Date of advice: 29 June 2016
Published: March 2017
Ruling period: 20xx | 20yy

Ruling: Q1: Are the following allowances paid to touring employees a Living-Away-From-Home allowance (LAFHA) benefit under subsection 30(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)? ● Daily Travel Allowance (with meals) - Allowance No.1 in the 'Allowance Table' under the Relevant facts and circumstances . ● Daily Travel Allowance (without meals) - Allowance No.2 in the 'Allowance Table' under the Relevant facts and circumstances . | A1: No. | Q2: Are the following allowances paid to touring employees a travel allowance (under subsection 900-30(3) of the Income Tax Assessment Act (ITAA 1997)) for the purposes of PAYG withholding? ● Daily Travel Allowance (with meals) - Allowance No.1 in the 'Allowance Table' under the Relevant facts and circumstances . ● Daily Travel Allowance (without meals) - Allowance No.2 in the 'Allowance Table' under the Relevant facts and circumstances . | A2: Yes.

Relevant facts and circumstances: 1. The taxpayer is a propriety limited company, hereafter X. It provides services in regions throughout Australian. 2. In order to service its clients, X creates rosters and utilises its staff located throughout Australia. A common roster that exists at X includes: Roster On Days Roster Off Days Employee zz xx 3. It is industry standard that rostered employees are not allocated a fixed 'work location'. They can be located anywhere in the Australian region during their scheduled off time but they must attend the location specified by the company during their scheduled time. 4. X currently supports between two and three of its clients out of some remote locations. In order to service those locations, X has to operate from N. 5. Due to the remote location of N, it is not possible for the home location of personnel to be within the same locale as the X operating base, and the personnel can be located anywhere in Australia. 6. The “Home Location” for employees touring to N may be in various locations within Australia. The travel arrangements associated with these touring employees are set out below. a. X will book all travel arrangements, flights, accommodation or conditions unless exceptional circumstances exist. b. Employees are generally not able to negotiate changes to these flights or conditions unless exceptional circumstances exist. 7. For employees not based in N, they would need to stay in a hotel at the airport waiting for their flight to N the next day. This accommodation and the flight are booked and paid by X. During this time, employees are paid allowance No.2. 8. Early next day, these employees arrive at the airport and are required to pass an alcohol breath test before boarding the charter flight to N to carry out their duties. If an employee fails the alcohol test, they will not be allowed to travel to N. Upon reaching N, employees are paid only allowance No. 1. 9. During the tour of duty, employees are provided with camp style accommodation at the N Base and are paid allowance No.1 as specified above. 10. Below is a description of the nature of accommodation provided: ● Accommodation is camp style with employees having a small room with a bed. ● Toilet facilities are shared. ● The accommodation is provided with basic furnishing and is of temporary nature. ● Employees are not allocated a fixed room, that is, the rooms change with each tour of duty. ● Employees have access to food, meals and refreshments in a dining hall. ● No alcohol is allowed on the premises at N. ● Employees are unable to leave any personal belongings in the accommodation when they vacate after each tour of duty. ● Family members are unable to join the employee in N. ● There is only enough room on the charter flight for the employee to bring 1 bag of clothing and belongings. 11. Due to the nature of the work and contractual requirement to be on standby should an emergency occur, work hours vary to meet the requirements. Some employees work in shifts of roughly aa hours a day. Other employees' work hours are governed by government regulations and shifts can vary from less than b hours to cc hours depending on amount of rest, flying time etc. 12. Upon completion of the tour, employees are flown back to the airport at Y on a charter flight. 13. Employees not residing at Y are flown back to an airport nearest the state/city in which they reside. During the period of travel, they are paid allowance No.2 in the Allowance Table. 14. If the Employee is required to remain away from the Employee's home overnight in the course of performing the substantive role or on the Employer's business, the Employee will be entitled to a Daily Travel Allowance calculated from departure until return to the airport. 15. Allowance Table: No. Allowance Rate 1 If meals are provided free of charge: (DTA rates will be adjusted annually to at least the level for reasonable daily travel allowance specified by the ATO) $A per hour 2 If meals are not provided free of charge: (DTA rates will be adjusted annually to at least the level for reasonable daily travel allowance specified by the ATO) $B per hour 3 Employees on overseas training courses will receive the overseas travel allowance (OTA). (OTA rates will be adjusted annually to at least the level for reasonable daily travel allowance specified by the ATO) “Dependent on the country” 5 Airport Transfer Reimbursement: When an employee is required to travel on Employer Business, an Airport transfer Reimbursement will be paid towards the cost of travel between the Employee's home and the nominated airport of departure. The Employee must provide appropriate tax invoices to verify the actual cost of such transport. The maximum reimbursement will be $C per tour. Up to $C per tour

Relevant legislative provisions: Fringe Benefits Tax Assessment Act 1986 Subsection 30(1) | Fringe Benefits Tax Assessment Act 1986 Subsection 136(1) | Income Tax Assessment Act 1997 Subsection 900-30(3) Case law | Roads and Traffic Authority of NSW v FC of T 93 ATC 4508 | Other relevant documents | Taxation Ruling MT 2030, Fringe Benefit Tax: Living-Away-From-Home Allowance

Reasons for decision: Detailed Reasoning - Detailed reasoning: Subsection 136(1) of the FBTAA defines a 'living-away-from-home allowance benefit' as the benefit referred to in section 30 of the FBTAA. Section 30 of the FBTAA sets out the circumstances in which an allowance paid by an employer to an employee will qualify as a living-away-from-home allowance (LAFHA) benefit. Subsection 30(1) of the FBTAA states: Where: (a) At a particular time, in respect of the employment of an employee of an employer, the employer pays an allowance to the employee; and (b) It would be concluded that the whole or a part of the allowance is in the nature of compensation to the employee for: (i) additional expenses (not being deductible expenses) incurred by the employee during a period; or (ii) additional expenses (not being deductible expenses) incurred by the employee, and other additional disadvantages to which the employee is subject, during a period; by reason that the duties of that employment require the employee to live away from his or her normal residence; the payment of the whole, or of the part, as the case may be, of the allowance constitutes a benefit provided by the employer to the employee at that time. Thus, an allowance is a LAFHA under subsection 30(1) of the FBTAA if it satisfies the following 3 conditions: 1. the allowance is paid by an employer to an employee in respect of the employee's employment; 2. the duties of employment require the employee to “live away from his or her normal residence”; and 3. the allowance is wholly or partly to compensate the employee for additional non-deductible expenses and other disadvantages of living away from home. | Detailed Reasoning - Condition 1: Allowance is paid in respect of the employee's employment: A LAFHA benefit can only arise on the payment of an allowance by an employer to an employee. The allowance must be paid in respect of the employee's employment which includes by reason of, by virtue of, or for or in relation directly or indirectly to that employment. In the present case, the two allowances are paid in relation to the employment of X's staff. Thus this condition is satisfied. | Detailed Reasoning - Condition 2: Employment duties require employee to live away from normal residence: LAFHA is paid to employees who are required to 'live away from their normal residence' as required by the employer in performing their employment duties. Generally, an employee is considered to be in receipt of LAFHA if the employee would have continued to live in their usual home, but for the requirement to temporarily reside elsewhere. In the present case, the employees will be living away from their normal residence while on tour working on N. Thus, this condition is also satisfied. | Detailed Reasoning - Condition 3: Compensation for non-deductible expenses: The LAFHA must be in the nature of compensation for additional non-deductible expenses incurred during a period of employment, or additional non-deductible expenses so incurred and “other additional disadvantages” to which the employee is subject during the period, because the duties of employment require the employee to live away from his or her normal residence. Subsection 136(1) of the FBTAA provides the definition of deductible expenses as follows: deductible expenses, in relation to an allowance paid to an employee, means expenses incurred by the employee in respect of which a deduction is allowable to the employee under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997). If an expense is deductible under section 8-1 of the ITAA 1997 by an employee for a loss or outgoing incurred in gaining or producing assessable income, it will not give rise to a LAFHA benefit. In Roads and Traffic Authority of NSW v FC of T 93 ATC 4508 (the RTA case), Hill J noted that where a taxpayer is required by his employer, and for the purposes of his employer, to reside, for periods at a time, away from home and at the work site, and that employee incurs expenditure for the cost of sustenance or other necessary matters which, if the taxpayer had been living at home, would be private expenditure, the occasion of the outgoing operates to stamp that outgoing as having a business or employment related character. In that case, camping allowances were paid to employees. There are two components to the allowance being an amount to compensate for the disadvantageous conditions of living in a camp, and part compensation for additional costs of food and other expenses caused by camping. Hill J held that as the camping allowances were paid to meet deductible amounts, they were not LAFHA. Similarly, the employees in the present case are required to live away from their normal place of residence while working in N; the employees are provided with accommodation; and travel allowances are provided in anticipation of the employees bearing the increased costs of food, drink and incidentals while travelling on work. Thus, the allowances in question are not a living-away-from-home allowance benefit under subsection 136 FBTAA. Therefore, the allowances (No.1 and No.2 of the Allowance table) paid to touring employees are not LAFHA under subsection 30(1) of the FBTAA. | Detailed Reasoning - Detailed reasoning: Subsection 900-30(3) of the ITAA 1997 defines a travel allowance as: an allowance your employer pays or is to pay to you to cover losses or outgoings: (a) that you incur for travel away from your ordinary residence that you undertake in the course of your duties as an employee; and (b) that are losses or outgoings for accommodation or for food or drink, or are incidental to the travel. The travel may be within or outside Australia. As concluded above, the allowances are not LAFHA, and thus not fringe benefits. Taxation Ruling MT 2030, Fringe Benefits Tax: Living-Away-From-Home Allowance (MT 2030) sets out characteristics of a travelling allowance as discussed below: ● Employees stay away from their usual residence for short periods of time: In the present case, the touring employees travel to site for periods no more than zz days including travel. The duties are performed on an 'as necessary' basis and are temporary in nature. The individuals do not take any significant personal effects to site, other than requisite clothing. ● Employment location remains unchanged / Employees do not change their place of residence: In the present case, the employee's job location does not change. In addition, the employee maintains their home residence. ● Employees travelling in the course of employment ordinarily would not be accompanied by their spouse and family: In the present case, the employees do not travel to site with family members. In addition, the allowances are paid with reference to the ATO's reasonable travel and overtime meal allowances for employees who are travelling on business and the allowances are paid on an hourly basis. As illustrated above, the allowances in the present case exhibit the characteristics of a travel allowance under subsection 900-30(3) of the ITAA 1997.