Private ruling: Relocation expenses - exempt benefits
Date of advice: 18 September 2025
Published: 17 November 2025
Ruling period: FBT year ended 31 March 20YY | FBT year ended 31 March 20YY | FBT year ending 31 March 20YY | FBT year ending 31 March 20YY
Date scheme commenced: 1 April 20YY

Ruling: Q1: Does the Fringe Benefits Tax (FBT) exemption under section 58C of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) apply to the reimbursement of the Employee's acquisition costs under a salary sacrifice arrangement? | A1: Yes

Relevant facts and circumstances: In November 20YY, the Employee entered into an Employment Contract with the Employer. It was a condition of employment that the Employee relocate in order to effectively perform the duties of their role. It was made clear that the Employee would be required to relocate in order to perform the role. The Employee resided in City A and was employed by another entity in City A until January 20YY. The Employee commenced employment with the Employer in February 20YY. The Employee and an associate of the Employee (the Associate) hold ownership interest in a real property located in City A (the City A property). The Employee's primary residence was the City A property. The Employee relocated from City A to City B in February 20YY, just before commencing employment with the Employer. The Employee intends to sell the City A property. This is to be done within 2 years from commencement of employment with the Employer. To date, the City A property has not been sold. The Employee and the Associate entered a 12-month lease agreement, for the lease of a rental property in City B commencing in February 20YY. In July 20YY, the Employee and the Associate entered into a contract to purchase a real property in City B (the City B property). There were a number of costs involved in the acquisition of the City B property (the acquisition costs). The Employee has finalised the purchase and paid for the acquisition costs. The Employee provided the Employer with the documentary evidence of the acquisition costs incurred in December 20YY. Following the acquisition of the City B Property, the Employee carried out renovation works at this property. When the renovation works were undertaken, the Employee continued to reside in the rental property. The Employee moved into the City B property, as soon as the renovation works were completed. The Employee gave notice to terminate the lease agreement (before its end date). Under a clause of the Employment Contract, the Employee may elect to salary sacrifice any part of remuneration by agreement with the Employer. Under the terms of the Employment Contract, the Employee may also salary sacrifice property sale and acquisition costs relating to relocation. The Employer and the Employee are proposing to enter a salary sacrifice agreement as below: • the Employer will reimburse the Employee for the acquisition costs; the Employer will reimburse the Employee for the acquisition costs (GST-inclusive) in monthly or fortnightly instalments • for each instalment, the Employee will forgo an amount from their salary which is equal to that reimbursement instalment, and • the Employer will record each reimbursement instalment as a pre-tax deduction to the Employee's salary. The proposed salary sacrifice arrangement will be documented and signed by the Employee and the Employer before any salary sacrifice payments commence. Assumption The salary sacrifice arrangement between the Employer and the Employee is an effective salary sacrifice arrangement. The Employee and the Associate will enter into a contract for the sale of the interest in the City A property within 2 years from commencement of employment. In providing the expense payment benefit for the acquisition costs, the Employee and the Employer will deal with each other at arm's length.

Relevant legislative provisions: Fringe Benefits Tax Assessment Act 1986 section 20 | Fringe Benefits Tax Assessment Act 1986 section 58C | Fringe Benefits Tax Assessment Act 1986 section 136 | Fringe Benefits Tax Assessment Act 1986 section 141 | Fringe Benefits Tax Assessment Act 1986 section 141A

Reasons for decision: Summary: Subsection 58C(1) of the FBTAA sets out the pre-conditions for section 58C to apply. This subsection states that where: (a) during a particular period (in this subsection called the "former home holding period" ), an employee of an employer, or an associate of an employee of an employer, holds: (i) a prescribed interest in land on which: (A) there is a building constituting or containing a dwelling; (B) the employee or associate proposes to construct, or complete the construction of, a building constituting or containing a dwelling; (ii) a prescribed interest in a stratum unit in relation to a dwelling; or (iii) a proprietary right in respect of a dwelling, being a flat or home unit; (b) the employee or associate sells, or proposes to sell, the interest or right solely because the employee is required to change his or her usual place of residence in order to perform the duties of his or her employment; (c) the employer first notifies the employee at a time (in this subsection called the "notice time" ) during the former home holding period that the employee is required to perform the duties of that employment at the employee's new place of employment; and (d) at the notice time, the employee occupied, or proposed to occupy, the dwelling, or proposed to occupy the proposed dwelling, as his or her usual place of residence; (e) (Repealed by No 23 of 2005) the following subsections (i.e. subsections 58C(2) - 58C(5)) have effect. A benefit relating to the acquisition of property will only be regarded as exempt under subsection 58C(3), if the pre-conditions set out in subsection 58C(1) are satisfied. Did the employee hold a prescribed interest or proprietary right in a dwelling, as specified by paragraph 58C(1)(a)? During the "former home holding period", under paragraph 58C(1)(a)(i), the employee or an associate must hold a prescribed interest in land on which there was a dwelling or on which it was proposed that a dwelling would be built. According to subsection 136(1) of the FBTAA, a dwelling is defined to mean a unit of accommodation constituted by, or contained in a building, being a unit that consists, in whole or in substantial part, of residential accommodation. The Employee and the Associate held a prescribed interest, (a fee simple interest), in land containing a dwelling - that is the City A property during the former home holding period. Therefore, sub-subparagraph 58C(1)(a)(i)(A) of the FBTAA is satisfied. Has the employee sold, or has the employee proposed to sell, the interest or right solely because the employee is required to change his or her usual place of residence in order to perform the duties of his or her employment? Subsection 136(1) of the FBTAA provides that a 'place of residence' is the place at which the person resides or has sleeping accommodation, whether on a permanent or temporary basis and whether or not on a shared basis. The term 'usual place of residence' is not defined in the FBTAA, but in the context of the term primary place of residence, it should be taken as meaning habitual or customary. Therefore, broadly, the usual place of residence of the Employee is a place that the Employee is able to show is their home. The Employee was notified of the requirement to relocate to City B during their contract negotiations. It was a condition of employment with the Employer that the Employee relocate to City B in order to effectively perform their employment duties. The Employee ceased their previous employment in City A in January 20YY and commenced the employment with the Employer in February 20YY. The City A property was the Employee's usual place of residence until relocating to City B in February 20YY. The Employee proposed to sell the City A Property solely because they were required to change their usual place of residence to City B in order to perform the duties of their new employment. Therefore, paragraph 58(1)(b) of the FBTAA is satisfied. Did the employer first notify the employee that he or she was required to perform the duties of that employment at the employee's new place of employment, during the time in which the employee held the former home? The Employer first notified the Employee in 20YY that they were required to perform the duties of their employment in City B. This was during the former home holding period when the Employee was living in City A. Therefore, paragraph 58(1)(c) of the FBTAA is satisfied. Did the employee occupy, or did the employee propose to occupy, the dwelling as his or her usual place of residence? The Employee occupied the dwelling at the City A property as their usual place of residence at the notice time. Paragraph 58(1)(d) of the FBTAA is satisfied. Conclusion regarding the pre-conditions As the Employee satisfied all of the pre-conditions under subsection 58(1) of the FBTAA, subsection 58C(3) (within subsections 58C(2) - 58C(5)), will have effect. | Detailed Reasoning - Acquisition of property: Subsection 58C(3) provides that where: (a) at a particular time, the employee or an associate of the employee acquires: (i) a prescribed interest in land on which: (A) there is a building constituting or containing another dwelling; (B) the employee or associate proposes to construct, or complete the construction of, a building constituting or containing another dwelling; (ii) a prescribed interest in a stratum unit in relation to another dwelling; or (iii) a proprietary right in respect of another dwelling, being a flat or home unit; (b) the employer or associate acquires the interest or right solely because the employee is required to change his or her usual place of residence in order to perform the duties of that employment at the employee's new place of employment; (c) the employee or associate entered into a contract for the acquisition of the interest or right on a day (the contract day ) within 4 years after the new employment day; (ca) if, on the contract day, the employee or associate holds an interest or right in another dwelling in a situation where: (i) if that interest or right were sold within 2 years after the new employment day; and (ii) if a benefit of a kind referred to in subsection (2) were provided in relation to that interest or right; the benefit would be an exempt benefit under subsection (2) - not more than 2 years have elapsed since the new employment day; (d) immediately after the completion of the acquisition, the employee occupied the other dwelling, or proposed to occupy the other proposed dwelling, as his or her usual place of residence; (e) any of the following benefits is provided in respect of that employment of the employee in, or in respect of, a year of tax: (i) an expense payment benefit where the recipients expenditure is incidental to the acquisition of that interest or right; (ii) a residual benefit where the recipients benefit is incidental to the acquisition of that interest or right; (iii) an expense payment benefit where the recipients expenditure is in respect of the act of connecting or re-connecting a telephone service to the other dwelling or proposed dwelling; (iv) a residual benefit where the recipients benefit is constituted by the act of connecting or re-connecting a telephone service to the other dwelling or proposed dwelling; (v) an expense payment benefit where the recipients expenditure is in respect of the act of re-connecting gas or electricity to the other dwelling or proposed dwelling; (vi) a residual benefit where the recipients benefit is constituted by the act of re-connecting gas or electricity to the other dwelling or proposed dwelling; (f) if subparagraph (e)(iii) or (iv) applies - immediately before the change, a telephone service was provided to the unit of accommodation that was the employee's usual place of residence before the change; (g) if subparagraph (e)(i), (iii) or (v) applies - documentary evidence of the recipients expenditure is obtained by the recipient and that documentary evidence, or a copy, is given to the employer before the declaration date; and (h) the benefit is not provided under a non-arm's length arrangement; the benefit is an exempt benefit in relation to the year of tax. These conditions are discussed below. Has the employee, or an associate, acquired a prescribed interest in land on which there is a dwelling or on which it is proposed that a dwelling be built? The Employee and the Associate entered into a contract to purchase the City B property, which was settled in September 20YY. It is accepted that they acquired a prescribed interest on land in which there is a dwelling present. Hence, paragraph 58C(3)(a) of the FBTAA is satisfied. Did the employee or associate acquire the interest or right solely because the employee is required to change his or her usual place of residence in order to perform duties at their new place of employment. The employee or associate must acquire the new residential property solely because the employee is required to change his or her usual place of residence in order to perform employment duties at the employee's new place of employment. As discussed in the reasoning in relation to the pre-conditions above, the term usual place of residence is not defined in the FBTAA, however should be taken to mean a place that the employee is able show is their home. The Employee and the Associate acquired the City B property as their new usual place of residence solely because it was a condition of employment that the Employee relocate to City B to perform their duties with their new Employer. The Employee was required to change her usual place of residence from the City A property to the City B property. Hence, paragraph 58C(3)(b) of the FBTAA is satisfied. Did the employee or associate enter into a contract for the acquisition of the interest or right within 4 years after commencing the new employment? The Employee and the Associate entered into a contract for the acquisition of the City B property in September 20YY, within 4 years after commencement of the new employment in February 20YY. Hence, paragraph 58C(3)(c) of the FBTAA is satisfied. Did the Employee hold an interest or right in another dwelling on the date of the contract for the acquisition of the City B property? Paragraph 58C(3)(ca) of the FBTAA provides that if, on the contract day, the employee or associate holds an interest or right in another dwelling in a situation where: (a) If the interest or right were sold within 2 years after the new employment day; and (b) If a benefit of a kind referred to in subsection 58C(2) were provided in relation to that interest or right; the benefit would be an exempt benefit under subsection 58C(2) - not more than 2 years have elapsed since the new employment day. Paragraph 58C(2)(a) and paragraph 58C(2)(aa) state the following: Where: (a) either of the following benefits is provided in respect of that employment of the employee in, or in respect of, a year of tax: (i) an expense payment benefit where the recipients expenditure is incidental to the sale of that interest or right; (ii) a residual benefit where the recipients benefit is incidental to the sale of that interest or right; (aa) the employee or associate entered into a contract for the sale of the interest or right within 2 years after the day (the new employment day ) on which the employee commenced to perform the duties of that employment at the employee's new place of employment. As the Employment Contract provides for the salary sacrificing of home sale costs related to the Employee's relocation, the Employee and the Employer will enter into a salary sacrifice agreement with the Employer to reimburse the Employee for any expenditure that is incidental to the sale of the City A property. If such a reimbursement is provided, this will give rise to an expense payment benefit as required in paragraph 58C(2)(a) of the FBTAA. It is assumed that the Employee and the Associate will enter into a contract for the sale of the City A property within 2 years from the date of commencement of employment. This will satisfy the requirement under paragraph 58C(2)(aa) of the FBTAA. As both criteria are met as explained above, paragraph 58C(3)(ca) is satisfied. Immediately after completing the acquisition, did the employee either occupy, or propose to occupy, the new dwelling, as his or her usual place of residence? After the new property is acquired, the employee must immediately occupy the dwelling or propose to occupy the proposed new dwelling. The Employee acquired the City B property with the intention that it would be their usual place of residence immediately after the settlement. The Employee moved into the property as soon as the renovation works were completed. Therefore, it can be accepted that the Employee proposed to occupy the proposed new dwelling. Hence, paragraph 58C(3)(d) of the FBTAA is satisfied. Was an expense payment benefit or residual benefit provided to the Employee in respect of incidental expenditure related to the acquisition? The proposed benefit provided by the Employer, must fall under one of the paragraphs as described in paragraph 58C(3)(e). Section 20 of the FBTAA provides that an employee be provided with an expense payment benefit if: Where a person (in this section referred to as the provider ): (a) makes a payment in discharge, in whole or in part, of an obligation of another person (in this section referred to as the recipient ) to pay an amount to a third person in respect of expenditure incurred by the recipient; or (b) reimburses another person (in this section also referred to as the recipient ), in whole or in part, in respect of an amount of expenditure incurred by the recipient; the making of the payment referred to in paragraph (a), or the reimbursement referred to in paragraph (b), shall be taken to constitute the provision of a benefit by the provider to the recipient. In both (a) and (b) above, the employee or associate mush have incurred the expense that is the subject of the payment or reimbursement. An expense payment benefit arises at the point of payment or reimbursement by the employer or associate of the employer. The Employer will compensate the Employee the exact amount for the acquisition costs under the proposed salary sacrifice arrangement. The Employee has provided the Employer with all the documentary evidence of the acquisition costs incurred. It is accepted that from the terms of the Employment Contract that the Employer (as the provider of the benefit) considers the acquisition costs to be an expense of the Employer that the Employee (as the recipient) has incurred on behalf of the Employer. Therefore, the repayment of the acquisition costs by the Employer to the Employee under the proposed salary sacrifice arrangement will be a reimbursement. An expense payment benefit will be provided under the proposed salary sacrifice arrangement in relation to the reimbursement of the acquisition costs. Paragraph 141A(1)(b) of the FBTAA provides that where an employee is provided with an expense payment benefit the capital expenditure that is incidental to the acquisition or sale of a residential property includes (subject to exceptions): i. stamp duty; ii. advertising iii. legal services; iv. agent's services; v. discharge of a mortgage; vi. expenses of borrowing; and vii. any similar matter; The exception under paragraph 141A(1)(c) is that the following are not incidental costs of the sale or purchase of a residential property in any circumstances: i. interest; ii. repayments of principle; iii. loan service fees; iv. discharge of a mortgage or expenses of borrowing where the money borrowed was not applied wholly in in respect of the land, stratum unit or proprietary right or in respect of a building on the land; v. insurance; or vi. rates The acquisition costs fall within the expenditure set out in paragraph 141A(1)(b) of the FBTAA and the exceptions listed under paragraph 141A(1)(c) do not apply. An expense payment benefit will be provided under the proposed salary sacrifice arrangement in relation to the reimbursement of the acquisition costs. Hence, paragraph 58C(3)(e) of the FBTAA is satisfied Was documentary evidence of the recipient's expenditure provided to the employer before the declaration date? In this case, the documentary evidence for the acquisition costs was provided to the Employer in December 20YY, which is before the declaration due date. Hence, paragraph 58C(3)(g) of the FBTAA is satisfied. Was the benefit provided under a non-arm's length arrangement? It is assumed that in providing the expense payment benefit, the Employee and the Employer will deal with each other at arm's length. Hence, paragraph 58C(3)(h) of the FBTAA is satisfied. | Detailed Reasoning - Conclusion: As all the conditions set out in subsection 58C(3) of the FBTAA have been satisfied, the expense payment benefit, being the reimbursement of acquisition costs, will be an exempt benefit in accordance with section 58C of the FBTAA.