Private ruling: Drive-in drive-out employee
Date of advice: 22 February 2018
Published: June 2018
Ruling period: FBT years ending 31 March 20XX to 31 March 20XX
Date scheme commenced: 1 April 20XX

Ruling: Q1: Would the employee of the company who currently stays at temporary accommodation in regional Australia during their work roster satisfy the requirement under paragraph 31E(c) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) for drive-in drive-out? | A1: Yes

Relevant facts and circumstances: The Company operates a business at various remote sites in regional Australia. The Company’s employees are currently working on a regular and rotational basis of 2 weeks on and 2 weeks off at those worksites. That is, 14 consecutive days of work and 14 consecutive days off. On working days, the employees work 11.5 hour shifts per day. There are a number of employees who drive-in and drive-out from their normal place of residence to their usual place of employment. There is no public transport available for the employees in the regional areas where the Company operates due to the remoteness of the sites, so it is not possible for the employees to travel between work and their normal place of residence by public transport. In accordance with the Company’s health and safety policy, if the employees’ commute time is greater than 45 minutes (one way), then the employees are required to stay in local accommodation due to health and safety concerns. During the work roster, their temporary accommodation is typically local motels or rental properties that are located close to the work sites. Most drive-in drive-out employees have their normal residence 100km or more away from their worksites, well in excess of an hour travel by car. The employee to whom this ruling relates normally resides at a location which is approximately 81km away from their primary place of employment. The commuting time for the employee between these two locations is about 60 minutes one way, depending on the traffic conditions on the day. The roads are frequently used by large trucks. Whilst the route is generally clear of traffic congestion, 35% of the road traffic consists of heavy vehicles. The route for the employee is largely along sealed roads and has a stretch of winding single lane road of 21km. Although the road has a 100km/hr speed limit, the Company enforces an internal policy of travelling at or under 80km/hr on that road for safety reasons. The nature of the work for the employee is largely physical labour. The facilities on the employee’s worksite run 24 hours, 7 days a week. The employee’s shift is for 11.5 hours each day, with someone on call from each team every night in case there is a plant shut down or emergency alarm. Typical breaks of 15 minutes for morning and afternoon tea, and 30 minutes for lunch, are included in the working hours per day. The employee’s commute often occurs outside of daylight hours.

Relevant legislative provisions: Section 31E of the FBTAA

Reasons for decision: Summary: Section 31E of the FBTAA sets out the requirements for employees in a drive-in drive-out situation: | Detailed Reasoning - Section 31E Fly-in Fly-Out and Drive-In Drive-Out Requirements: The employee satisfies this section if: (a) the employee, on a regular and rotational basis: (i) works for a number of days and has a number of days off (but not the same days in consecutive weeks); and (ii) on completion of the working days, travels from his or her usual place of employment to his or her normal residence and, on completion of the days off, returns to that usual place of employment; and (b) the basis of work described in paragraph (a) is customary for employees performing similar duties in that industry; and (c) it would be unreasonable to expect the employee to travel on a daily basis on work days between: (i) his or her usual place of employment; and (ii) his or her normal residence; having regard to the location of those places; and (d) it is reasonable to expect that the employee will resume living in his or her normal residence when the duties of that employment no longer require him or her to live away from it. The applicant has advised that the requirements of paragraphs 31E(a), (b) and (d) are satisfied in respect of all of their drive-in drive out employees. The other drive-in drive-out employees of the Company live a considerable distance (more than 100kms) from the worksite. This employee only lives 81kms away and therefore the question for this ruling is whether paragraph 31E(c) is satisfied, that is, would it be unreasonable to expect this employee to travel to/from work on a daily basis, having regards to the locations of their place of employment and normal residence. The FBTAA does not expand further on what might be considered “unreasonable”, and the Explanatory Memorandum to the Tax Laws Amendment (2012 Measures No. 4) Act 2012 (which discusses the reform of the living away from home allowances) also does not offer any assistance. The Macquarie Dictionary Online defines unreasonable to be: 1. Not reasonable, not endowed with reason 2. Not guided by reason or good sense 3. Not agreeable to or willing to listen to reason 4. Not based on or in accordance with reason or sound judgement 5. Exceeding the bounds of reason; immoderate; exorbitant. It defines “reason” in a number of different ways, but the most relevant one to this ruling is “sound judgement or good sense”. If the Commissioner were to solely look at the location of the employee’s residence to their worksite, it would not be concluded that daily travel between these places would be “unreasonable”. However, if the Commissioner should consider the specific circumstances of the employee’s employment alongside the distance of travel, a different conclusion would be reached. The employee works an 11.5 hour day doing mainly physical labour, and works 14 days continuously. Much of the employee’s commute time would be outside daylight hours and/or during the periods of dawn/dusk, which decreases visibility, as well as increasing the likelihood of wildlife being on the roads. The travel route has heavy vehicle traffic and there are no public transport options. It is noted that the Company’s health and safety policy requires that if the employees’ commute time is greater than 45 minutes, then the employees are required to stay in local accommodation due to health and safety concerns. The applicant has also drawn our attention to the fact that this also aligns with a State Government Guidance Note for Fatigue Risk Management, where a commute over 45 minutes is classified as a high potential for fatigue. Based on the above, in consideration of the working conditions and the commute times and conditions of the roads, it can be seen that the employee would be at a very high risk of fatigue, and it would be unreasonable to expect the employee to travel to/from work on a daily basis. For the safety of the employee (and the other road users) it would not be “sound judgement or good sense” to expect the employee to undertake a daily commute. Therefore, the Commissioner accepts that it would be unreasonable to expect the employee to travel to/from work on a daily basis.