Private ruling: Remote area housing benefit
Date of advice: 1 June 2026
Published: 17 August 2026
Ruling period: Fringe Benefit Tax (FBT) year ended DD MM 20YY | FBT year ended DD MM 20YY | FBT year ended DD MM 20YY | FBT year ended DD MM 20YY
Date scheme commenced: DD MM 20YY

Ruling: Q1: Will the provision of the dwelling located at Area X, to employees constitute an exempt remote area housing benefit under section 58ZC of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)? | A1: No. | Q2: Will the Company be entitled to apply the remote area residential fuel reduction under section 59 of the FBTAA in respect of residential fuel or utilities supplied in connection with the provision of the dwelling? | A2: No.

Relevant facts and circumstances: The Company is an Australian proprietary limited company engaged in primary production, operating a mixed grazing and cattle breeding enterprise. Its operations are conducted predominantly from the Company's principal production property located at Area X, comprising of approximately X acres. The property supports approximately xx head of cattle, including xx breeding cows, with livestock sold to Farmers Marker and other outlets. The Directors plan to expand operations on the current property and possibly lease additional land in the area. The business has invested infrastructure, including: • fencing, • pasture improvements • solar panels, and • water facilities 24/7 on-site management is required for animal husbandry, particularly calving, animal health monitoring and pasture management. The Company proposes to construct a custom-designed dwelling, at an estimated cost of approximately $x,xxx,xxx, for occupation by the Directors in their capacity as employees of the Company. This construction includes the dwelling itself, site works, driveways, and structures required for the business. Both Directors are actively engaged in day-to-day operational farming duties. One Director also works part-time as a consultant, in which their hours are not fixed, and they work as required. This Director has advised this role will cease when they work full time on the farm. Pending construction of the dwelling, the Directors currently utilise a basic shed that has been fitted with limited living facilities. The Company will formalise employment arrangements through written employment agreements stipulating that residence on the farm is an inherent requirement of the employees' roles, owing to the need for continuous monitoring and attendance on the livestock and property. The Directors will be working full-time when they reside on the property. They intend on working x hours a day for x-x days per week and when they commence full-time work, will be paying themselves a full-time salary. The Company will maintain records, including utility bills, duty rosters, and descriptions of employment duties to demonstrate the operational necessity of employees residing on-site and to substantiate the circumstances under which the accommodation is provided. A market rent appraisal will be obtained for substantiation.

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 section 59 | Fringe Benefits Tax Assessment Act 1986 subsection 136(1) | Fringe Benefits Tax Assessment Act 1986 section 140 | Fringe Benefits Tax Assessment Act 1986 section 142 | Fringe Benefits Tax Assessment Act 1986 subsection 148(1)

Reasons for decision: Summary: While the dwelling is located in a remote area and is connected with the employees' duties, the arrangement under which the housing right is provided is not considered to be at arm's length and displays characteristics of being entered into for the purpose of obtaining the remote area housing exemption. Accordingly, paragraph 58ZC(2)(e) is not satisfied and the exemption does not apply. | Detailed Reasoning - Detailed reasoning: Fringe benefits tax (FBT) is a tax paid by employers on certain benefits provided to their employees, or to their employees' family or other associates. FBT is separate to income tax. It's calculated on the taxable value of the fringe benefit. The definition of a fringe benefit within subsection 136(1) of the FBTAA states: A 'fringe benefit' is defined in subsection 136(1) of the FBTAA, which holds that the following conditions must 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: a. their employer; or b. an associate of the employer; or c. 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 d. a third party other than the employer or an associate of the employer, if the employer or an associate of the employer: i. participates in or facilitates the provision or receipt of the benefit; or ii. 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, 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) of the FBTAA. | Detailed Reasoning - Is a benefit provided?: Subsection 136(1) of the FBTAA provides a broad definition of a 'benefit': includes any right (including a right in relation to, and an interest in, real or personal property), privileged, service, or facility and, without limiting the generality of the forgoing, includes a right, benefit, privilege, service or facility that is, or 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. In this case the benefit being provided is in the form of real property. The Company is proposing to construct a dwelling for the employees. This condition is therefore satisfied. | Detailed Reasoning - Is the benefit provided to an employee or an associate of the employee?: An 'employee' is defined in subsection 136(1) of the FBTAA to mean a current, future or former employee. Future employee is defined in subsection 136(1) to mean a person who will become a current employee. Subsection 136(1) defines a 'current employee' to mean a person who receives, or is entitled to receive, salary or 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). In this case the individuals are the owners and directors of the Company (Employer). They currently do not receive a salary however, have advised once they reside on the property they will be working full time. Once working full time they will be paying themselves a salary. As per the definition of a future employee, the Directors are employees of the Company as they will be receiving salary and wages once working full time. The benefit being provided is the construction and provision of an on-farm dwelling for the directors to occupy as part of their employment, to enable 24/7 on-site management of the Company's primary production operations. This condition is satisfied. | Detailed Reasoning - Is the benefit 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. Future employer is defined in subsection 136(1) of the FBTAA as meaning a person who will become a current employer. Subsection 136(1) of the FBTAA defines a 'current employer' to mean a person who pays, or is liable to pay, salary or wages. The Company does not currently pay the individuals salary and wages. Once they reside on the property and commence full time employment, they will receive a salary from the company. Therefore, the company is a future employer. This condition is satisfied. Is the benefit provided in respect of the employment of the employee? "In respect of" is defined in subsection 136(1) of the FBTAA as: in relation to the employment of an employee, including 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. In J & G Knowles & Associates Pty Ltd v Federal Commissioner of Taxation (2000) 96 FCR 402; 2000 ATC 4151; (2000) 44 ATR 22, the full Federal Court - in examining the meaning of 'in respect of' an employee's employment - held that the phrase required a 'nexus, some discernible and rational link, between the benefit and employment', though noted that 'what must be established is whether there is a sufficient or material, rather than a causal, connection or relationship between the benefit and the employment'. The construction and provision of an on-farm dwelling for occupation by the Directors is provided in respect of their employment with the company. The key indicators are: • Both Directors are actively engaged in the day-to-day primary production operations, including calving supervision, animal health monitoring, and pasture management. • The business requires 24/7 on-site presence, meaning continuous residence is necessary to perform essential employment duties. • The employment agreements will specify an obligation to reside on the property as a condition of their employment. • The dwelling is being constructed specifically to enable the employees to carry out their employment functions and to replace the inadequate temporary accommodation currently used. • The Company will maintain records (e.g., rosters, utilities, duties) to demonstrate that on-site residence is required for effective performance of the role. These facts establish a direct and substantive link between the provision of the dwelling and the employees' ability to perform their employment duties. Accordingly, the benefit is provided in respect of their employment for the purposes of the FBTAA. | Detailed Reasoning - Is the benefit 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. A benefit provided by an employer in relation to housing that is a remote area housing benefit , is an exempt benefit under section 58ZC of the FBTAA, provided certain statutory conditions are satisfied. Before we determine if an exempt benefit we need to determine if a housing benefit arises. | Detailed Reasoning - Housing benefit: Section 25 of the FBTAA, as stated below, provides that a 'housing benefit' will arise when a recipient is provided with the right to use a unit of accommodation by a provider and the accommodation is the recipient's usual place of residence: 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 (in this section referred to 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: ...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. A 'unit of accommodation' is also defined in subsection 136(1) of the FBTAA to include 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 term 'usual place of residence' is not defined within the FBTAA, however subsection 136(1) of the FBTAA defines a 'place of residence' as: (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 'habitual or customary' or 'in common use'. Whether a place is an employee's usual place of residence is a question of fact, based on all the circumstances. The following factors may be considered when deciding where an employee's usual place of residence is: • an employee's usual place of residence is normally found near to their fixed or permanent employment base • the terms of the employee's employment contract or award may indicate whether their move to a new place of residence is merely temporary or of a more lasting nature • the longer the employee is required to work at a place, the more indicative it is that the move is not temporary in nature. | Detailed Reasoning - Application to your circumstances: In these circumstances, the construction of the dwelling and the granting of the right for the employees to occupy it will constitute a housing right for the purposes of subsection 136(1) of the FBTAA. The dwelling is a unit of accommodation under subsection 136(1), and when occupied by the Directors, will be their usual place of residence, having the ordinary meaning of habitual or customary residence. As both employees will live on the property on an on-going basis under the terms of their employment agreements, the residence will satisfy the ordinary, factual meaning of "usual place of residence". Accordingly, the existence of the housing right throughout the FBT year will give rise to a housing benefit under section 25 of the FBTAA. The taxable value of the benefit will be determined having regard to the market rental value of the right to occupy the dwelling, less any employee rent contributions, subject to any applicable concessions. | Detailed Reasoning - Remote area exempt housing benefit: Section 58ZC states: 58ZC(1) Remote area housing benefit to be exempt A housing benefit that is a remote area housing benefit is an exempt benefit. 58ZC(2) What constitutes remote area housing benefit 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) 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 recipient's 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. Subsection 58ZC(1) provides that a housing benefit that is a remote area housing benefit is an exempt benefit. A 'housing benefit' is defined in subsection 136(1) of the FBTAA to mean a benefit referred to in section 25 of the FBTAA. Section 25 defines such a benefit as one where a person grants a housing right to another person. | Detailed Reasoning - Paragraph 58ZC(2)(a) - Accommodation must be located in a remote area: To determine if this condition is met, we must determine if it is located in or adjacent to an eligible urban area. Subsection 140(1) of the FBTAA sets out what is an 'eligible urban area' and what is a location that is 'adjacent to an eligible area'. It states that: In this act: (a) a reference to an eligible urban area is a reference to: (i) an area that: (A) is situated in an area described in Schedule 2 to the Income Tax Assessment Act 1936 ; and (B) is an urban centre with a census population of not less than 28,000; and (ii) an area that: (A) is not situated in an area described in Schedule 2 to the Income Tax Assessment Act 1936 ; and (B) is an urban centre with a census population of not less than 14,000; and (b) a reference to a location that is adjacent to an eligible urban area is a reference to a location that, as at the date of commencement of this section: (i) was situated less than 40 kilometres, by the shortest practicable surface route, from the centre point of an eligible urban area with a census population of less than 130,000; or (ii) was situated less than 100 kilometres, by the shortest practicable surface route, from the centre point of an eligible urban area with a census population of not less than 130,000 Paragraph 140(1)(a) of the FBTAA provides that an 'eligible urban area' is a reference to an area that is an urban centre with a census population of not less than 14,000 (or 28,000 for an urban centre located in Zone A or B in Schedule 2 to the Income Tax Assessment Act 1936 (ITAA 1936) for income tax purposes). Paragraph 140(1)(b) of the FBTAA defines a location that is 'adjacent to an eligible urban area' to include one that is: i. situated less than 40 kilometres from an urban centre with a census population of less than 130,000; or ii. situated less than 100 kilometres from an urban centre with a census population of 130,000 or more. Under this provision, an area will be treated as 'remote' where it is at least 40 kilometres from an eligible urban centre with a population of 14,000 or more (or 28,000 for an area located in either Zones A or B for income tax purposes) and at least 100 kilometres from an eligible urban centre with a population of 130,000 or more. All population figures are based on the 1981 census population figures. The property is located in Area X. Area X is not listed in either Zone A or Zone B. As such it is not situated in an area described in Schedule 2. Area X had a population of less than xx,000 in the 1981 census. As such, Area X is not a location in an eligible urban area. The closest eligible urban area (with a census population of less than 130,000) is Area Y. For the units of accommodation to be in a location 'adjacent to an eligible urban area', the units of accommodation would have to be within 40 kilometres of the centre point of Area Y. Area Y is approximately xxkm from Area X by road. Area X is not adjacent to Area Y, for the purposes of the remote area housing exemption. The closest eligible urban area (with a census population of greater than 130,000) is Area Z. For the units of accommodation to be in a location 'adjacent to an eligible urban area', the units of accommodation would have to be within 100 kilometres of the centre point of Area Z. Area Z is approximately xxkm from Area X by road. Area X is not adjacent to Area Z, for the purposes of the remote area housing exemption. As such, the units of accommodation will not be at a location adjacent to an eligible urban area. This criterion is satisfied. | Detailed Reasoning - Paragraph 58ZC(2)(b) - Recipient must be a current employee and usual place of employment must be remote: While the Directors are currently future employees. They will become current employees when they move to the accommodation. Therefore, at that point they will be current employees. The dwelling is being provided to current employees in their capacity as employees engaged in primary production activities on the property. Their usual place of employment is the farm in Area X, which is located in a remote area for FBT purposes. Employment agreements will specify the requirement to reside on the property, and the Company will maintain records demonstrating the necessity of on-site residence. This criterion is satisfied. | Detailed Reasoning - Paragraph 58ZC(2)(d) - Provision of accommodation must be necessary: It must be established that it is necessary for the employer to provide housing for one of the reasons listed in subparagraphs (i) - (iii). Based on the facts, the relevant ground is subparagraph 58ZC(2)(d)(iii) - customary in the industry . The Company operates a primary production business involving: • approximately xx head of cattle, including xx breeding cows • calving operations requiring immediate attention • ongoing animal health monitoring • pasture and land management across xxx acres • a requirement for 24/7 on-site presence due to livestock welfare, water supply management, and property security. In the livestock and cattle industry, particularly where calving, herd management and land maintenance occur, it is customary for employers to provide on-farm accommodation to employees who must be available at all times. The Directors currently rely on a shed with basic living facilities, demonstrating that alternative accommodation is inadequate and inconsistent with business needs. Further, the farm is in a rural locality with limited nearby rental availability, supporting the necessity of employer-provided housing. Accordingly, subparagraph 58ZC(2)(d)(iii) is satisfied. As it is only necessary for one of subparagraphs 58ZC(2)(d)(i), (ii) and (iii) to be satisfied, no conclusion is required in respect of subparagraphs (i) or (ii). This criterion is satisfied. Paragraph 58ZC(2)(e) of the FBTAA - The arrangement must be at arm's length and not for the purposes of the employer obtaining a benefit Paragraph 58ZC(2)(e) requires that the housing right must not be granted under: • a non-arm's length arrangement; or • an arrangement entered into for the purpose, or for purposes including the purpose, of enabling the employer to obtain the benefit of the application of section 58ZC. | Detailed Reasoning - Non-arm's length arrangement: In this case, both directors are controlling individuals of the Company, as well as the recipients of the housing benefit in their capacity as employees. Having regard to the relationship between the parties and the information provided, the arrangement is not considered to reflect dealings between independent parties acting at arm's length. As noted in ATO Interpretative decision ATO ID 2005/156 Fringe Benefits Tax Exempt Benefits: remote area housing - non-arm's length arrangement , parties are not dealing at arm's length where they do not act independently and the terms differ from what would be expected between independent parties. In determining whether parties are dealing at arm's length, regard is had to the substance of the arrangement and whether the terms are consistent with those that would be expected between independent parties. Based on the information provided, the following factors indicate that the arrangement is not at arm's length: • the dual capacity of the individuals as both owners and employees of the Company • the absence of evidence of independently negotiated commercial terms governing the provision of the housing • the construction of a high-value dwelling (approximately $x,xxx,xxx) for their personal occupation • the lack of comparable arrangements with unrelated employees These factors indicate that the housing right is granted under a non-arm's length arrangement. Further, the arrangement exhibits characteristics consistent with an arrangement entered into, at least in part, for the purpose of obtaining the benefit of the remote area housing exemption. In determining whether an arrangement has the requisite purpose, regard is had to the objective features and surrounding circumstances of the arrangement. Relevant considerations include: • the accommodation is being constructed specifically for the directors who control the Company • the arrangement aligns closely with the requirements of section 58ZC • there is limited evidence that alternative commercial or remuneration arrangements were meaningfully pursued • the arrangement results in a significant FBT advantage by treating what would otherwise be a taxable housing benefit as exempt While there are operational reasons for on-site residence, the structure and circumstances of the arrangement indicate that obtaining the benefit of the exemption is at least one of the purposes of entering into the arrangement. Accordingly, it is considered that: • the arrangement is considered to be a non-arm's length arrangement; and • the arrangement has the purpose, or a purpose, of enabling the employer to obtain the benefit of section 58ZC, having regard to its form and substance. Therefore, paragraph 58ZC(2)(e) is not satisfied. As paragraph 58ZC(2)(e) is not satisfied, the housing benefit does not qualify as a remote area housing benefit. Accordingly, the benefit is not exempt from FBT under subsection 58ZC(1) of the FBTAA. | Detailed Reasoning - Conclusion: It is concluded that the accommodation benefits provided by the Company do not constitute an exempt remote area housing benefit, as the requirements of paragraph 58ZC(2)(e) of the FBTAA are not satisfied. | Detailed Reasoning - Question 2: Will the Company be entitled to apply the remote area residential fuel reduction under section 59 of the FBTAA in respect of residential fuel or utilities supplied in connection with the provision of the dwelling? | Summary: As the accommodation does not qualify as a remote area housing benefit under section 58ZC, the remote area residential fuel reduction under section 59 is not available. | Detailed Reasoning - Detailed reasoning: As concluded in Question 1, the housing benefit does not qualify as a remote area housing benefit due to the failure of paragraph 58ZC(2)(e). Subsection 59(1) of the FBTAA provides: If (a) residential fuel is for use: (i) in connection with the recipient's unit of accommodation; and (ii) during the subsistence of the recipients overall housing right; in relation to a remote area housing benefit, in relation to an employer in relation to a year of tax; and (b) any of the following conditions are satisfied: (i) the recipient's expenditure in relation to an expense payment fringe benefit in relation to the employer in relation to the year of tax or a subsequent year of tax is in respect of the supply of that residential fuel; (ii) the recipient's property in relation to a property fringe benefit in relation to the employer in relation to the year of tax is that residential fuel; (iii) the recipients benefit in relation to a residual fringe benefit in relation to the employer in relation to the year of tax is the benefit of the consumption of that residential fuel; the amount that, apart from this subsection and section 62, would be the taxable value of the fringe benefit referred to in paragraph (b) in relation to the year of tax is reduced by 50%. Subsection 59(1) of the FBTAA provides a 50% reduction in the taxable value of certain fringe benefits where residential fuel is supplied in connection with a remote area housing benefit. Applied to the circumstances of the Company, each requirement in subsection 59(1) is considered below. Paragraph 59(1)(a) - Residential fuel must be for use in connection with the dwelling during the employees' housing right, and relate to a remote area housing benefit The Company is constructing and providing a dwelling on the farming property at Area X, which has been determined to be located in a remote area for FBT purposes under the remote area tests. The Directors will occupy the dwelling as part of their employment duties and will hold an overall housing right for the period they reside in the accommodation. Residential fuel (such as electricity, gas, or similar domestic energy) used in the dwelling will therefore be for use in connection with the employees' unit of accommodation and will be consumed during the subsistence of their housing right. As concluded in Question 1, the dwelling does not qualify as a remote area housing benefit under section 58ZC due to the failure of paragraph 58ZC(2)(e). As paragraph 59(1)(a) requires that the residential fuel be supplied in connection with a remote area housing benefit, this requirement is not satisfied. As paragraph 59(1)(a) is not satisfied, no further consideration of paragraph 59(1)(b) is required. | Detailed Reasoning - Effect of subsection 59(1) - 50% reduction in taxable value: As the requirement in paragraph 59(1)(a) is not satisfied, subsection 59(1) does not apply and no reduction in taxable value is available. | Detailed Reasoning - Conclusion: Applying subsection 59(1) of the FBTAA to the circumstances of the Company, the Company is not entitled to apply the remote area residential fuel reduction for eligible residential fuel or utilities supplied in connection with the on-farm dwelling at Area X.