reside. Scenario 6 ● the employee is engaged to undertake boarding duties on a fixed term contract of between 12 and 24 months ● the employee is also engaged in relation to non-boarding duties on a casual basis ● the employee is required to reside on-site in relation to their boarding duties ● the employee left most of his or her belonging's at their parents' home, where they lived before taking up this employment ● the employee intends to return to their parents' home during school holidays and at the end of their contract ● the employee does not have a spouse or children with whom they would habitually reside. Scenario 7 ● the employee is engaged to undertake boarding duties on a fixed term contract of between 12 and 24 months ● the employee is also engaged in relation to non-boarding duties on a casual basis ● the employee is required to reside on-site in relation to their boarding duties ● the employee left most of his or her belonging's at their parents' home, where they lived before taking up this employment ● the employee intends to return to their parents' home on weekends, during school holidays and at the end of their contract ● the employee does not have a spouse or children with whom they would habitually reside. Scenario 8 ● the employee is engaged to undertake boarding duties on a fixed term contract of between 12 and 24 months ● the employee left most of his or her belonging's at their parents' home, where they lived before taking up this employment and at which they maintain their own room ● the employee intends to return to their parents' at the end of their contract ● the employee does not have a spouse or children with whom they would habitually reside. Scenario 9 ● the employee is engaged to undertake boarding duties on a fixed term contract of between 12 and 24 months ● the employee also has an ongoing role in relation to non-boarding duties ● the employee is required to reside on-site in relation to their boarding duties ● the employee does not have a spouse or children with whom they would habitually reside ● the employee leases another property which they have sublet for the duration of their period of residence on-site ● the employee keeps only clothes and precious objects on-site, with the remainder of their belongings in storage ● the employee intends to return to the other residence at the end of their contract. Scenario 10 ● the employee is engaged to undertake non-boarding duties ● the term of employment is ongoing, rather than for a fixed term ● the employee has another residence available for their immediate use ● the employee keeps only clothes and precious objects on-site, with the remainder of their belongings at the other residence ● the employee intends to return to the other residence at the end of their contract ● the other residence is available for their use for the duration of their contract ● the employee does not have a spouse or children with whom they would habitually reside. Scenario 11 ● the employee is engaged to undertake boarding duties on a fixed term contract of between 12 and 24 months ● the employee does not have a spouse or children with whom they would habitually reside ● the employee does not have another place of residence, but intends to purchase or lease a property at the end of their contract ● the employee left their previous place of residence as a result of their requirement to reside on-site. Scenario 12 ● the employee is engaged to undertake boarding duties on a fixed term contract (12-24 months) ● the employee also has an ongoing role in relation to non-boarding duties ● the employee is required to reside on-site in relation to their boarding duties ● the employee does not have a spouse or children (with whom they would habitually reside) ● the employee does not have another place of residence, but intends to purchase or lease a property at the end of their contract ● the employee left their previous place of residence as a result of their requirement to reside on-site. Scenario 13 ● the employee is engaged to undertake boarding duties on a fixed term contract (12-24 months) ● the employee also has an ongoing role in relation to non-boarding duties ● the employee is required to reside on-site in relation to their boarding duties ● the employee's spouse and children reside with them on-site ● the employee does not have another place of residence, but intends to purchase or lease a property at the end of their contract ● the employee left their previous place of residence as a result of their requirement to reside on-site. Scenario 14 ● the employee is engaged to undertake boarding duties on a fixed term contract (12-24 months) ● the employee also has a casual role in relation to non-boarding duties ● the employee is required to reside on-site in relation to their boarding duties ● the employee does not have a spouse or children (with whom they would habitually reside) ● the employee does not have another place of residence, but intends to purchase or lease a property at the end of their contract ● the employee left their previous place of residence as a result of their requirement to reside on-site. Scenario 15 ● the employee is engaged to undertake non-boarding duties. The position is permanent ● the employee's spouse and children reside with them on-site ● the employee does not have another place of residence, but intends to purchase or lease a property at the end of their contract ● the employee left their previous place of residence as a result of their requirement to reside on-site Scenario 16 ● the employee is engaged to undertake non-boarding duties ● the term of employment is casual ● the employee does not have a spouse or children (with whom they would habitually reside) ● the employee does not have another place of residence, but intends to purchase or lease a property at the end of their contract ● the employee left their previous place of residence as a result of their requirement to reside on-site. Scenario 17 ● the employee is engaged to undertake boarding duties ● the term of employment is ongoing, rather than for a fixed term ● the employee is required to reside on-site primarily in relation to their non-boarding duties but has additional boarding duties for 3 to 4 weeks a year during sports camps ● the employee does not have a spouse or children (with whom they would habitually reside) ● the employee does not have another place of residence, but intends to purchase or lease a property at the end of their contract ● the employee left their previous place of residence as a result of their requirement to reside on-site.

Relevant legislative provisions: Fringe Benefits Tax Assessment Act 1986 s25, | Fringe Benefits Tax Assessment Act 1986 s45 and | Fringe Benefits Tax Assessment Act 1986 s52.

Reasons for decision: Detailed Reasoning - Issue 1: A housing benefit is defined in section 25 of the FBTAA as the subsistence of a housing right during the year of tax. 'Housing right' is defined under subsection 136(1) of the FBTAA to mean: 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 provide residential accommodation facilities to employees in the form of self-contained units. Those facilities are provided under an arrangement in relation to the employee's performance of work. Therefore, the provision of on-site accommodation, in circumstances where it is the employee's usual place of residence, will constitute a housing benefit under section 25. Unless the employee satisfies the exception in subsection 47(5) of the FBTAA, the provision of on-site accommodation to the employee, which is not their usual place of residence, will be a residual benefit under section 45 of the FBTAA. | Detailed Reasoning - Usual place of residence: The FBTAA does not define 'usual place of residence', however subsection 136(1) provides that a 'place of residence' in relation to a person means: (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. Whether a place is a person's usual place of residence will depend on the facts of that particular case. Draft Taxation Ruling TR 2017/D6 Income tax and fringe benefits tax: when are deductions allowed for employees' travel expenses? discusses what is meant by the term 'usual place of residence' at paragraphs 75 to 85. In TR 2017/D6, the Commissioner considers that an underlying theme of the cases is a general presumption that a person's usual place of residence will be close to the place where he or she is permanently employed. The various cases that have considered usual place of abode or usual place of residence were discussed by the Administrative Appeals Tribunal in Compass Group (Vic) Pty Ltd (as trustee for White Roche and Associates Hybrid Trust) v FC of T [2008] AATA 845; 2008 ATC 10-051. At paragraph 56 Deputy President S A Forgie said: Putting to one side the case of Case 50, all cases looked to the taxpayer's place of residence before he or she acquired another place of residence. Each looked to the taxpayer's continuing connection with the first place of residence including matters such as whether his or her family continued to live there, the frequency of the taxpayer's visits there and whether or not that was a place to which the taxpayer could return at will if he or she so wished. Also relevant was the nature of the employment and whether the move to another place was a temporary or permanent move. Taking into account TR 2017/D6 and the various court and tribunal cases over the years, an employee's usual place of residence is determined by considering various factors and applying appropriate weightings to those factors. These factors include: 1. the nature of the employee's employment and whether the move to another place was a temporary or permanent move; 2. the employee's place of residence (the other place of residence) before he or she obtained another place of residence (the on-site accommodation); 3. the employee's continuing connection/ties with the other place of residence, in particular:- a. whether the employee maintained/retained the other place of residence during the period the employee resided at the on-site accommodation; b. whether or not the other place of residence was a place to which the employee could return at will if he or she so wished; c. whether the employee's family continued to live in the other place of residence during the employee's temporary absence; and d. the frequency of the employee's visits to the other place of residence and use of this residence as a place of residence; 1. whether the employee intends or expects to return to live at the other place of residence on cessation of work at the temporary locality; and 2. any unique or special circumstances. | Summary: No. The provision of accommodation to the employee will be a residual benefit as the accommodation is not the employee's usual place of residence. | Detailed Reasoning - Detailed reasoning: The weighting given towards the temporary nature of the employment will be relatively high in view of the presumption that an employee's usual place of residence is normally found near to the employee's permanent employment base. It would be difficult to accept that an employee is living away from home where both the temporary position is relatively long, or ongoing, and the employee has not maintained a strong continuity of association with the former place of residence. In considering these factors, it is concluded that the on-site accommodation is not the employee's usual place of residence. Although the employee's family resides with the employee in the on-site accommodation and the appointment to the position is ongoing, rather than fixed, the employee regularly returns to the other residence which is where he or she stores their belongings. This indicates the employee has retained the necessary connection with the other residence. | Summary: No. The provision of accommodation to the employee will be a residual benefit as the accommodation is not the employee's usual place of residence. | Detailed Reasoning - Detailed reasoning: The nature of the contract that requires the employee to reside on-site is temporary - no longer than two years. The employee intends to return to their other place of residence at the end of the contract, and in the meantime has maintained a sufficient connection to that other residence to retain its character as their usual place of residence. | Summary: Yes. The provision of accommodation to the employee will be a housing benefit as the accommodation is the employee's usual place of residence. | Detailed Reasoning - Detailed reasoning: As the employee will reside in the on-site accommodation for a considerable period of time, the employee will need to demonstrate a strong connection to their other place of residence. In this case, there are factors weighing against the other residence being their usual place of residence; specifically that the employee's family reside with them on-site for an unspecified ongoing period of time and that the employee only returns on school holidays. It is concluded that the on-site accommodation is the employee's usual place of residence. | Summary: No. The provision of accommodation to the employee will be a residual benefit as the accommodation is not the employee's usual place of residence. | Detailed Reasoning - Detailed reasoning: Scenario 4 is similar to scenario 3 except the employee in Scenario 4 does not have a spouse or children with whom they habitually reside. It is not considered that this materially affects the connection the employee has with the other place of residence and so the on-site accommodation will not be the employee's usual place of residence. | Summary: No. The provision of accommodation to the employee will be a residual benefit as the accommodation is not the employee's usual place of residence. | Detailed Reasoning - Detailed reasoning: As discussed above, a 'place of residence' is a place at which the person resides or a place at which the person has sleeping accommodation, whether on a permanent or temporary basis and whether or not on a shared basis. In Case R99 84 ATC 650, the taxpayer was an electrical mechanic employed in Sydney and living at home with his parents. Due to a lack of work in Sydney he was offered work in connection with the electrification of the railway line between Wyong and Newcastle. He accepted this and stayed with friends at Avoca which was where he owned a block of land on which he was constructing a residence. During the year in question he left most of his possessions at his parent's home in Sydney to which he returned on most weekends and thus it was held to be his usual place of residence. Similarly, the allowance paid to the taxpayer in Case 152 (1984) 27 CTBR(NS) was held to be a living-away-from-home allowance as the taxpayer's usual place of residence was the room at his parent's house. The taxpayer was employed on a contract which required his absence from home on weekdays, but on Saturday afternoons he would travel back to his parent's home in Sydney at which he had a separate bedroom and a number of assets. He would return to his employment the following Monday morning. The common thread between these cases is the ties with the places of residence where the taxpayer's families lived were such that the taxpayer's usually lived and slept in those places at regular intervals. In applying these decisions, it can be seen that while the employee is residing in the on-site accommodation, the employee has sufficient ties to his or her parent's house to be regarded as their usual place of residence. Although the employee does not intend to return to their parent's house on weekends, consideration is given to the employer's expectation that employees engaged for boarding roles remain on-site when not on duty to interact with the children. | Summary: No. The provision of accommodation to the employee will be a residual benefit as the accommodation is not the employee's usual place of residence. | Detailed Reasoning - Detailed reasoning: Scenario 6 is similar to scenario 5 except that the employee is also engaged on a casual basis in relation to non-boarding duties. It is not considered that the additional role is material as it is the employee's duties in relation to the boarding role that require them to reside on site. As such, the on-site accommodation will not be the usual place of residence. | Summary: No. The provision of accommodation to the employee will be a residual benefit as the accommodation is not the employee's usual place of residence. | Detailed Reasoning - Detailed reasoning: In considering these factors, it can be concluded that the on-site accommodation is not the employee's usual place of residence. The employee maintains a sufficient connection with their parent's house and there is no evidence of a permanent severance of ties with their parental home. | Summary: Yes. The provision of accommodation to the employee will be a housing benefit as the accommodation is the employee's usual place of residence. | Detailed Reasoning - Detailed reasoning: The employee's intention to return to the other place of residence at the cessation of their contract is a relevant factor under TR 2017/D6. However, the cases illustrate that 'intention' is not enough to make the property their 'usual place of residence'. The employee must demonstrate continued ties with their former place of residence to show they maintained a connection with that property. There is nothing in the above factors that indicate the employee has a sufficient connection and so the on-site accommodation will be the usual place of residence. | Summary: Yes. The provision of accommodation to the employee will be a housing benefit as the accommodation is the employee's usual place of residence. | Detailed Reasoning - Detailed reasoning: As outlined above, the employee's intention to return to the other place of residence is a factor to consider in determining their usual place of residence. It will be given less weight in circumstances where the employee displays no connection with that residence and where that residence is not available for their immediate use. In Case U110 87 ATC 663; Tribunal Case 76 (1987) 18 ATR 3547 the taxpayer accepted his employer's request to move temporarily from Adelaide to Sydney for six to nine months to oversee a problem project. The employer rented accommodation for the taxpayer and his daughter while in Sydney. The taxpayer leased his Adelaide home during the first six months of his absence and retained contact with Adelaide friends. Tribunal Senior Member McMahon said: It seems to me that as a matter of fact the Adelaide home could not, during the year, be said to be the applicant's place of abode. For 6 of the 12 months it was occupied by another family with their furniture. At no time during that period could the applicant have knocked on the door and demanded that he be allowed to sleep there with his family. He had granted the right of exclusive possession to others. More importantly, he did not, as a matter of fact sleep there. For the remainder of the period it was empty of both tenants and furniture. Without fanciful hardships, it would not have been possible to stay there during this time - the remainder of the financial year. More importantly, again, the applicant did not in fact do so. A place of abode is more than a place one merely owns. It is a place where one lives In the same way, it can be concluded that the on-site accommodation is the employee's usual place of residence. The only connection the employee appears to have with the property he or she owns is that of a landlord. The employee does not return to the other property and, indeed, could not return if they wanted to. | Summary: Yes. The provision of accommodation to the employee will be a housing benefit as the accommodation is the employee's usual place of residence. | Detailed Reasoning - Detailed reasoning: None of the above factors indicate a sufficient connection with the property such that it retains its character as the employee's usual place of residence. | Summary: Yes. The provision of accommodation to the employee will be a housing benefit as the accommodation is the employee's usual place of residence. | Detailed Reasoning - Detailed reasoning: It is considered that whether an employee is living away from his or her usual place of residence normally involves a choice between two places of residence. The general rule is outlined in paragraph 76 of TR 2017/D6: An employee is only living away from home where it is reasonable to conclude that they intend to return to their previous location after work at the new location ceases. An employee who has permanently left their previous location is not living away from home but has relocated. In Case C77 71 ATC 342, the taxpayer, a technician employed in Sydney, was appointed to the employer's Canberra branch. The taxpayer obtained a rental flat in Canberra, after which his wife joined him and he gave up his Sydney flat, transferring his furniture to his brother-in-law's home in Sydney. It was held that the allowance paid to compensate for the higher cost of rentals in Canberra did not constitute a living away from home allowance because '... whilst being paid the allowance, [he] had no other home other than the flat he was renting in Canberra and where he resided with his wife' An employee who temporarily works in a different country to their home may have maintained their usual place of residence, even if they do not retain residential premises in their home country, provided they intend to return to live in their home country. In the case of each of these scenarios, the employees abandoned their previous place of residence in order to take up employment with the School. It is not considered that the employees fall into the category of employees mentioned in TR 2017/D6. As such, in order for the on-site accommodation not to be the employee's usual place of residence, each employee must have a place of residence that is not on the school grounds. | Summary: Yes. The provision of accommodation to employees in scenarios 1, 2, 4, 5, 6 and 7 would be otherwise deductible to the employee. | Detailed Reasoning - Detailed reasoning: Section 52 of the FBTAA operates to reduce the taxable value of a residual benefit in circumstances where the benefit, if paid for by the recipient, would have been an allowable deduction under either the Income Tax Assessment Act 1936 or Income Tax Assessment Act 1997 (' ITAA97 '). Section 8-1 of the ITAA 1997 allows a deduction for all losses or outgoings to the extent to which they are incurred in gaining or producing assessable income, except where the outgoings are of a capital, private or domestic nature or relate to the earning of exempt income. It is a question of fact whether an expense for accommodation, meals or incidentals is incurred in gaining or producing assessable income. As a general rule, expenditure on accommodation while living away from home cannot be deducted. These outgoings are essentially 'living expenses' of a private or domestic nature which are preliminary to the work and not incurred in the course of performing those activities. However, accommodation expenses will be deductible to the extent the work requires the employee to sleep away from home as they then take on an employment-related character. Hill J in Roads and Traffic Authority of NSW v. FC of T 93 ATC 4508; (1993) 26 ATR 76 noted the following features of the workers' conditions that supported claims for the deductibility of expenditure: ...they are required, as an incident of their employment, by their employer and for the purposes of their employer to live close by their work site for relatively short periods of time. No question arises of their choosing to live in these places. Each of the persons in question has a permanent house in which he lives when not in camp. None of the employees spend inordinate periods of time in the camps so that the camp becomes their home. Their house is retained and the employees in question travel home at weekends. They do not remain in the camps. However, Hill J also observed that where an employee has no private home and is employed indefinitely to work at a particular site, then that employee might be said to have chosen to live at the site so that the cost of the employee's accommodation there would be private. TR 2017/D6 confirms this approach at paragraphs 61 to 64, stating the requirement to sleep away from home overnight is a practical test that considers the circumstances of the work and the need for employees to have a sufficient rest to perform their duties effectively. In scenarios 1, 2, 4, 5, 6 and 7, the employees are required to reside off site as part of the terms of their employment. They regularly return to their other place of residence such that they have not made the on-site accommodation their home. Accommodation expenses would take on an employment related character and would be deductible if they were paid for by the employee. The otherwise deductible rule would apply in these circumstances. | Summary: Yes. The taxable value of the housing benefit can be reduced by up to 10%, although the particular amount will depend on the external factors present for each unit of accommodation. | Detailed Reasoning - Detailed reasoning: Subsection 26(1) of the FBTAA provides three separate valuation rules for non-remote area housing fringe benefits. The appropriate valuation method depends upon whether: a) the accommodation is provided in Australia, and b) if it is provided in Australia, whether the accommodation is in a caravan, mobile home, hotel, motel, hostel or guesthouse where the person providing the benefit is carrying on a business which consists of providing such accommodation to the public. As the accommodation is provided in Australia, and is not one of the classes listed in paragraph (b) above, the appropriate valuation method, as outlined within paragraph 26(1)(c) of the FBTAA, is calculated by reference to the market value of the recipients current housing right. Section 27 of the FBTAA requires that certain factors must be disregarded in determining the market value of the right to occupy a unit of accommodation. These include any onerous conditions of the occupancy that relate to the occupant's employment, for example, the requirement to be on call for duty, leave access doors unlocked or the prohibition of overnight guests. Miscellaneous Taxation Ruling 2025 Fringe Benefits Tax: Guidelines for Valuation of Housing Fringe Benefits provides guidelines for the valuation of housing fringe benefits. In particular, paragraph 44 of MT 2025 recognizes that the general living conditions within the grounds of a school will be affected by external physical factors such as noise from students, school bells, the noise and proximity of campus traffic and other disturbances caused by institutional routine. Where such conditions exist to an appreciable extent the market value established by reference to comparable nearby accommodation could be discounted by up to 10%. You have stated that the following factors are present in some of the accommodation: ● No secure access to the apartments ● Noise from school bells ● Noise from students, both during standard school hours and during the evenings when students play extracurricular sports and attend various clubs ● Ongoing noise from boarding students ● Other disturbances These are external physical factors of the type contemplated by MT 2025 and so a reduction of up to 10% may apply. It is not concluded that the external factors in this case would qualify for a 10% reduction. The amount of the reduction will depend upon the particular situation insofar as it relates to each unit of accommodation. Guidance should be obtained from a qualified valuer. | Summary: Yes. The taxable value of the housing benefit can be reduced insofar as an employee does not have exclusive use to the entire unit of accommodation at all times. | Detailed Reasoning - Detailed reasoning: MT 2025 recognises that there may be situations in which an employee does not have access to the entire unit of accommodation. Paragraphs 46 to 48 provide examples of caretakers that, for different reasons, have the right to use only part of a unit of accommodation. They state: 46. Where a caretaker has the right to use only part of a unit of accommodation, the market rental value is appropriately reduced. In the case, for example, where one bedroom of a three bedroom caretaker's house was required for storage of the employer's equipment, the market rental value would be based on rents for comparable two bedroom rather than three bedroom houses. 47. A similar situation applies, as another example, where say, elderly couples are provided with accommodation in historic houses owned and preserved by National Trust bodies in return for acting as caretakers or security wardens. Frequently, the houses are open to the public and, in those circumstances, it is commonly the case that the employees in practice do not have the full run of the houses as a residence. 48. If caretakers are allotted specific rooms in a National Trust house that they may occupy as a residence, the market rental value would be set for those rooms. For example, a couple may be entitled to use a bedroom, lounge, kitchen, bathroom and laundry. The market rental value would be the commercial rental paid for a similar sized flat or unit in a nearby residential quarter. As set out in the above paragraphs, it is considered that the appropriate methodology is to value the accommodation on the basis of comparable properties, taking into account the reduced number of rooms or features available. In seeking to apply these paragraphs it should be noted that they refer to the situation of a caretaker who only has the right to use part of a unit of accommodation. In the case of the School, specific obligations are imposed on all Assistant House Masters and House Masters to ensure they have a dedicated area within the accommodation they occupy, which is specifically used for school purposes. This area, normally a reception area, is used for talking with students, meeting with families of students or third parties and allowing free access by students at particular times. The situation of the caretakers discussed in these paragraphs can be distinguished from your circumstances as the use of a room for work related purposes does not remove the right to use the room at other times. It is considered that the requirement to make the room available at particular times is more appropriately identified as an onerous condition to be disregarded when calculating the market value of the accommodation. To the extent that an employee does not have the right to use a room or area it would be appropriate to reduce the market value of the housing right. The appropriate reduction is on the basis of comparable properties without such a room.

This notice must not be taken to imply anything about: | ● the binding nature of the private advice issued to the applicant | ● the correctness of other edited versions. | Question 1: Where a residual benefit exists, does the otherwise deductible rule pursuant to section 52 of the FBTAA apply? | Question 2: Where a housing benefit exists, can the taxable value of the benefit be reduced as a consequence of the general living conditions being affected by external physical factors? | Question 3: Where a housing benefit exists, can the taxable value of the benefit be reduced as a consequence of not having exclusive use at all times to the entire unit of accommodation?