Private ruling: FBT-Usual place Of Residence
Published: May 2012
Ruling period: 01 April 2012 to 31 March 2014
Date scheme commenced: 05 April 2012

Ruling: Q1: Is the employee considered to be living away from their usual place of residence for the purposes of Part III of Fringe Benefits Tax Assessment Act 1986 for the term of the specified contract that requires them to live in a different State? Advice/Answers Yes

Relevant facts and circumstances: The employee has been requested and agreed to take on the role of General Manager for the employer in another State for a period of 12 months. Prior to taking on the role of General Manager the employee lived in a different State where the Head Office was located The role of General Manager will require the employee to live away for the term of the contract (12 months). The employer requires that the employee return to home city once the contract is completed. The employee's intention is to return to and reside closer to their employer in the original State. Due to a described uncertainty the employee sold their residence prior to moving with the intention of purchasing a replacement residence in that State. During the 12 month assignment period, the employee will live in the other State in rental accommodation provided by the employer for the employee and their immediate family. Supporting Documentation Attached signed copy of employment agreement The current employment agreement between the employer and the employee includes the arrangement for the employee to take on the role of General Manager for a period of 12 months. The following details are from the submitted employment agreement: Employment · The Employee has been employed by the Employer since prior to relocation · The parties agree that the Employer will employ the Employee on the terms set out in this agreement (Agreement). Position of Employee Full-time - General Manager - 12 month assignment. Other benefits Expenses allowed' The Employer will reimburse reasonable expenses which the Employee necessarily incurs in the furtherance of the Employer's business, provided that: · such expenses have been approved in writing in advance by the Employer (which approval may be withheld at its absolute discretion); · the expenses have been incurred in accordance with, and at the level specified, in the Employers written approval; and · the Employee provides the Employer with receipts and such other evidence of the expenses as the Employer reasonably requests. Tools of Trade A company owned laptop and mobile phone will be made available to the employee to enable them to carry out the requirements of their position. Relocation Expenses The employer will pay the following costs directly associated with the relocation of the employee Transportation of the employee's personal effects, and motor vehicles. Storage costs for personal effects not relocated for the assignment period. Transport costs for immediate family household members. Other travel benefits regarding home trips. On completion of the assignment, after the 12 month period, transportation of the employee's personal effects, and motor vehicles back to the home city, Accommodation During the 12 month assignment period, the Employer will provide accommodation for the employee in a rental property.

Relevant legislative provisions: Part Ill of the Fringe Benefits Tax Act 1986 | Fringe Benefits Tax Assessment Act 1986 136(1)

Reasons for decision: Summary: The employee is regarded as living away from their usual place of residence for a period 12 months during assignment as General manager. Except for having to change residence in order to work temporarily for their employer in the relocation State, the employee would have continued to live in their original State where they were living at the time when requested by employer to relocate for a limited/finite period to fulfil the assignment. | Detailed Reasoning - Detailed reasoning: In determining whether the employee is considered to be living away from their usual place of residence it is necessary to identify the usual place of residence. The Fringe Benefits Tax Assessment Act 1986 (FBTAA) does not define 'usual place of residence'. However, subsection 136(1) defines a 'place of residence' to mean: · 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 the absence of a legislative reference it is relevant to refer to the ordinary meaning of 'usual'. The Macquarie Dictionary defines 'usual' to mean: 1. habitual or customary: his usual skill. 2. 2. such as is commonly met with or observed in experience; ordinary: the usual January weather. 3. 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. Guidelines for determining an employee's usual place of residence are provided by Miscellaneous Taxation Ruling MT 2030 Fringe benefits tax: living-away-from-home allowance benefits (MT 2030). Paragraphs 15 to 18 refer to various decision of Taxation Boards of Review relating to the former 51A of the Income Tax Assessment Act 1936 (ITAA 1936). In referring to these decisions paragraph 14 of MT 2030 states: As the decisions illustrate, the question whether an employee is living away from his or her usual place of residence normally involves a choice between two places of residence, i.e., the place where the employee is living at the time or some other place. A person is regarded as living away from a usual place of residence if, but for having to change residence in order to work temporarily for his employer at another locality, the employee would have continued to live at the former place. It would be relevant in reaching that view that there is an intention or expectation of the employee returning to live at the former place of residence on cessation of work at the temporary job locality. This would be relevant even if the employee is living in temporary quarters close to a temporary job site. Further discussion occurs at paragraphs 19 to 25. Paragraph 20 provides the following general rule: Employees who move to a new locality to take up a position of limited duration with an intention to return to the old locality at the end of the appointment would generally be treated as living away from their usual place of residence. For example, a construction worker having to travel to a construction site to live and work would be in this category unless he had abandoned the former place of residence upon moving to the locality of the site. A case of the latter situation would be where the employee decided to permanently leave the former home, e.g., if a resident of Sydney, on obtaining a job for two years on a construction site in a remote part of Western Australia, decided to "sell up" in Sydney and move permanently to Western Australia to live. As an example of the application of this general rule paragraph 22 states: Examples of employees on appointments of finite duration who will generally be living away from their usual place of residence are foreign nationals employed in Australia on a temporary basis and Australian residents (e.g., export consultants, diplomats, immigration officials, etc.) stationed in a foreign country for a time. Provided the appointment is for a limited period and the employee can be expected in the normal course to return to the same city or district of the home country to live, the employee may be treated as living away from his or her usual place of residence. Further examples are provided in paragraph 25 which states: … certain kinds of occupations have a career structure which brings with it the necessity to accept regular transfers from one location to another, e.g., police officers, school teachers, members of the defence force, bank employees, etc. Employees in these situations will generally not be treated as living away from home when they move on transfer to live in proximity to the current work place. That will be the case even if the employee owns a home elsewhere in which he or she eventually intends to reside. These principles and the various cases that have considered usual place of abode or usual place of residence were discussed by the Administrative Appeals Tribunal (AAT) in Compass Group (Vic) Pty Ltd (as trustee for White Roche & Associates Hybrid Trust) v FC of T [2008] AATA 845; 2008 ATC 10-051. At paragraphs 55 and 56 Deputy President S A Forgie said: 55. There are several principles that can be gleaned from these cases. The first is that the fact that s 30 and, before it, s 51A, are concerned with what is described as a living-away-from-home allowance. That allowance is paid by an employer to an employee in respect of the employee's employment. It is a payment in the nature of compensation. The compensation is to meet additional expenses the employee incurs during a particular period and for other additional disadvantages he or she faces in that period but only if the expenses are incurred because he or she is required to live away from his or her usual place of residence in order to perform the duties of employment. As Mr Cotes alluded to in Case B47 , it necessarily assumes that the taxpayer has two places that could be described as his or her place of residence before one or the other needs to be identified as the "usual place of residence". 56. 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. Paragraphs 29 and 30 state: 29. Another question that has been raised is the extent to which it is necessary, before an employer may treat an allowance as a living-away-from-home allowance, to establish whether the employee does in fact have a residence at a place other than the locality at which the employee is temporarily residing. 30. The Act does not express a requirement, for a person to qualify as having a "usual place of residence", that it be established that he or she actually have such a residence. If the employee is one of a class of employees, (e.g., diplomats posted overseas, foreign experts employed in Australia, construction workers at a remote construction site, etc.) who could reasonably be expected by the employer to satisfy the tests set out in paragraphs 11-25 of living away from the usual place of residence, and the allowance is paid to compensate for additional costs (as explained in paragraph 28) that the employees could be expected to incur through having to live away from home, the allowance will constitute a living-away-from-home allowance in terms of section 30. | Detailed Reasoning - Application to your circumstances: In considering the factors referred to by the AAT the following factors indicate the employee's usual place of residence is in the State they resided in and intends to return to after completion of the temporary assignment in the other State: · If not for the requirement to relocate temporarily for a period of 12 months to undertake duties as General Manager, the employee would not have moved temporarily but would have continued to reside in the State where they were living/working. · The employee has taken up temporary assignment of limited and finite duration and will return to the previous location. · It is the clear intention of the Employer and the employee that the employee would return to their previous location at the conclusion of the current employment contract at the end of 12 months. · During the 12 month assignment period provision by the employer of travel benefits to visit home state.. · On completion of the assignment, after the 12 month period, payment by the employer of transportation costs of the employee's personal effects, and motor vehicles back to previous State · Personal effects not relocated will be placed in storage in the previous State for the assignment period. Storage costs will be borne by employer. · During the 12 month assignment period, the employer will provide rental accommodation for the employee and immediate family.. · The employee's employment is not in the kinds of occupations that have a career structure which brings with it the necessity to accept regular transfers from one location to another, e.g., police officers, school teachers, members of the defence force, bank employees, etc. Paragraph 30 makes it clear that the FBTAA does not express a requirement for a person to qualify as having a 'usual place of residence' that it be established that they actually have such a residence. Therefore the fact that the employee relinquished their residence in the home city does not necessarily preclude them from claiming that their usual place of residence is in that state where they lived before relocating to another city temporarily. It is therefore concluded that the employee is living away from home in accordance with paragraphs 20 and 22 of MT 2030,

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