Private ruling: Fringe benefits tax - individuals
Date of advice: 30 May 2025
Published: 4 August 2025
Ruling period: FBT year ending 30 March 20XX | FBT year ending 30 March 20XX | FBT year ending 30 March 20XX
Date scheme commenced: 1 April 20XX

Ruling: Q1: Is the Individual an employee of the Corporation as defined in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 ( FBTAA)? | A1: Yes. | Q2: Is the provision of the house and utilities to the Individual a fringe benefit as defined in subsection 136(1) of the FBTAA? | A2: Yes. | Q3: Is the provision of the vehicle and fuel to the Individual a fringe benefit as defined in subsection 136(1) of the FBTAA? | A3: Yes.

Relevant facts and circumstances: The Individual resided in the Corporation (Employer) owned Property for nominal rent with a vehicle provided for work purposes, which was housed at the property. The Individual was employed as XXX. The Individual commenced living in the Property whilst employed. The Individual ceased their paid employment with the Employer. The Individual commenced a new role with the same Employer after their paid employment ceased. The Individual continued to live in the Property after termination of their paid employment. The Property could be leased/rented out for $XXX a week at market rates. There was no written lease arrangement for the Individual to occupy the Property. There was a verbal agreement, that the individual could occupy one room of the Property and have use of amenities for $XX per week. The Individual and their family occupied and used the full house. The Employer was aware of the full use of the property. The Individual worked X mornings per week in the new role, approximately XX hours per week (which could be slightly more or less depending on their duties. The Individual was directly reportable to a paid employee. Various tasks/duties were to be undertaken by the individual in the new role. The new role was not an advertised position and there was no formal application process. The Employer determined that they required the position, and it was filled internally from within. If the Individual failed to undertake their duties, they would not be evicted. If the Individual ceased living at the property, the Employer would not immediately find a replacement. The Property was the Individual's principal place of residence for the individual and their family. The Employer pays all rates, water, and electricity bills for the property. The role of the Individual comes with a vehicle. This vehicle is a utility vehicle. The Employer allows the vehicle to be garaged at the property. The vehicle is to be driven by the Individual for work purposes, however, it is known that their adult children were driving the vehicle outside work hours. The Employer pays for the fuel of the vehicle directly by providing a fleet fuel card. The Employer paid this account at the end of each month. The Individual kept copies of receipts when filling the vehicle and provided these to the Employer for reconciling with the fuel card account. The Individual was free to undertake paid work elsewhere as they chose.

Relevant legislative provisions: Fringe Benefits Tax Assessment Act 1986 section 25 | Fringe Benefits Tax Assessment Act 1986 section 45 | Fringe Benefits Tax Assessment Act 1986 subsection 47(6) | Fringe Benefits Tax Assessment Act 1986 subsection 136(1) | Fringe Benefits Tax Assessment Act 1986 section 137 | Fringe Benefits Tax Assessment Act 1986 subsection 148(1) | Taxation Administration Act 1953 (TAA) section 12-35 | Income Tax Assessment Act 1997 subsection 995-1(1) We followed these ATO view documents | Taxation Ruling TR 2023/4 Income tax and superannuation guarantee: who is an employee? | Question 1 | Is the Individual an employee of the Corporation (the Employer) as defined in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 ( FBTAA)? Summary | The Individual is an employee of the Employer as defined in subsection 136(1) of the FBTAA | Detailed reasoning | An employee is defined in subsection 136(1) of the FBTAA to be: | a) a current employee | b) a future employee; or | c) a former employee. | Subsection 136(1) of the FBTAA also sets out that a current employee is someone who receives, or is entitled to receive, salary or wages. A former employee is someone who was a current employee. | Subsection 137(1) of the FBTAA further expands the definition of employee to include persons who receive non-cash remuneration in circumstances where the person would have been treated as an employee if the non-cash remuneration had been received by way of a cash payment. | Subsection 137(1) states: | For the purpose only of ascertaining whether a person is an employee or an employer within the meaning of this Act, where: (a) a benefit is provided by a person (in this subsection referred to as the first person ) to, or to an associate of, another person (in this subsection referred to as the second person ); | (b) but for this subsection, the benefit would not be regarded as having been provided in respect of the employment of the second person; and | (c) either of the following conditions is satisfied: | (i) if the benefit were provided by the first person by way of a cash payment to the second person, the payment would constitute salary or wages paid by the first person to the second person; | (ii) all of the following conditions are satisfied: | (A) subparagraph (i) does not apply in relation to the benefit; | (B) the first person is an associate of a third person or the benefit is provided under an arrangement between the first person and a third person; | (C) if the benefit were provided by the third person by way of a cash payment to the second person, the payment would constitute salary or wages paid by the third person to the second person; | a definition in subsection 136(1) applies as if the benefit were salary or wages paid to the second person by: | (d) in a case to which subparagraph (c)(i) applies - the first person; or | (e) in a case to which subparagraph (c)(ii) applies - the third person. | The Individual has been provided full use of the Property for $xx per, the Property has a market value of $xxx. Payment of rates, water and electricity were also included. In addition, a vehicle was provided for work purposes which was garaged at the property and was available and had been used for private use. Fuel was also provided. | It is important to consider if cash payments were to be made to the Individual rather than providing accommodation, utilities and vehicle, would those payments constitute salary and wages. | 'Salary or wages', as defined in subsection 136(1) of the FBTAA, means payments from which an amount must be withheld under section 12-35 of Schedule 1 to the Taxation Administration Act 1953 (TAA). As noted in Paragraph 6 of Taxation Ruling TR 2023/4: pay as you go withholding - who is an employee? the term 'employee' is not defined in the TAA and that for the purposes of section 12-35 has its ordinary meaning. | Paragraph 7 of TR 2023/4 states: | 7. Whether a person (that is, a worker) is an employee of an entity (referred to in this Ruling as the 'engaging entity') under the term's ordinary meaning is a question of fact to be determined by reference to an objective assessment of the totality of the relationship between the parties, having regard only to the legal rights and obligations which constitute that relationship. | The relationship between an employee and an employer is a contractual one, often referred to as a contract of service. While there is no written contract between the Employer and the Individual, there is an agreement that the Individual undertakes duties for the Employer and, in turn, is provided accommodation for themselves and their family, payment of utilities, use of a vehicle and fuel. | Paragraph 13 of TR 2023/4 states: | 13. The 'label' which parties choose to describe their relationship, whether within a written contract or otherwise, is not determinative of, or even relevant to, that characterisation. It is the legal rights and obligations which constitute their relationship which are relevant, and 'label' used to describe the relationship which are inconsistent with those rights and duties have no meaning. | Volunteer is not a defined term in the FBTAA, so it takes on its ordinary meaning. The Macquarie Dictionary defines 'volunteer' as: | 1. Someone who enters into any service of their own free will, or who offers to perform a service or undertaking for no financial gain. | The Individual is said to be a volunteer by the Employer, as salary or wages are not paid for their services. | However, the extensive list of duties undertaken by the Individual, for the Employer, in exchange for the benefits received, demonstrates an employer/employee relationship and not that of a volunteer. | As noted in paragraph 21 of TR 2023/4, an employer generally has a right to control how, where and when its employee performs their work. While no factor will be determinative, the more control the engaging entity can exercise over how, when and where the worker personally performs their work under the contract, the more likely the worker is to be an employee of the engaging entity. | In this case, the Individual worked approximately XX hours a week over X mornings. | The list of duties undertaken by the Individual and when they are undertaken supports a level of control by the Employer. | The Individual is provided accommodation, payment of utilities, use of a vehicle and fuel. These are 'benefits' provided under an arrangement in relation to the performance of work. If a cash payment had been received rather than the benefits provided, the Employer would be required to withhold under section 12-35 of Schedule 1 to the TAA. If not for subsection 137(1) of the FBTAA, the benefit would not be regarded as having been provided in respect of employment as the Individual does not receive salary or wages. | From the facts provided, there is a material connection between the benefits provided and the Individual's duties. As such, the Individual is considered to be an employee for the purposes of subsection 136(1) of the FBTAA. | Question 2 | Is the provision of the housing and utilities to the Individual a 'fringe benefit' as defined in subsection 136(1) of the FBTAA? | Summary | The provision of the housing to the Individual is a housing fringe benefit as defined in subsection 136(1) of the FBTAA. The market rental value of the right to use the accommodation can be reduced by any rental payments made by the employee. | Where the right of occupancy carries with it the provision of gas or electricity without charge to the employee, the market rental value of the housing benefit would need to reflect this condition. | Detailed reasoning | A 'fringe benefit' is defined in subsection 136(1) of the FBTAA, which requires the following conditions to be satisfied: | i. A benefit is provided at any time during the year of tax. | ii. The benefit is provided to an employee or an associate of the employee | iii. The benefit is provided by: | 1. Their employer: or | 2. An associate of the employer; or | 3. 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 | 4. 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. | i. The benefit is provided in respect of the employment of the employee. | ii. The benefit is not one that is specifically excluded as per paragraph (f) to (s) of the definition of a fringe benefit in subsection 136(1). | In order to determine whether the provision of the house and utilities by the Employer to the Individual constitutes a 'fringe benefit' as defined in subsection 136(1) of the FBTAA, each condition of the definition of a 'fringe benefit' must be satisfied. | A benefit is provided | A benefit is broadly defined in subsection 136(1) of the FBTAA as: | Any right (including a right in relation to, and an interest in, real or personal property), privilege, service, or facility and, without limiting the generality of the foregoing, includes a right, benefit, privilege, service, or facility that is, or is to be, provided under: | An arrangement for or in relation to: | • The performance of work (including work for a professional nature), whether with or without the provision of property: | • The provision of, or of the use of facilities for, entertainment, recreation, or instruction; or | • The conferring of rights, benefits, or privileges for which renumeration is payable in the form of a royalty, tribute, levy or similar extraction | ­ A contract of insurance; or | ­ An arrangement for or in relation to the lending of money. | Subsection 136(1) of the FBTAA defines 'provide' and 'provider' as follows: | Provide: | i. In relation to a benefit - includes allow, confer, give, grant or perform; and | ii. Provider: | iii. In relation to a benefit, means the person who provides the benefits. | The Individual was provided with the right to occupy the Property with rent paid at discounted rate to the market value of other comparable dwellings in the area. Additionally, the Employer provides the Individual with utilities by way of rates, electricity and water. Therefore, this condition is satisfied. | The benefit is provided by an employer, an associate of the employer or a third party | 'Employer' is defined in subsection 136(1) of the FBTAA to mean a current, future or former employer. | As discussed under Question one, the Individual is considered an employee of the Employer, under the extended definition of employee under section 137(1) of the FBTAA. Therefore, the benefit is provided by an employer and this condition is satisfied. | The benefit is provided in respect of the employment of the employee | As per subsection 136(1) of the FBTAA, the term 'in respect of' - in relation to the employment of an employee - includes by reason of, by virtue of, or for or in relation directly or indirectly to, that employment. | Subsection 148(1) of the FBTAA stipulates that a benefit will be provided in respect of the employment of an employee: | • whether or not the benefit also relates to some other matter or thing | • whether the employment is past, present or future | • whether or not the benefit is surplus to the recipient's requirements | • whether or not the benefit is also provided to another person | • whether or not the benefit is offset by any inconvenience or disadvantage | • whether or not the benefit is provided or used, or required to be provided or used, in connection with any employment | • whether or not the provision of the benefit is in the nature of income, and | • whether or not the benefit is provided as a reward for services rendered, or to be rendered, by the employee. | The meaning of 'in respect of employment' was considered by the Federal Court in J & G Knowles v Federal Commissioner of Taxation [2000] 96 FCR 402; 2000 ATC 4151; 44 ATR 22 (Knowles). In Knowles, the Full Federal Court concluded that there needs to be a sufficient or material, rather than a causal connection or relationship between the benefit and the employment. | To establish whether a sufficient or material connection exists between the provision of the accommodation and the employment of the employee, it is necessary to consider the circumstances in which it has been provided. | The Individual has been provided accommodation in the Property owned by the Employer. This arrangement commenced when the Individual was employed by the Employer as a handyman/gardener which allowed them to undertake their employment duties. After this employment ceased, the Individual continued being provided the accommodation while undertaking their duties. | The connection between the benefit received by the Individual and the Individual's employment is material and sufficient, not merely casual. If not for the employment relationship between the Employer and the Individual, the Individual would not have received the benefit. On this basis, the benefit of accommodation and payment of rates, water and electricity provided to the Individual by the Employer would be considered to be 'in respect of the employee's employment. Therefore, this condition is satisfied. | The benefits is not specifically excluded from the definition of a fringe benefit | With respect to paragraphs (f) to (s) of the definition of a 'fringe benefit' in subsection 136(1) of the FBTAA, the relevant paragraph to consider is paragraph (g) which provides that an exempt benefit will not be a fringe benefit. | In considering whether the accommodation provided by the Employer to the Individual falls within any of the exempt benefits listed in Part III of the FBTAA, it is necessary to determine the types of fringe benefits that may be applicable under the FBTAA. In this case, the relevant benefit is considered to be a 'housing benefit'. | Under section 25 of the FBTAA, a 'housing benefit' will arise where a person grants a 'housing right' to another person, as follows: | The subsistence during the whole or a part of a year of tax of a housing right granted by a person (in this section referred to as the provider ) to another person (referred to in this section as the recipient ) shall be taken to constitute a benefit provided by the provider to the recipient in respect of the year of tax. | A 'housing right' is defined in subsection 136(1) of the FBTAA as meaning a lease or licence being granted to a person to occupy or use a unit of accommodation as that person's current usual place of residence: | A 'unit of accommodation' is defined in subsection 136(1) of the FBTAA as including a house, flat or home unit, accommodation in a hotel, hostel, motel or guesthouse, accommodation in a bunkhouse or other living quarters, accommodation in a ship, vessel or floating structure, and a caravan or mobile home. | The FBTAA does not define 'usual place of residence'. However, in subsection 136(1) of the FBTAA, it does define a 'place of residence' 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. | In the absence of a legislative reference, it is relevant to refer to the ordinary meaning of 'usual'. The Macquarie Dictionary Online defines 'usual' to mean: | 1. habitual or customary: his usual skill. | 2. such as is commonly met with or observed in experience; ordinary: the usual January weather. | 3. in common use; common: say the usual things. | noun | 4. that which is usual or habitual. | phrase | 5. as usual, as is (or was) usual; in the customary or ordinary manner: he will come as usual. | Whether a place is an employee's usual place of residence is a question of fact, based on all the circumstances. | Having regard to each of the above definitions, the Commissioner considers that, in the current circumstances: | • the Property owned by the Employer falls within the definition of a 'unit of accommodation' as defined in subsection 136(1) of the FBTAA | • there is verbal agreement between the Individual and the Employer which grants the Individual the right to occupy or use the Property, and the Property is the usual place of residence of the Individual. | As such, a 'housing right' as defined in subsection 136(1) of the FBTAA is provided by the Employer to the Individual, and on the basis it is considered that a 'housing right' is provided by the Employer to the Individual, the definition of a 'housing benefit' in turn is also satisfied as per the definition of that term in section 25 and subsection 136(1) of the FBTAA. | Therefore, it is considered that a 'housing benefit' is provided by the Employer to the Individual. Having established that the relevant benefit that would apply in the current circumstances is a 'housing benefit', the only exempt benefit listed in Part III of the FBTAA that is of relevance is a 'remote area housing benefit' under section 58ZC of the FBTAA. | 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. | 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 (ITAA 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. | The area the Property is located in is considered to be an eligible urban area; therefore, it is not considered to be a 'remote area' and this exemption is not applicable in the current circumstances. | Therefore, the housing benefit provided by the Employer to the Individual is not specifically excluded from the definition of a 'fringe benefit'. This condition is satisfied. | As all the conditions in definition of a 'fringe benefit' are satisfied, the benefit provided to the Individual is considered a 'fringe benefit' as defined in subsection 136(1) of the FBTAA and the relevant benefit is 'housing benefit' under section 25 of the FBTAA. | The taxable value of the non-remote housing benefit is calculated pursuant to the formula in paragraph 26(1)(c) of the FBTAA. | The taxable value of the benefit can be reduced by any rental payments made by the employee. | Where the right of occupancy carries with it the provision of gas or electricity without charge to the employee, the market rental value of the housing benefit would need to reflect this condition. | Question 3 | Is the provision of the vehicle and fuel to the Individual a 'fringe benefit' as defined in subsection 136(1) of the FBTAA? | Summary | The provision of the vehicle to the Individual is a residual fringe benefit as defined in subsection 136(1) | Detailed reasoning | Car fringe benefit | A 'car fringe benefit' is defined in subsection 136(1) of the FBTAA to mean a fringe benefit that is a car benefit. | A 'car benefit' is defined in subsection 136(1) of the FBTAA to mean a benefit referred to in subsection 7(1) of the FBTAA. | Under section 7 of the FBTAA, a 'car benefit' arises if: | 1. An employee or associate is provided with a car. | 2. The car is held by the employer (or an associate, or a third party under an arrangement). A car is 'held' where the car is owned, leased (or let on hire) or otherwise made available to the employer (or an associate, or a third party under an arrangement). | 3. The car is either: | (a) applied to a private use by the employee or associate of the employee, or | (b) taken to be available for the private use of the employee or associate of the employee. | A 'car' is defined in subsection 136(1) of the FBTAA to have the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997 . That provision defines a 'car' as 'a motor vehicle (except a motorcycle or similar vehicle) designed to carry a load of less than one tonne and fewer than 9 passengers'. As the vehicle provided is designed to carry a load in excess of one tonne, it is not considered to be a car for the purposes of the FBTAA. Therefore, the provision of the vehicle is not a car fringe benefit. Is the provision of the vehicle a 'residual benefit under section 45 of the FBTAA | Section 45 (Division 12) of the FBTAA 1986 provides that a benefit will be a 'residual benefit' if: | a. ...the benefit is not a benefit by virtue of a provision of Subdivision A of Divisions 2 to 11 (inclusive). | Subsection 136(1) of the FBTAA 1986 defines 'benefit' to include: | any right (including a right in relation to, and an interest in, real or personal property), privilege, service or facility and, without limiting the generality of the foregoing, includes a right, benefit, privilege, service or facility that is, or is to be, provided under: | (a) an arrangement for or in relation to: | (i) the performance of work (including work of a professional nature), whether with or without the provision of property; | (ii) the provision of, or of the use of facilities for, entertainment, recreation or instruction; or | (iii) the conferring of rights, benefits or privileges for which remuneration is payable in the form of a royalty, tribute, levy or similar exaction; | (b) a contract of insurance; or | (c) an arrangement for or in relation to the lending of money. | The Individual was provided a vehicle which was garaged at the property and available for private use. Therefore, a benefit has been provided in relation to the employment of the employee. | As the benefit is not a benefit by virtue of any provision of Subdivision A of Division 2 to 11 inclusive of the FBTAA, it will be a residual benefit. | Subsection 47(6) of the FBTAA allows an exemption for the private use of certain motor vehicles where certain conditions are met. Subsection 47(6) of the FBTAA states: | Where: | (a) a residual benefit consisting of the provision or use of a motor vehicle is provided in a year of tax in respect of the employment of a current employee: | (aa) the motor vehicle is not: | (i) a taxi let on hire to the provider; or | (ii) a car, not being: | (A) a panel van or utility truck; or | (B) any other road vehicle designed to carry a load of less than 1 tonne (other than a vehicle designed for the principal purpose of carrying passengers); and | (b) there was no private use of the car during the year of tax and at a time when the benefit was provided other than: | (i) work-related travel of the employee; and | (ii) other private use by the employee or an associate of the employee, being other use that was minor, infrequent and irregular. | the benefit is an exempt benefit in relation to the year of tax. | In this case, the residual benefit consists of the provision of a utility vehicle designed to carry a load in excess of one tonne. Although the vehicle was provided for work-related travel of the employee, it was known that the vehicle was driven by the adult children, outside the business opening hours, for private use and therefore the exemption under subsection 47(6) of the FBTAA does not apply. | Conclusion | The Employer provides a vehicle and pays for the fuel of the vehicle directly by providing a fleet fuel card. As the benefit provided is not a benefit by virtue of any provision of Subdivision A of Division 2 to 11 inclusive of the FBTAA, it will be a residual benefit.