Private ruling: FBT - remote area housing benefits
Date of advice: 22 August 2022
Published: November 2022
Ruling period: Year ended 31 March 20XX | Year ended 31 March 20XX | Year ended 31 March 20XX | Year ended 31 March 20XX | Year ended 31 March 20XX | Year ended 31 March 20XX
Date scheme commenced: 1 April 20XX

Ruling: Q1: Is the provision of a housing benefit to an employee an exempt benefit under section 58ZC of the Fringe Benefits Tax Assessment Act 1986 ? | A1: Yes.

Relevant facts and circumstances: You are registered with the Australian Charities and Not-for-profits Commission (ACNC). In order to attract and retain the high calibre of employees required to fill certain roles you must provide housing benefits as part of their remuneration package. You have consulted within your industry and have established that it is customary within the sector to provide housing benefits. There are similar organisations that provide such benefits. You have provided a benefit to a current employee in the form of a right to use a unit of accommodation as part of their total remuneration package. The unit of accommodation consists of a house which is located in Location A. This is the employee's usual place of residence and where they work.

Relevant legislative provisions: Fringe Benefits Tax Assessment Act 1986 section 25 | Fringe Benefits Tax Assessment Act 1986 section 58ZC | Fringe Benefits Tax Assessment Act 1986 subsection 136(1) | Fringe Benefits Tax Assessment Act 1986 section 140

Reasons for decision: Summary: While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision. All references made in these reasons for decision are to the Fringe Benefits Tax Assessment Act 1986 unless otherwise stated. The provision of a housing benefit to an employee in Location A is an exempt benefit under section 58ZC as all of the requirements in subsection 58ZC(2) are met. | Detailed Reasoning - Is a housing benefit provided?: Section 25 defines a 'housing benefit' as being a housing right granted by a person to another person. A 'housing right' is defined by subsection 136(1) 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'. Subsection 136(1) defines a 'unit of accommodation' to include a house. Therefore, you are providing your employee with a housing benefit pursuant to section 25, being the right to use a unit of accommodation consisting of a house. | Detailed Reasoning - Is the housing benefit provided exempt from FBT?: Under subsection 58ZC(1), a housing benefit that is a remote area housing benefit is an exempt benefit. The requirements that must be satisfied for a housing benefit to be a remote area housing benefit are contained in subsection 58ZC(2). The requirement in paragraph 58ZC(2)(a) is that for the whole of the tenancy period the unit of accommodation was not at a location in, or adjacent to, an eligible urban area. Where a location is not 'in, or adjacent to, an eligible urban area', it is a remote area. The parameters defining 'eligible urban area' and 'adjacent to' an eligible urban area are set out in subsection 140(1). This subsection applies for most employers, however, subsection 140(1A), extends the general parameters, and is used where housing benefits are provided to employees of certain employers including an employer that is a registered charity. A 'registered charity' is defined in subsection 136(1) to mean: an entity that is registered under the Australian Charities and Not-for-profits Commission Act 2012 as the type of entity mentioned in column 1 of item 1 of the table in subsection 25-5(5) of that Act. As you are a registered charity, Location A is a remote area for the purposes of section 58ZC. Therefore, this requirement is met. The requirement in paragraph 58ZC(2)(b) is that for the whole of the tenancy period, the accommodation was occupied by a person who was a current employee of the employer and the usual place of employment of the employee was in the remote area. Your employee is a current employee and their usual place of employment is in Location A. Therefore, this requirement is met. The requirement in paragraph 58ZC(2)(d) is that it is necessary for the employer to provide residential accommodation for the employee because: i. the nature of the employer's business was such that employees were likely 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 employer's industry to provide free or subsidised residential accommodation for employees. In relation to subparagraph 58ZC(2)(d)(iii), 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: 2. A benefit will be accepted as being customary where it is normal or common for employees of that class or job description in that industry to be provided with the same or similar benefits. It is not necessary that all or even the majority of employees in the industry receive the benefit. 3. In defining the employer's industry, this Office will accept categorisation based on any recognised industry classification system. Examples of these are the industry codes for business income used by this Office (listed in the company income tax return instructions), and Australian and New Zealand Standard Industrial Classification (ANZSIC) codes. You have established that it is customary within the industry to provide accommodation to employees, citing examples of similar organisations providing accommodation. It is accepted that this is the case and therefore this requirement is met. Paragraph 58ZC(2)(e) requires that the recipient's overall housing right was not granted: i. under a non-arm's length arrangement or ii. for purposes that include enabling the employer to obtain the remote area housing benefit exemption in section 58ZC. There is nothing in the arrangement to suggest that the accommodation has been provided under a non-arm's length arrangement or to enable you to obtain the benefit of the exemption. You provide accommodation in order to attract and retain the high calibre of employees required to fill certain roles. The accommodation was provided as part of the employee's overall remuneration package. Therefore, as all of the requirements of subsection 58ZC(2) are met, the provision of a housing benefit to your employee will be an exempt benefit.