Private ruling: FBT - travel on work
Date of advice: 12 September 2025
Published: 22 December 2025
Ruling period: Fringe Benefits Tax (FBT) year ended 31 March 20XX | FBT year ended 31 March 20XX | FBT year ending 31 March 20XX | FBT year ending 31 March 20XX
Date scheme commenced: 1 April 20XX

Ruling: Q1: Do the reimbursed amounts for accommodation, transport, and food and drink that are paid for using a corporate credit card give rise to expense payment benefits under section 20 of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)? | A1: No. | Q2: Do the reimbursed amounts for food and drink that are paid for using a corporate credit card, give rise to property benefits under section 40 of the FBTAA? | A2: Yes. | Q3: Can the taxable value of the property fringe benefit (in relation to the food and drink provided) be reduced using the otherwise deductible rule (ODR), under section 44 of the FBTAA? | A3: Yes. Question 3a Can the taxable value of the property fringe benefit (in relation to the food and drink provided) still be reduced using the ODR, under section 44 of the FBTAA, where the employees are at the client location for a cumulative period of no more than 140 days? Answer 3a Yes. | Q4: Do the reimbursed amounts for accommodation that are paid for using a corporate credit card, give rise to residual benefits under section 45 of the FBTAA? | A4: Yes. | Q5: Can the taxable value of the residual benefits (in relation to the accommodation) be reduced using the ODR, under section 52 of the FBTAA? | A5: Yes. Question 5a Can the taxable value of the residual benefits (in relation to the accommodation) be reduced using the ODR, under section 52 of the FBTAA, where the employees are at the client location for a cumulative period of no more than 140 days? Answer 5a Yes. | Q6: Do the reimbursed amounts for transport that are paid for using a corporate credit card, give rise to residual benefits under section 45 of the FBTAA? | A6: Yes. | Q7: Can the taxable value of the residual benefits (in relation to the transport) be reduced using the ODR, under section 52 of the FBTAA? | A7: Yes. Question 7a Can the taxable value of the residual benefits (in relation to the transport) be reduced using the ODR, under section 52 of the FBTAA, where the employees are at the client location for a cumulative period of no more than 140 days? Answer 7a Yes.

Relevant facts and circumstances: The Company's employees are engaged in consulting work and an inherent part of the employee's role is to undertake business travel. Client projects are based in locations all over Australia and internationally. The need to resource a project with travelling employees will be driven by various factors, including whether the Company has a presence in the client location, and whether there are insufficient resources locally with the appropriate skills and expertise to fulfill the project requirements. The Company will notify an employee of their requirement to travel by way of written communication advising them of their project assignment and relevant particulars in relation to the project (e.g., project location and expected duration, associated travel requirements, expense claim process etc). Where employees are required to undertake travel, the Company pays all costs associated with accommodation, airfares (including frequent trips to the primary workplace during the project), meals and incidentals relating to the project. Aside from airfares (which are paid for directly by the Company when the flight is booked via a travel portal), these costs are reimbursed by the Company to the employee. Employees do not receive a cash allowance to cover any of the travel related costs. Employees are provided a corporate credit card to pay for travel and business expenses. Employees are required to make payments to the credit card provider, including any interest incurred on late monthly payments. Employees use their corporate credit card for business expenses and submit claims through the Company's expense system for reimbursement. All claims are audited to ensure compliance with the Company's expense policy. Airfares are booked and paid for through the Company's corporate credit card account directly. Employees are able to book Ubers through the Company's corporate account directly, and these expenses are paid for directly by the company. Alternatively, employees can put these trips on their corporate credit card and claim a reimbursement. The Company has two general categories of employees who are required to travel for work purposes, as follows: • Employees who are required to travel to a client site for the duration of the project. The duration of most projects is X to X months. In some cases, the projects may be for a period of up to X-X months (and in very limited cases, sometimes longer). • Employees who are required to travel internationally to a client site for the duration of the project. The duration of most international projects is X to X months, with the average being approximately X months. Occasionally, travel may be for up to X months, but this is rare. All travel is at the request and direction of the Company and is in accordance with client demands in respect of the projects that the employees are assigned to work on. The length of travel is not always known to employees at the commencement of a project. Specifically, employees will generally know the approximate duration of the project but will not know in advance if it will be extended, with the decision to extend a project generally made within the last couple of weeks of the initial project end date. Further, employees generally will not know if they will be placed on another project in the same location with the same or a different client, as this is determined at the completion of the project. Upon completion of a project, employees will be assigned to another project which is determined based on the Company's upcoming work. For the wellbeing of the employees, the Company will try to avoid allocating the employee to a client in the same location of their previous project to try and prevent extended periods of travel. However, in some cases this may be unavoidable (e.g., if there are insufficient resources to allocate another staff member to the project). Therefore, following completion of a project, an employee may be assigned to a project in: • The same city as their primary workplace, • Another city, or • Very rarely, the same city as their previous project. All employees: • Are full-time employees (i.e., no casual employees) • Have a regular place of work, which is the Company office location noted in their employment contract • Have a normal residence at their home location where they continue to live and frequently return to (generally X, but in some cases X), whilst working at the project location • Are required to return to their Company primary workplace/normal residence after the project ends, and • Are not considered 'fly-in fly-out' or 'drive-drive-out' employees per section 31E of the FBTAA. In the case of interstate projects, it is a standard company expectation that employees travel home every X, so they can attend training and affiliation in their primary workplace every X. Per company policy, the Company expects client-facing teams to: • Co-locate aligned to client impact and case needs, typically X-X days a week • Work from their Company primary workplace on a X, unless needed at a client site, to create time for affiliation, in person learning etc. For employees travelling internationally, the frequency of their travel home whilst on international assignment will largely depend on the travel time. The Company's policy outlines the following expectation of travel frequency to the employee's home location whilst on international assignment: • weekly if flight <X hours • fortnightly if flight X-X hours • monthly if flight X-X hours • bi-monthly if flight >X hours Employees generally abide by the above company expectations, and it is generally enforced within project teams. On the days that the employees return to the primary workplace, they are expected to undertake training, attend in-person meetings and undertake other work. However, on some occasions, employees may not return to their primary workplace in a particular week if they are needed to be in-person at the client project site on a X, or where undertaking the travel may be taxing on their personal wellbeing (e.g., if employee is travelling extensively). The Company maintains records of employee flights home and tracks the frequency of that travel, which confirms it is rare in practice. During the 20XX FBT year, it is estimated that at least XX% of employees that undertook travel did not have any occasions in which they did not return to their primary workplace either X or X, and that less than XX% of employees only had limited instances of X or less in which they did not return to their primary workplace where otherwise required (X or X basis). Accordingly, it is rare for an employee to be at a client location for a continuous period of more than X to X days at a time. While on assignment, employees required to undertake travel for periods of up to X months will stay in hotel-style accommodation. The Company's travel policy does not allow Airbnb or permanent style accommodation (e.g., house, unit, apartment). Further, whilst not expressly excluded under the policy, employees cannot stay in serviced apartment-style accommodation, without approval from the Company. In this regard, approvals to stay in serviced apartments are granted only on an extremely rare basis, and generally reserved for longer-term travel where the length of travel exceeds X months (which is outside the scope of this ruling). Employees booking their travel must choose from approved the Company hotels, and the cost of the hotel is reimbursed to the employee by the Company. When returning to their home location (e.g., each X or X), employees are required to check out of their hotel. This effectively means that they cannot establish themselves at the client's location as they must remove their belongings from the hotel each X or X, as required. Further, there is no certainty that the employee will be allocated to the same hotel room (or even the same hotel) when returning to the client location. The Company does not formally preclude family members from accompanying or staying with the employee whilst travelling, however the hotel accommodation would impede this from occurring for any notable period of time, other than a couple of days. This is further supported in practice by the travel guidelines, which impose an expectation on employees to return to their primary workplace each X (or X, as required), making it additionally impractical for employees to be joined by their spouse. On average, the Company estimates that it receives no more than X to X ad hoc requests per X, which represents a negligible proportion of their workforce (less than X% of the headcount). Further, on the rare occasions that an employee's spouse does accompany them for a weekend, it is common that the employee will check out of the hotel provided by the Company during the week and stay at a different hotel for the weekend as it is at their personal cost. The employees remain substantively under the direction and control of the Company when undertaking travel, including being bound by the Company's employee code of conduct. Specifically, in the event an employee breaches the code of conduct whilst undertaking travel (e.g. during the flight to the client location), they may be subject to disciplinary action.

Relevant legislative provisions: Fringe Benefits Tax Assessment Act 1986 section 20 | Fringe Benefits Tax Assessment Act 1986 section 30 | Fringe Benefits Tax Assessment Act 1986 section 40 | Fringe Benefits Tax Assessment Act 1986 section 45 | Fringe Benefits Tax Assessment Act 1986 section 47 | Fringe Benefits Tax Assessment Act 1986 section 52 | Fringe Benefits Tax Assessment Act 1986 section 149 | Fringe Benefits Tax Assessment Act 1986 section 150 | Fringe Benefits Tax Assessment Act 1986 subsection 136(1) | Income Tax Assessment Act 1997 section 8-1 | Taxation Administration Act 1953 section 12-35 of schedule

Reasons for decision: Detailed Reasoning - General Principles: A 'fringe benefit' is defined in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA). Broadly, a 'fringe benefit' arises when the following conditions are satisfied: (a) A benefit is provided at any time during the year of tax. (b) The benefit is provided to an employee or an associate of the employee. (c) The benefit is provided by: (i) their employer; or (ii) an associate of the employer; or (iii) 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 (iv) a third party other than the employer or an associate of the employer, if the employer or an associate of the employer: (A) participates in or facilitates the provision or receipt of the benefit; or (B) 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, that the employer or associate is doing so; (d) The benefit is provided in respect of the employment of the employee. (e) 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). | Detailed Reasoning - Is a benefit provided?: Subsection 136(1) of the FBTAA provides the definition of a 'benefit' as including: any right (including a right in relation to, and an interest in, real or personal property), privilege, service or facility and, without limiting the generality of the foregoing, includes a right, benefit, privilege, service or facility that is, or is 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; ... The Company provides a range of benefits (transport, accommodation, food and drink) to their employees in relation to the performance of their work. Specifically, these are: • Reimbursement for accommodation expenses paid for using a corporate credit card • Reimbursement for food and drink expenses paid for using a corporate credit card • Reimbursement for transport expenses (other than flight expenses) paid for using a corporate credit card. Each is a 'benefit' as defined in subsection 136(1) in the FBTAA. Therefore, this condition in the definition of 'fringe benefit' in subsection 136(1) is satisfied. | Detailed Reasoning - Is the benefit provided to an employee or an associate of an employee?: An employee is defined in subsection 136(1) of the FBTAA to include a current, future and former 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), means payments from which an amount must be withheld under section 12-35 of Schedule 1 to the Taxation Administration Act 1953 . The Company pays each of its employees amounts which constitute 'salary or wages' as defined in the FBTAA. The employees are therefore the Company's current employees. Therefore, this condition in the definition of a 'fringe benefit' in subsection 136(1) of the FBTAA is satisfied. Is the benefit provided by the employer, an associate of the employer or a third party in a situation that comes within either paragraph (e) or (ea) of the 'fringe benefit' definition? Paragraphs (e) and (ea) of the definition of a 'fringe benefit' in subsection 136(1) of the FBTAA provide: (e) a person (in this paragraph referred to as the arranger ) other than the employer or an associate of the employer under an arrangement covered by paragraph (a) of the definition of arrangement between: (i) the employer or an associate of the employer; and (ii) the arranger or another person; or (ea) a person 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; Furthermore, the definitions of 'provide' and 'provider' in subsection 136(1) of the FBTAA are as follows: provide: (a) in relation to a benefit - includes allow, confer, give, grant or perform; and (b) ... provider, in relation to a benefit, means the person who provides the benefit. The Company provides the benefits to their employees while working at a client location. Therefore, this condition in the definition of a 'fringe benefit' in subsection 136(1) of the FBTAA is satisfied. | Detailed Reasoning - Is the benefit provided in respect of the employee's employment?: In considering whether a benefit is provided to an employee 'in respect of' their employment, subsection 136(1) of the FBTAA defines 'in respect of', in relation to the employment of an employee, to include '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 ( Knowles ), 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'. A similar view was also held in Essenbourne Pty Ltd v FC of T 2002 ATC 5201 and Starrim Pty Ltd v FCT (2000) 102 FCR 194; [2000] FCA 952; 2000 ATC 4460; (2000) 44 ATR 487. The full Federal Court in Knowles also suggested that it would be useful to ask, 'whether the benefit is a product or incident of the employment'. To establish whether a sufficient or material connection exists between the provision of the benefits (transport, accommodation and food and drink) and the employment of the employees, it is necessary to consider the circumstances in which the benefits have been provided. The employees have been provided with these benefits to conduct their employment duties and enable employees to attend client work locations. Therefore, the connection between the benefits received by the employees and the employees' employment is considered to be material and sufficient, and not merely causal. If it were not for the employment relationship between the Company and the employees, the employees would not have received the benefits. Given this connection between the benefits provided and the employees' duties, it is considered that the benefits are provided 'in respect of the employees' employment'. | Detailed Reasoning - Is the benefit excluded from the definition of a fringe benefit?: A benefit which comes within paragraphs (f) to (s) of the definition of a 'fringe benefit' in subsection 136(1) of the FBTAA is excluded from being a fringe benefit. Paragraph (g) of the definition of 'fringe benefit' excludes 'a benefit that is an exempt benefit'. When relevant, this condition will be discussed below in relation to a specific question. | Detailed Reasoning - Expense payment benefit: An expense payment benefit is defined in section 20 of the FBTAA as follows: 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. | Detailed Reasoning - Property Benefits: The term 'property fringe benefit' is defined in subsection 136(1) of the FBTAA to mean 'a fringe benefit that is a property benefit'. A 'property benefit' is defined in that subsection to mean: a benefit referred to in section 40 but does not include a benefit that is a benefit by virtue of a provision of Subdivision A of Divisions 2 to 10 (inclusive) of Part III. Section 40 of the FBTAA states: Where, at a particular time, a person (in this section referred to as the provider) provides property to another person (in this section referred to as the recipient), the provision of the property shall be taken to constitute a benefit provided by the provider to the recipient at that time. Subsection 136 defines Property as: (a) Intangible property and (b) tangible property. Tangible property is defined under section 136 as goods and includes: (a) animals, including fish; and (b) gas and electricity. Division 11 applies to property fringe benefits. For a property benefit to arise the property must be 'provided'. In the context of a property fringe benefit, 'provide' is a defined term under subsection 136(1). The provision of property is the disposal of the provider's beneficial interest in the property, or the legal ownership of the property. A residual benefit will arise from the use of the property, instead of a property benefit. | Detailed Reasoning - Residual Benefits: Residual fringe benefits can be separated under four different categories under subsection 136(1) of the FBTAA as: • In-house non-period residual fringe benefits; • In-house period residual fringe benefits; • External non-period residual fringe benefits • External period residual fringe benefits Broadly, an 'in-house residual fringe benefit' is a residual benefit provided by an employer or associate of the employer as part of their business activities. An 'external residual fringe benefit' is a benefit that is not an in-house residual fringe benefit. The distinction between a 'period' and a 'non-period' residual fringe benefit depends on the definition of 'period residual fringe benefit' in subsection 136(1) and section 149 of the FBTAA. A 'period residual fringe benefit' is defined as a residual fringe benefit that is provided during a period. Under subsection 149(1), a benefit is taken to be provided during a period if, and only if, it is provided and subsists during a period of more than one day and is not deemed to be provided at a particular time or on a particular day. The effect of this is that, generally, where a residual fringe benefit is provided and subsists for more than one day, it is a period residual fringe benefit. | Detailed Reasoning - Otherwise deductible rule: The 'otherwise deductible' rule in section 24 of the FBTAA operates to reduce the taxable value of an expense payment fringe benefit where the recipient of the benefit is an employee, and the employee would have been entitled to a once-only deduction under either the Income Tax Assessment Act 1936 (ITAA 1936)or the Income Tax Assessment Act 1997 (ITAA 1997) for the expense had they personally incurred it. The 'otherwise deductible rule in section 52 of the FBTAA operates to reduce the taxable value of a residual fringe benefit in an analogous way. The relevant Australian Taxation Office (ATO) view on whether an employee would be able to claim a once-only deduction if they had incurred the unreimbursed travel expenditure themselves is contained in: • for transport expenses: Taxation Ruling TR 2021/1 Income tax: when are deductions allowed for employees' transport expenses? (TR 2021/1) • for accommodation and food and drink expenses: Taxation Ruling TR 2021/4 Income tax and fringe benefits tax: employees: accommodation and food and drink expenses, travel allowances, and living-away-from-home allowances (TR 2021/4). | Detailed Reasoning - Section 8-1 of the ITAA 1997: Where an employee incurs unreimbursed expenses, they may be entitled to a deduction under section 8-1 of the ITAA 1997. An employee can only deduct an expense under section 8-1 to the extent that: • it is incurred in gaining or producing assessable income (positive test) • and also meets the 'negative tests' that: ­ the expense is not a loss or outgoing of capital ­ the expense is not private or domestic in nature ­ the expense is not incurred in relation to gaining or producing exempt or non-assessable non-exempt income, and ­ another provision of the tax law does not prevent deduction of the expense. | Detailed Reasoning - Living-away-rom-home vs Travel on work: In considering whether the benefits provided by the Company fall within any of the exempt benefits listed in Part III of the FBTAA, it is necessary to initially determine whether the employees are travelling on work or living away from home. Subsection 30(1) of the FBTAA provides that a benefit will be a living-away-from-home allowance (LAFHA) benefit where it would be concluded that some or all of the benefit is, in the nature of compensation to an employee, for: i. additional expenses (not being deductible expenses) incurred by an employee during a period; or ii. additional expenses (not being deductible expenses) incurred by the employee and other additional disadvantages to which an 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. As a LAFHA is a fringe benefit, it is non-assessable non-exempt income in the hand of the employee. TR 2021/4 provides guidance on the difference between travel allowances and a LAFHA. Per paragraph 130 of TR 2021/4, the main difference between a travel allowance and a LAFHA is that a: i. travel allowance can only be paid to cover deductible accommodation and food, and drink expenses and incidental expenses incurred by an employee when they are travelling on work ii. LAFHA is paid to provide compensation to an employee for the additional living expenses incurred by an employee because their duties of employment require them to live at a location away from their usual residence. Paragraph 133 of TR 2021/4 further states, to determine whether a benefit is a travel allowance or a LAFHA, it is first necessary to determine what expenditure the benefit is designed to cover or compensate an employee for and whether those expenses are deductible under section 8-1 of the ITAA 1997. To be deductible under section 8-1 of the ITAA 1997, the expense must have a sufficiently close connection to the performance of the employment duties and activities through which the employee earns income. It will not be enough to show some general link or causal connection between the expenditure and the production of income. Paragraph 24 of TR 2021/4 provides, if any of the following factors apply, the employee will not be travelling on work and the accommodation and food and drink expenses incurred will be living expenses and therefore not deductible: i. The expenses are incurred because the employee's personal circumstances are such that they live far away from where they gain or produce their assessable income. (personal circumstances - see paragraphs 25 to 37 of this Ruling). ii. The employee incurs the expenses because they are living at a location (living at a location - see paragraphs 38 to 78 of this Ruling). iii. The employee incurs the expenses as a result of relocating from their usual residence (relocation - see paragraphs 79 to 86 of this Ruling). | Detailed Reasoning - Personal Circumstances: An employee cannot deduct accommodation, transport and food and drink expenses they have incurred where, due to their personal circumstances, they live far away from where they gain or produce their assessable income. Expenses incurred for this reason are living expenses and are not deductible. The Company has provided a template employment contract. The contract states: Information provided. Therefore, it is a work requirement and not personal circumstances that require employees to stay away from their usual residence and it is not only the fact they must stay overnight away from their usual residence to earn their assessable income, but also their 'income producing activities' or 'work activities' which requires them to do so. | Detailed Reasoning - Relocation: Where an employee has relocated for work, the cost of accommodation, transport and food and drink will be living expenses; regardless of whether moving to the new location is required by the employer or the work. The application states the employees of the Company maintain their normal residence during the period of their travel to client business locations and will return to their normal residence weekly, fortnightly, monthly or bi-monthly during the travel and at the end of the travel. Therefore, the employees are not relocating. | Detailed Reasoning - Living at the location: Paragraph 42 provides, the following factors would support a characterisation of an employee as living at a location away from their usual residence: • there is a change in the employee's regular place of work • the length of the overall period the employee will be away from their usual residence is a relatively long one • the nature of the accommodation is such that it becomes their usual residence • whether the employee is, or can be, accompanied by family or visited by family and friends. All the above factors should be considered, and no single factor is necessarily decisive. The weight given to each factor will vary depending on the employee's individual circumstances and is not a mathematical process. Reaching a conclusion as to whether an employee is living at a location away from their usual residence is a matter of judgment which requires a holistic assessment based on a consideration of all the factors. | Detailed Reasoning - Regular place of work: Most employees have a regular place of work, being a usual or normal place where the employee starts and finishes their work duties with a particular employer. In most cases, identifying an employee's regular place of work is clear. In circumstances where it is not clear, it may be necessary to consider in more depth the contract of employment, customary practice, the nature of the work duties, where these duties commence and at what point in time the employee is under the direction and control of their employer in order to determine where the employee's regular place of work is. Where there is a change in the employee's regular place of work and the employee incurs accommodation and food and drink expenses to be closer to their new regular place of work, the employee will be living at that new location away from their usual residence. In these circumstances, the expenses incurred are living expenses and are not deductible. In situations where it is difficult to conclude whether a second or subsequent place of work is also a regular place of work, an actual or anticipated duration of three months or more at the location would usually be sufficient for the location to amount to a regular place of work. However, consideration should also be given to the following matters: • The nature of the employment. A briefer period may be sufficient in the context of a short-term contract rather than ongoing employment. • The frequency at which the employee attends the workplace. Attending a location once a fortnight for four months would not usually be sufficient to establish a location as a regular place of work. • Whether any element of choice on the part of the employee is influential such as the choice of where to live, and • Whether the travel to a new workplace occurs when the employee is on work time, or substantively under the direction or control of the employer. This would tend to support the characterisation of the travel to the location as being part of the employment rather than a prerequisite to travel to another place of work. Paragraph 25 of TR2021/1 states: Most employees have a regular place of work, this being the normal or usual place where the employee starts and finishes their work duties with a particular employer. Paragraph 26 of TR 2021/1 continues: In most cases, identifying an employee's regular place of work is clear. In circumstances where it is not clear, it may be necessary to consider in more depth the contract of employment, the nature of the work duties, where these duties commence and at what point the employee is under the direction and control of their employer to determine where the employee's regular place of work is. Where there is a change in the employee's regular place of work and the employee incurs accommodation, transport and food and drink expenses to be closer to their new regular place of work, the employee will be living at that new location away from their usual residence. In these circumstances, the expenses incurred are living expenses and are not deductible. In this case, the employees are attending a client's business location for varying lengths of time. Employees travelling interstate travel between X and X months, with most stays being between X to X months. International Staff travel internationally for a period of X to X months. For interstate employees it is a standard company expectation that employees travel home every X. For international employees the frequency of travelling back home whilst on international assignment depends on the travel time (duration of the flight). Given the requirement to return to the primary workplace every X for employees travelling interstate and, on average, every X for employees travelling internationally, it is not considered that there is a change to the employee's regular place of work. | Detailed Reasoning - Usual residence: Subsection 136(1) of the FBTAA defines, 'normal residence' as the employee's usual place of residence, when an employee's usual place of residence in in Australia. The FBTAA does not provide a definition for the term, 'usual place of residence'. Subsection 136(1) of the FBTAA defines 'place of residence' in relation to a person as: (a) a place at which a 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. It is relevant to refer to the ordinary meaning of the word, 'usual' when there is an absence of a legislative reference. The Macquarie Dictionary defines, 'usual' to mean, 'habitual or customary...'. Considering the above, an employee's permanent principal place of residence is the employee's usual place of residence. | Detailed Reasoning - Length of period away from their residence: The 'length of period away' means the overall period of time the employee spends living at a particular location for work. Where an employee is living at one location for work for an extended period, that period is not broken by short trips they take from that location, for example travelling back to their usual residence on weekends or when travelling on work from that location. Generally, the longer an employee spends away from their usual residence for work, the more likely the employee is living at the location. Employees travelling interstate are expected to travel home every X so that can attend training in their primary workplace every X. The Company expects client facing teams to co-locate, typically X to X days a week and work from the Company primary workplace on a X, unless needed at a client site. For international employees, the Company's policy outlines the following expectations of travel frequency to the employee's home location whilst on international assignment: • weekly if flight <X hours • fortnightly if flight X-XX hours • monthly if flight is XX-XX hours • bi-monthly if flight is >XX hours The Company has advised that during the 20XX FBT year, it is estimated that at least XX% of employees that undertook travel did not have any occasions in which they did not return to their office either X or X and there were less than X instances in which they did not return to their primary workplaces where otherwise required. It is rare for an employee to be at a client location for a continuous period of more than X to XX days at a time. Accordingly, this length of travel is more characteristic of travelling on work. However, length of stay is not determinative. A key factor is that the employees regular place of employment does not change, and this will be addressed below. | Detailed Reasoning - The nature of the accommodation: The nature of an employee's accommodation is relevant but does not determine whether the employee is living at a location away from their usual residence. Generally, where an employee works away from home for a considerable period and, for that period, stays in accommodation generally used for longer term accommodation (such as a house, unit or apartment or caravan), this would support a view that they are living at a location away from their usual residence. However, an employee may live and make their home in any kind of accommodation. In this instance, the Company's travel policy does not allow Airbnb or permanent style accommodation, e.g. house, unit or apartment. Employees must choose their accommodation from hotels approved by the Company. When returning to their home location, each X or X, employees are required to check out of their hotel. This means employees must remove their belongings from the hotel each X or X as required. Further, there is no certainty that the employees will be allocated to the same hotel room, or even stay at the same hotel, when returning to the client location. The way the accommodation is being used is more characteristic of business travel, rather than employees living at a location. | Detailed Reasoning - Whether the employee is or can be accompanied by family or visited by family or friends: An employee who is living at a location away from their usual residence can generally be accompanied or visited by their family or friends. In this case, the Company has advised that is does not formally preclude family members from accompanying or staying with the employee whilst travelling, however, the hotel accommodation would impede this from occurring for any notable period of time, other than a couple of days. On average, the Company estimates that it received no more that X to X ad hoc requests for spouses to accompany employees on travel per month. Further on the occasions that an employee's spouse does accompany them for a weekend, it is common that the employee will check out of the hotel provided by the Company during the week and stay at a different hotel for the weekend at their personal cost. | Detailed Reasoning - Conclusion of whether the employees are living at the location: Having regard to the above analysis, it is accepted that employees are travelling on work. As the provision of transport, accommodation, food and drink are not considered LAHFA, consideration needs to be given to what benefit these gives rise to. | Detailed Reasoning - Question 1: Do the reimbursed amounts for accommodation, transport, and food and drink that are paid for using a corporate credit card give rise to expense payment benefits under section 20 of the FBTAA? | Summary: Accommodation, transport, food and drink expenses reimbursed by the Company to employees that are travelling between their office and client location will not constitute an expense payment benefit for the purposes of subsection 20 of the FBTAA. As the benefit is not an expense payment benefit, an expense payment fringe benefit will not arise. | Detailed Reasoning - Detailed reasoning: As discussed above, an expense payment benefit is defined under section 20 of the FBTAA. An expense payment benefit arises where an employee uses a personal credit card to acquire goods or services, and the employer either pays an amount to the issuer of the card or reimburses the employee in respect of the expenditure. However, in this case, the employee uses a corporate credit card and is reimbursed by the employer. Section 150 of the FBTAA governs the situation where an employee acquires goods and services by using a credit card issued to the employer or an associate of the employer. Section 150 provides that where an employee or an associate of the employee acquires a benefit on credit by using a credit card issued to the employer or an associate of the employer, the benefit is considered to have been provided under an arrangement between the employer, the associate of the employer, and the person who provided the recipient with the benefit. Sections 150 states: For the purposes of this Act, where, in respect of the employment of an employee of an employer, the employee or an associate of the employee uses a credit card issued by a third person to, or to an associate of, the employer to obtain the provision of a benefit on credit from a fourth person, the following provisions have effect: (a) the fourth person shall be taken to have provided the benefit, in respect of that employment, under an arrangement between: (i) the employer or the associate of the employer, as the case requires; and (ii) the fourth person; (b) where the employer or the associate of the employer, as the case may be, incurred expenditure to the third person under an arm's length transaction in respect of the provision of the benefit - the employer or the associate of the employer, as the case requires, shall be taken to have incurred that expenditure to the fourth person under an arm's length transaction. This means that the benefit is taken to have been given directly to the recipient by the employer, not indirectly as an expense payment benefit. Therefore, the benefit is not an expense payment benefit. | Detailed Reasoning - Question 2: Do the reimbursed amounts for food and drink, that are paid for using a corporate credit card, give rise to a property benefit under section 40 of the FBTAA? | Summary: Food and drink provided to employees while travelling on work constitute a property benefit for the purposes of section 40 of the FBTAA. As all the requirements for a fringe benefit as discussed above are met, a property fringe benefit will arise. | Detailed Reasoning - Detailed reasoning: The definition of a 'fringe benefit' in subsection 136(1) of the FBTAA requires that the following conditions 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, that 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. Subsection 136(1) of the FBTAA provides a broad definition of a 'benefit' as including: any right (including a right in relation to, and an interest in, real or personal property), privilege, service or facility and, without limiting the generality of the foregoing, includes a right, benefit, privilege, service or facility that is, or is 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; ... It is considered that the reimbursed amounts for food and drink, that are paid for using a corporate credit card provided to employees by the Company as their employer, constitutes a benefit. As discussed under General Principals, under section 40 of the FBTAA, a property benefit is taken to be provided at the time the property is provided to the Employee. The food and drink are consumed by the employees; therefore, the provision of food and drink gives rise to a property benefit due to the definition of 'provide' under subsection 136(1) of the FBTAA. However, a property fringe benefit will only arise where the property is provided in respect of the employment of the employee. The phrase 'in respect of' is defined in subsection 136(1) to include by reason of, by virtue of, or for or in relation directly or indirectly to, the employment of the employee. A causal relationship between the property benefit and employment is not sufficient despite the extension to the meaning of 'in respect of' in subsection 148(1) of the FBTAA. Instead, what must be established is that there is a sufficient or material, rather than a causal, connection or relationship between the benefit and the employment ( J & G Knowles & Associates v FC of T 2000 ATC 4151; [2000] FCA 196). In the current circumstances, food and drink is being purchased by employees with a credit card provided by the Company, while travelling for work. If it were not for the employment relationship between the Company and the employee, the employee would not have received the benefit. As discussed in Question 1, section 150 of the FBTAA provides that where an employee or an associate of the employee acquires a benefit on credit by using a credit card issued to the employer or an associate of the employer, the benefit is considered to have been provided under an arrangement between the employer, the associate of the employer, and the person who provided the recipient with the benefit. The food and drink purchased with the corporate credit card is provided by the Company to the employee. As food and drink are tangible property, the definition under section 136(1) of the FBTAA of 'property' is met. Therefore, the purchase of food and drink using a corporate credit card constitutes a property benefit as defined in section 40 of the FBTAA. As all of the other requirements of a fringe benefit have been met, a property fringe benefit will arise. | Detailed Reasoning - Question 3: Can the taxable value of the property fringe benefit (in relation to the food and drink provided) be reduced using the otherwise deductible rule (ODR), under section 44 of the FBTAA? | Summary: The taxable value of the property fringe benefit can be reduced using the ODR under section 44 of the FBTAA. The taxable values are reduced to the extent that the employees would have been entitled to a one-off deduction. | Detailed Reasoning - Detailed reasoning: As detailed in Question 1, the Company provides food and drink to its employees when travelling on work by providing a corporate credit card with which food and drink is purchased. By virtue of section 150 of the FBTAA, this benefit is considered directly provided by the Company to the employee. Therefore, the food and drink provided to employees while travelling on work constitutes a property fringe benefit. The taxable value of a property fringe benefit can be reduced, potentially to nil, if the ODR requirements under section 44 of the FBTAA are satisfied. Subsection 44(1) of the FBTAA states: Where: (a) the recipient of a property fringe benefit in relation to an employer in relation to a year of tax is an employee of the employer; and (b) if the recipient had, at the provision time, incurred and paid unreimbursed expenditure (in this subsection called the gross expenditure ), in respect of the purchase of the recipients property, equal to the amount that, but for this subsection and Division 14 and the recipients contribution, would be the taxable value of the property fringe benefit in relation to the year of tax - a once-only deduction (in this subsection called the gross deduction ) would, or would if not for Divisions 28 and 900 of the Income Tax Assessment Act 1997 , have been allowable to the recipient under that Act or the Income Tax Assessment Act 1936 in respect of the gross expenditure; | Detailed Reasoning - Paragraph 44(1)(a): For the 'otherwise deductible' rule to apply, the recipient of the benefit of food and drink expenses must be an employee of the employer. That condition is satisfied in the circumstances covered by this question. | Detailed Reasoning - Paragraph 44(1)(b): For the 'otherwise deductible' rule to apply, a once-only deduction must have been allowable to the employee under either the ITAA 1936 or ITAA 1997. | Detailed Reasoning - Application of section 8-1 of the ITAA 1997: To be deductible under section 8-1 of the ITAA 1997, the expense must have a sufficiently close connection to the performance of the employment duties and activities through which the employee earns income. It will not be enough to show some general link or causal connection between the expenditure and the production of income. The occasion of the outgoing on food and drink must be found in the employee's income producing activities, rather than because the employee: • lives far away from where they gain or produce their assessable income (i.e. due to their personal circumstances) • lives at a location away from their usual residence • incurs the expenses as a result of relocating from their usual residence. Such expenses are 'living expenses' and are not deductible under section 8-1 of the ITAA 1997 because they are not incurred in performing an employee's income-producing activities and are private or domestic in nature. Similarly, costs incurred by an employee to maintain their normal residence and in consuming food and drink to go about their daily activities are not deductible. They are living expenses. They are preliminary to the work and are not incurred in performing the work activities and are of a private or domestic nature. However, where an employee travels and stays away from their usual residence overnight in the course of performing their income producing activities and incurs food and drink expenses, these expenses will generally be deductible under section 8-1 of the ITAA 1997 | Detailed Reasoning - Connection to employment duties and activities: The scope of an employee's income producing activities is a question of fact and degree and is not confined to the day-to-day activities performed by the employee. It requires consideration of the employment contract along with: • the duties to be observed, and • the tasks to be performed by the employee (which may extend beyond what is contained in the employment contract). | Detailed Reasoning - Application: In this case, the following factors support a conclusion that overnight travel is an incident of the employee's employment: • The employees are bound by their employment contract with the Company • All travel is at the request and direction of the Company and is in accordance with client demands • The employment contract states: ­ Information supplied • Client projects are based in locations all over Australia and internationally, with the need to resource a project with travelling employees being driven by various factors including: ­ whether the Company has a presence in the client location, ­ whether there are insufficient resources locally with the appropriate skills and expertise. • The Company will notify an employee of their requirement to travel by way of written communication advising them of their project assignment and relevant particulars in relation to the project • Following the completion of a project, an employee may be assigned to a project in: ­ The same city as their primary workplace ­ Another city, or ­ Very rarely, the same city as the previous project. | Detailed Reasoning - The employee does not incur the expenses due to their personal circumstances: Living expenses include expenses incurred by an employee where, due to their personal circumstances, they live far away from where they gain or produce their assessable income. Such expenses are incurred because the employee's personal circumstances are such that they keep their usual residence, rather than relocate. The occasion of the outgoing for food and drink is not found in the employee's income-producing activities, meaning that these expenses are not incurred in the course of gaining or producing the employee's assessable income. They are private and domestic in nature. In this case, the employees' expenses would not be incurred because of their personal circumstances. The employees did not choose to be assigned to the client locations. Their presence in the client locations was due to the need to resource projects being undertaken by the Company which requires the employees to be at the client location. Therefore, their expenses would be incidental to their employment and incurred in the course of producing or gaining their assessable income. Hence, they would not be private or domestic in nature. | Detailed Reasoning - The employee does not incur the expenses because they are living at a location or have relocated: Where an employee is living at a location away from their usual residence or has relocated, their food and drink expenses are living expenses and will not be deductible even if the employee is living at that location due to their employment. This is because the location at which the employee works has become their new regular place of work, and the food and drink expenses are not an incident of their income-earning activity. Rather, the employee's personal circumstances are such that their usual residence is not located near their new workplace. Consequently, the employee is living at a location away from their usual residence and their food and drink expenses will not be deductible. Paragraphs 38 to 72 of TR 2021/4 further explain when an employee will not be 'travelling on work' but 'living at a location' away from their usual residence (including when they have relocated). Where an employee is living at a location away from their usual residence, their food and drink expenses are living expensesand will not be deductible even if the employee is living at that location due to their employment. The 'length of period away' means the overall period of time the employee spends living at a particular location for work. Where an employee is living at one location for work for an extended period, that period is not broken by short trips they take from that location, for example travelling back to their usual residence on weekends or when 'travelling on work' from that location. Generally, the longer an employee spends away from their usual residence for work, the more likely the employee is living at the location. In this case, employees are away from their usual residences for varying lengths of time, up to 6 months in rare cases. The actual length of time an employee is away from their usual residence depends on the project being undertaken and projects can be extended based on the client's needs. The Company's policy outlines the expectation that employee's return to their home location when on assignment, both interstate and internationally. Staff travelling interstate are expected to return to their home location each week, checking out of their accommodation to return to their regular place of work on Fridays for meetings, training and to undertake other work. Staff travelling internationally are expected to return to their usual place of work with the following frequency: • weekly if flight <X hours • fortnightly if flight X-XX hours • monthly if flight XX-XX hours • bi-monthly if flight >XX hours It is rare for an employee to be at a client location for a continuous period of more than X to XX days at a time. Given the time away from their usual residence, rarely being more than X to XX days continuously, and the reason for travel, being to undertake projects at a client location, stays at a client location in hotel accommodation is considered to be travelling on work and not living at a location. | Detailed Reasoning - Conclusion - food and drink: Having regard to the elements of section 8-1 of the ITAA 1997, the employees' food and drink expenses, had they incurred these expenses themselves, would have been incurred by them in the course of their gaining or producing their assessable income. They were 'travelling on work'. Furthermore, in considering the factors outlined in TR 2021/4, the employees would not have incurred the food and drink expense because of their personal circumstances or due to living at a location away from their residence or having relocated from their usual residence. Therefore, the food and drink expense would be deductible to the employees under section 8-1 of the ITAA 1997 had they incurred the expense themselves. Accordingly, the ODR would apply to reduce the taxable value of the benefit of food and drink provided to employees. | Detailed Reasoning - Question 3a: Can the taxable value of the property fringe benefit (in relation to the food and drink provided) still be reduced using the ODR, under section 44 of the FBTAA, where the employees are at the client location for a cumulative period of no more than 140 days? | Summary: The taxable value of the property fringe benefit can be reduced using the ODR under section 44 of the FBTAA, where the employees are at the client location for a cumulative period of no more than 140 days. The taxable values are reduced to the extent that the employees would have been entitled to a one-off deduction. | Detailed Reasoning - Detailed reasoning: Employees staying at a client location for a cumulative period of no more than 140 days during an FBT year are not covered by the guidance provided in Practical Compliance Guideline PCG 2021/3: Determining if allowances or benefits provided to an employee relate to travelling on work or living at a location (PCG 2021/3) | Detailed Reasoning - Practical Compliance Guideline 2021/3: Under PCG 2021/3, the Commissioner will accept that an employee is travelling on work and will generally not apply compliance resources to determine if benefits received relate to expenses for living at a location when all the following circumstances are satisfied: Table 1: Acceptable conditions for benefits received | Detailed Reasoning - The employee: • provides an allowance to an employee or pays or reimburses accommodation and food and drink expenses for the employee • does not provide the reimbursement or payment as part of a salary-packaging arrangement and the employee is not given the option to elect to receive additional remuneration in lieu • includes the travel allowance on the employee's payment summary or income statement and withholds tax, where appropriate, and • obtains and retains the relevant documentation to substantiate the fact that all of these circumstances are met. • is away from their normal residence for work purposes • does not work on a fly-in fly-out or drive-in drive-out basis • is away at the same work location for no more than 21 calendar days at a time continuously • is away at the same work location for no more than 90 calendar days in total in an FBT year, and • must return to their normal residence as soon as practicable when their period away ends. While the Commissioner accepts that an employee is travelling on work when the length of stay is no more than 90 calendar days in total for travel to the same work location in an FBT year (paragraphs 12 and 13 of PCG 2021/3), this does not necessarily mean that if the length of stay exceeds 90 days an employee is living at a location. Paragraph 4 of PCG 2021/3 states: Where an employee is eligible to reply on the Guideline, and does so, they are not required to determine definitively if an employee is living away from their normal residence or not. If an employer is outside the terms of the compliance approach in this Guideline, this should not be construed as meaning that the employee is living at a location. ATO officers will not approach this Guideline as imposing a 'bright line' to this effect - the matters set out in TR 2021/4 would need to be considered to reach a conclusion. Paragraph 42 of TR 2021/4 provides guidance for determining whether an employee is living at a location away from their usual residence. 42. The following factors would support a characterisation of an employee as living at a location away from their usual residence: • there is change in the employee's regular place of work • the length of the overall period the employee will be away from their usual residence is a relatively long one • the nature of the accommodation is such that it becomes their usual residence • whether the employee is, or can be, accompanied by family or visited by family and friends. In this instance, the period the employees are typically away from their usual residence is a period of no more than 140 days. As such, this period is not considered a short length of time to be away from their usual place of residence. However, the length of stay is not determinative in this case. A key factor is that the employees regular place of employment does not change. Paragraph 45 of TR 2021/4 outlines that where there is a change in the employee's regular place of work and the employee incurs accommodation and meal expenses to be closer to their new regular place of work, the employee will be living at that new location away from their usual residence and the expenses incurred will be living expenses, and therefore not deductible. In this case, as discussed under General Principals, there is no change in the employees' regular place of work. Employees are required to check out of their hotel style accommodation and return to their usual place of work every week if travelling interstate and, on average, every fortnight when travelling internationally. The Company requires that the employees travel to client locations due to resourcing requirements at the project location. When these projects end, the employee will either return to their primary workplace, being their regular place of work, be assigned to a new project in another city, or, rarely, be assigned to a new project in the same city. Paragraph 48 of TR 2021/4 explains that the 'length of period away' means the overall period of time the employee spends living at a particular location for work. Paragraph 49 explains that the longer an employee spends away from their usual residence for work, the more likely the employee is living at the location. As the employees return to the regular place of work and their usual residence weekly if travelling interstate and, on average, fortnightly when travelling internationally, it is considered that the overall period that the employees are at a location is a relatively short one, even when the cumulative stay is 140 days. Employees are required to check out of their hotel style accommodation and take their belongings with them. When they return to the client location there is no guarantee that they will be returning to the same hotel room or even the same hotel. The nature of the travel is considered travel on work and not living at a location. | Detailed Reasoning - Conclusion: Having regard to the elements of section 8-1 of the ITAA 1997, the employees' food and drink expenses, had they incurred these expenses themselves, would have been incurred in the course of their gaining or producing their assessable income. It is considered that the Employees are 'travelling on work' on cumulative stays of up to 140 days. Furthermore, in considering the factors outlined in TR 2021/4, the employees would not have incurred the food and drink expense because of their personal circumstances or due to living at a location away from their residence or having relocated from their usual residence. Therefore, the food and drink expense would be deductible to the employees under section 8-1 of the ITAA 1997 had they incurred the expense themselves. Therefore, the ODR will apply to reduce the taxable value of the benefit of food and drink provided to employees. | Detailed Reasoning - Question 4: Do the reimbursed amounts for accommodation that are paid for using a corporate credit card, give rise to residual benefits under section 45 of the FBTAA? | Summary: Accommodation provided to employees while travelling on work constitute a residual benefit for the purposes of section 45 of the FBTAA. As all the requirements of a fringe benefit have been met, a residual fringe benefit will arise. | Detailed Reasoning - Is the provision of accommodation a Housing Benefit?: A housing benefit arises where an employee or an associate is granted a lease or licence to occupy employer provided premises as their usual place of residence. The Commissioner considers that generally an employee is living away from their usual place of residence where, the employee would have continued to live in a particular place, but for having to change residence in order to work temporarily for the employer at another locality and expects to return to that place when the temporary period is over. Therefore, in this instance as the employee maintains their usual place of residence and returns there when the travel has ceased, the benefit cannot be a housing benefit. | Detailed Reasoning - Residual fringe benefits: A benefit provided by an employer (or associate or third party, in certain circumstances) to an employee, in respect of the employment of the employee that is not a benefit by virtue of a provision of Subdivision A of Divisions 2 to 11 of the FBTAA is called a 'residual benefit'. As discussed under General Principals, the Company does not provide the benefit of accommodation to members of the public as part of their business activities. Furthermore, the benefits of accommodation are provided in relation to a period exceeding one day. Therefore, the benefit of accommodation provided is an 'external period residual fringe benefit'. | Detailed Reasoning - Is the benefit an exempt residual fringe benefit?: Subsection 47(5) of the FBTAA provides that accommodation provided by an employer to an employee can be an exempt benefit where: (a) a residual benefit consisting of the subsistence, during a year of tax, of a lease or licence in respect of a unit of accommodation is provided to an employee of an employer in respect of his or her employment; and (b) the unit of accommodation is for the accommodation of eligible family members and is provided solely because the duties of that employment require the employee to live away from his or her normal residence; and (ba) the employee satisfies: (i) sections 31C (about maintaining an Australian home) and 31D (about the first 12 months); or (ii) section 31E (about fly-in fly-out and drive-in drive-out requirements); and (c) the accommodation is not provided while the employee is undertaking travel in the course of performing the duties of that employment (d) any of the following conditions is satisfied: (i) subsection (7) applies in relation to the provision of transport for the employee in connection with travel in the period in the year of tax when the lease or licence subsisted, being travel between the employee's usual place of residence and the employee's usual place of employment; (ii) if the employee satisfies sections 31C and 31D--the employee gives to the employer, before the declaration date, a declaration, in a form approved by the Commissioner, purporting to set out the matters in subparagraphs 31F(1)(a)(i) to (iii); (iii) if the employee satisfies section 31E--the employee gives to the employer, before the declaration date, a declaration, in a form approved by the Commissioner, purporting to set out the matters in subparagraphs 31F(1)(b)(i) to (iii); In this case, employees are provided the accommodation while the employee is undertaking travel in the course of performing the duties of their employment. There is no evidence to suggest that the employees are receiving exempt external period residual fringe benefits. | Detailed Reasoning - Conclusion: The employees are receiving an external period residual benefit. | Detailed Reasoning - Question 5: Can the taxable value of the residual benefits (in relation to the accommodation) be reduced using the ODR, under section 52 of the FBTAA? | Summary: The ODR in section 52 of the FBTAA applies to accommodation expenses paid for in respect of employees. | Detailed Reasoning - Detailed reasoning: The benefit of accommodation expenses is a residual fringe benefit under section 45 and subsection 136(1) of the FBTAA. The reasoning outlined at Question 3 in relation to the application of the ODR to the benefit of food and drink expenses would apply in an analogous way to the employees' accommodation expenses covered by this question. Therefore, the ODR in section 52 of the FBTAA would apply and reduce the taxable value of the residual fringe benefit. | Detailed Reasoning - Question 5a: Can the taxable value of the residual benefits (in relation to the accommodation) be reduced using the ODR, under section 52 of the FBTAA, where the employees are at the client location for a cumulative period of no more than 140 days? | Summary: The taxable value of the property fringe benefit can be reduced using the ODR under section 52 of the FBTAA, where the employees are at the client location for a cumulative period of no more than 140 days. The taxable values are reduced to the extent that the employees would have been entitled to a one-off deduction. | Detailed Reasoning - Detail reasoning: The reasoning outlined at Question 3a in relation to the application of the ODR to the benefit of food and drink expenses would apply in an analogous way to the employees' accommodation expenses covered by this question. Therefore, the ODR in section 52 of the FBTAA would apply and reduce the taxable value of the residual fringe benefit provided by way of accommodation on employee stays at a client location for a cumulative period if no more than 140 days. | Detailed Reasoning - Question 6: Do the reimbursed amounts for transport that are paid for using a corporate credit card, give rise to residual benefits under section 45 of the FBTAA? | Summary: Transport provided to employees while travelling on work constitute a residual benefit for the purposes of section 45 of the FBTAA. As all the requirements of a fringe benefit under subsection 136(1) are met, a residual fringe benefit will arise. | Detailed Reasoning - Detailed reasoning: A benefit, as defined under subsection 136(1) of the FBTAA includes any right, privilege, service or facility provided under an arrangement for, or in relation to, the performance of work. It is considered that the amounts paid for transport, that are paid for either by the employee using a corporate credit card and reimbursed by the employer, or directly through the Company's corporate account, constitutes a benefit. A benefit provided by an employer (or associate or third party, in certain circumstances) to an employee, in respect of the employment of the employee that is not a benefit by virtue of a provision of Subdivision A of Divisions 2 to 11 of the FBTAA is called a 'residual benefit'. As discussed under Question 4, the Company does not provide the benefit of travel (transport, accommodation, food and drink) to members of the public as part of their business activities. Furthermore, the benefit of transport is provided in relation to a period not exceeding one day. Therefore, the transport provided is an 'external non-period residual fringe benefit'. However, an external non-period fringe benefit will only arise where the transport is provided in respect of the employment of the employee. The phrase 'in respect of' is defined in subsection 136(1) to include by reason of, by virtue of, or for or in relation directly or indirectly to, the employment of the employee. A causal relationship between the property benefit and employment is not sufficient despite the extension to the meaning of 'in respect of' in subsection 148(1) of the FBTAA. Instead, what must be established is that there is a sufficient or material, rather than a causal, connection or relationship between the benefit and the employment (J & G Knowles & Associates v FC of T 2000 ATC 4151; [2000] FCA 196). In the current circumstances, transport is either being purchased by employees using a corporate credit card or using the Company's corporate account to enable the employees to travel to client locations. If it were not the employment relationship between the Company and the employees, the employees would not receive the benefit. As discussed above, section 150 of the FBTAA provides that where an employee or an associate of the employee acquires a benefit on credit by using a credit card issued to the employer or an associate of the employer, the benefit is considered to have been provided under an arrangement between the employer, the associate of the employer, and the person who provided the recipient with the benefit. The transport purchased with the corporate credit card is provided by the Company to the employee. Therefore, the transport purchased using either a corporate credit card or the Company's corporate account constitutes an external non-period residual benefit as defined under subsection 136(1). | Detailed Reasoning - Question 7: Can the taxable value of the residual benefits (in relation to the transport) be reduced using the ODR, under section 52 of the FBTAA? | Summary: The ODR in section 52 of the FBTAA applies to relation expenses paid for in respect of employees. | Detailed Reasoning - Detailed reasoning: Employees are provided transport and airfares by the Company while travelling on work. The benefit of travel expenses such as flights and other transport expenses (transport expenses) is a residual fringe benefit under section 45 and subsection 136(1) of the FBTAA. These benefits are external non-period residual fringe benefits. The taxable value of these benefits is calculated in accordance with section 50 of the FBTAA. This taxable value will be reduced where the ODR in subsection 52(1) of the FBTAA applies. The relevant conditions in subsection 52(1) of the FBTAA are considered below. | Detailed Reasoning - Paragraph 52(1)(a): For the ODR to apply, the recipient of the benefit of transport expenses must be an employee of the employer. That condition is satisfied in the circumstances covered by this question. | Detailed Reasoning - Paragraph 52(1)(b): For the ODR to apply, a once-only deduction must have been allowable to the employee under either the ITAA 1936 or ITAA 1997. Where an employee incurs unreimbursed transport expenses, they may be entitled to a deduction under section 8-1 of the ITAA 1997. | Detailed Reasoning - Application of section 8-1 of the ITAA 1997: TR 2021/1 considers the deductibility of employee transport expenses in a range of common circumstances. Where the occasion of transport expenses can be found in the employee's employment duties, the expenses will be incurred in gaining or producing the employee's assessable income. Where there is a close connection between a journey and the employee's private or domestic life is a strong indication that the journey occurs outside of the employee's income-producing activity and is not deductible. For example, with limited exceptions, an employee's costs of travelling between home and a regular place of work are not deductible. This expenditure is regarded as a prerequisite to earning an employee's assessable income and is private in nature. Conversely, if the duties of employment require that the employee travels from their home to somewhere other than the employee's regular place of work (known as an 'alternative work location'), the costs of such travel may be deductible. This is because the costs of such travel can be characterised as being incurred in the course of gaining or producing the employee's assessable income. It is therefore necessary to determine whether travel by the employees to the client location was travel to an alternative work location, rather than from home to a regular place of work. | Detailed Reasoning - Are the client business locations an alternative work location other than a regular place of work?: Most employees have a regular place of work, being a usual or normal place where the employee starts and finishes their work duties with a particular employer. As outlined above, where the duties of employment require that the employee travel from their home to somewhere other than the employee's regular place of work, that location other than the regular place of work will be an alternative work location. In some employment arrangements there may be more than one regular workplace established. A second or subsequent place of work would be a regular place of work if it is also a normal or routine place where the employee works, such that travelling between there and the employee's home is better characterised merely as part of the necessity of travelling to and from work. In most cases, identifying an employee's regular place of work is clear. In circumstances where it is not clear, it may be necessary to consider in more depth the contract of employment, customary practice, the nature of the work duties, where these duties commence and at what point in time the employee is under the direction and control of their employer in order to determine where the employee's regular place of work is. | Detailed Reasoning - Contract of employment: Employees are bound by their employment terms and conditions. The terms and conditions provided by the Company state the following: Information supplied | Detailed Reasoning - Customary practice: There is no information to suggest that there were customary practices which would indicate that the client's business locations were the Company employees' regular places of work. | Detailed Reasoning - Nature of the work duties: Where the nature of the employment requires an employee to travel away from home overnight, for purposes explained by their employment and not because of where they have chosen to live, the transport expenses incurred in travelling to the alternative work location will be incurred in the course of gaining or producing the employee's assessable income. This is explained by Example 6 of TR 2021/1. In that example, Duy has a regular place of work in Rockhampton and in the performance of his duties, travel is undertaken to an alternative destination in Brisbane which is not a regular place of work. Duy is required by the specific requirements of his role to carry out his duties of employment both in Rockhampton and Brisbane. The travel to Brisbane is not attributable to Duy's choice to live in Rockhampton or do part of his job in Brisbane. As a result, the transport expenses are incurred in gaining or producing Duy's assessable income and are deductible. In this case, travel is a regular component of the employees' duties, as stated in the employment terms and conditions. Like Duy in Example 6 of TR 2021/1, the employees have a regular place of work, for example, at the Company's office location and they return to this location after travel. In the performance of their duties, the employees travelled to the client's business location which are alternative destinations that were not established as secondary work locations of any permanence. Travel is a regular component of the employee's duties | Detailed Reasoning - Level of direction and control of the employer: The employees are bound by the terms and conditions of their employment. Travel to client business locations is an expectation of the role and employees remain under the direction and control of the Company when undertaking travel including being bound by the Company's employee code of conduct. Travel is undertaken at the request and direction of the Company in accordance with client demands. This travel is undertaken both interstate and internationally for periods less than X months, with a typical timeframe of X to X months. Employees are directed to return to their regular the Company office location every X for staff travelling interstate and X, X, X or X for staff on international travel, depending on the time it takes to return from the client location. | Detailed Reasoning - Conclusion - alternative place of work: In circumstances where identifying an employee's regular place of work is not clear, it is necessary to consider the factors detailed above to determine where the employee's regular place of work is. Having regard to the factors above, it is evident that the employees travel to varying client business locations is a requirement of the role and not due to these locations being a regular place of work. As such, the client locations are not the employees' regular place of work, but rather are alternative work locations. Additionally, when an employee is working at a new client location in the same city as a previous client location, each client location is a separate work location and is considered an alternative workplace. | Detailed Reasoning - Are the transport expenses incurred in gaining or producing assessable income?: It is now necessary to determine whether the transport expenses are incurred in gaining or producing assessable income. While transport expenses will only be deductible if they satisfy the requirements of section 8-1 of the ITAA 1997, the following factors would be relevant in determining whether the transport expenses are incurred in gaining or producing assessable income: • the travel fits within the duties of employment, that is, the obligation to incur transport expenses arises out of the employment itself and not the employee's personal circumstances • the travel is relevant to the practical demands of carrying out the work duties, that is, the transport expenses are a necessary consequence of the employee's income-producing activity • the employer asks for the travel to be undertaken • the travel occurs on work time • the travel occurs when the employee is under the direction and control of the employer. These factors need to be considered in the context of both the form and substance of the specific employment arrangement. No single factor on its own will necessarily support a conclusion that an expense is deductible. | Detailed Reasoning - The travel fits within the duties of employment: Travel to client's business locations is a regular component of the employee's employment duties. The employees are directed to travel to client business locations as required by work demands. As such, the obligation to incur transport expenses arose out of the employment itself and not the employees' personal circumstances. | Detailed Reasoning - The travel is relevant to the practical demands of carrying out the work duties: All travel is at the request and direction of the Company and is in accordance with client demands in respect of the projects that the employees are assigned to work on. Employees are required to be away from their usual residence for a period up to X months, but typically X to X months, with frequent return trips to their usual the Company office location and usual residence. There is no evidence to suggest that the requirement to travel is created other than by the nature of the employee's employment. | Detailed Reasoning - The employer asks for the travel to be undertaken: It is accepted that the employees were asked to undertake the travel, being travel to an alternative work location, in the course of their employment. | Detailed Reasoning - The travel occurs on work time or when employee is under the direction of the employer: In John Holland Pty Ltd v Commissioner of Taxation [2015] FCAFC 82 ( John Holland ), Edmonds J concluded that the travel undertaken by the employees was in the course of employment. Edmonds J concluded that Perth airport was the point at which the employee's duties and remuneration for performance of those duties commenced and ceased. He found that from the time the relevant employees checked in at Perth airport, they were travelling in the course of their employment, subject to the direction of their employer. He also said that John Holland employees were being paid for their travel time. | Detailed Reasoning - Conclusion - transport expenses: Having regard to these factors from TR 2021/1 and the requirements of section 8-1 of the ITAA 1997, it is evident they would support a characterisation of the transport expenses as having been incurred by the employees in gaining or producing their assessable income. The employees are undertaking travel in the course of their employment duties when they travel to client business locations, such that they will be 'travelling on work' and the transport expenses would be deductible to them under section 8-1 of the ITAA 1997. As a result, the ODR in section 52 of the FBTAA would apply to reduce the taxable value of the benefit of the transport expenses provided to employees. | Detailed Reasoning - Question 7a: Can the taxable value of the residual benefits (in relation to the transport) be reduced using the ODR, under section 52 of the FBTAA, where the employees are at the client location for a cumulative period of no more than 140 days? | Summary: The ODR in section 52 of the FBTAA applies to transport expenses paid for in respect of employees. | Detailed Reasoning - Detailed reasoning: The reasoning outlined at Question 3a in relation to the application of the ODR to the benefit of food and drink expenses would apply in an analogous way to the employees' transport expenses covered by this question. Therefore, the ODR in section 52 of the FBTAA would apply and reduce the taxable value of the residual fringe benefit provided by way of transport on employee stays at a client location for a cumulative period of no more than 140 days.