Private ruling: Fringe benefits tax
Published: May 2014
Ruling period: 1 April 2011 to 31 March 2012 | 1 April 2012 to 31 March 2013 | 1 April 2013 to 31 March 2014
Date scheme commenced: The scheme has commenced

Ruling: Q1: For each of the itemised expenses for which the employee claims a reimbursement or payment in Scenario 1, which items are exempt from fringe benefits tax (FBT) under the provisions of Division 13 (Miscellaneous exempt benefits) or Division 14 (Reduction of taxable value of miscellaneous fringe benefits) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)? | A1: (a) Furniture removalist fees of $4,000 - exempt in terms of section 58B (b) Family meal expenses of $300 (i.e. lunch/dinner incurred during a visit to the new work location as part of the search for suitable accommodation) - exempt in terms of section 58F (c) (i) Connection/reconnection fees for electricity, gas, water and telephone services of $400 (the amount for water supply is less than $300) - electricity, gas and telephone are exempt in terms of section 58D; the benefit for water supply is an exempt minor benefit in terms of section 58P (d) A rental bond of $1,200 (to be refunded when the lease expires/terminates) - this is a fringe benefit in respect of the 12 month lease - see the reasons for decision below (e) School uniform costs of $400 - this is a fringe benefit (f) $3,600 for temporary accommodation for the initial two months at the new work location (during the period of searching for suitable long-term rental accommodation) - the taxable value of this fringe benefit is nil in terms of section 61C (g) A Relocation Allowance of $1,000 is also paid of which $400 is used for a repair to a sofa which was damaged during the move to the new work location - the Relocation Allowance is subject to pay as you go withholding provisions under Division 12 of the Taxation Administration Act 1953 (TAA) - see the reasons for decision below (h) Sofa repair $400 - this is a fringe benefit | Q2: For each of the itemised expenses for which the employee claims a reimbursement or payment In Scenario 2, which items are exempt from fringe benefits tax (FBT) under the provisions of Division 13 (Miscellaneous exempt benefits) or Division 14 (Reduction of taxable value of miscellaneous fringe benefits) of the FBTAA? | A2: (a) Furniture removalist fees of $4,000 - exempt in terms of section 58B (b) Family meal expenses of $310 (i.e. lunch/dinner incurred during a visit to the new work location as part of the search for a new home) - exempt in terms of section 58F (c) $480 for 600 kilometres travelled during a visit to the new work location (paid at 60 cents per kilometre) - this is a fringe benefit (d) Connection/reconnection fees for electricity, gas, water and telephone services of $400 (the amount for water supply is less than $300) - electricity, gas and telephone are exempt in terms of section 58D; the benefit for water supply is an exempt minor benefit in terms of section 58P (e) School uniform costs of $400 - this is a fringe benefit (f) $3,600 for temporary accommodation for the initial two months at the new work location (during the period when searching for a new home) - the taxable value of this fringe benefit is nil in terms of section 61C (g) Sale of residence 14 months after the new employment day - solicitor's fees ($1,000), commission and advertising charges ($10,000) plus mortgage discharge and associated administrative fees ($1,000) - exempt in terms of section 58C (h) Purchase of residence - solicitor's fees ($1,000), stamp duty ($20,000) plus mortgage registration and associated bank fees ($1,000) - exempt in terms of section 58C | Q3: For each of the itemised expenses for which the employee claims a reimbursement or payment In Scenario 3, which items are exempt from fringe benefits tax (FBT) under the provisions of Division 13 (Miscellaneous exempt benefits) or Division 14 (Reduction of taxable value of miscellaneous fringe benefits) of the FBTAA? | A3: (a) Furniture removalist fees of $4,000 - exempt in terms of section 58B (b) Family meal expenses of $250 (i.e. lunch/dinner incurred during a visit to the new work location as part of the search for a new home) - exempt in terms of section 58F (c) $60 for petrol used during the visit to the new work location as part of the search for a new home - exempt in terms of section 58F (d) Connection/reconnection fees for electricity, gas, water and telephone services of $400 (the amount for water supply is less than $300) - electricity, gas and telephone are exempt in terms of section 58D; the benefit for water supply is an exempt minor benefit in terms of section 58P (e) School uniform costs of $250 - this is an exempt minor benefit in terms of section 58P (f) $3,600 for temporary accommodation for the initial two months at the new work location (during the period when searching for a new home) - the taxable value of this fringe benefit is nil in terms of section 61C (g) Sale of residence more than 2 years after the new employment day - solicitor's fees ($1,000), commission and advertising charges ($10,000) plus mortgage discharge and associated administrative fees ($1,000) - this is a fringe benefit (h) Purchase of residence - solicitor's fees ($1,000), stamp duty ($20,000) plus mortgage registration and associated bank fees ($1,000) - this is initially exempt in terms of section 58C in the 2011-2012 FBT year but when the sale of the employee's original residence does not take place within 2 years after the new employment day a benefit of an equivalent amount becomes a fringe benefit in the 2013-2014 FBT year (i) A Relocation Allowance of $1,000 - this is subject to pay as you go withholding provisions under Division 12 of the TAA | Q4: For each of the itemised expenses for which the employee claims a reimbursement or payment In Scenario 4, which items are exempt from fringe benefits tax (FBT) under the provisions of Division 13 (Miscellaneous exempt benefits) or Division 14 (Reduction of taxable value of miscellaneous fringe benefits) of the FBTAA? | A4: (a) Furniture removalist fees of $3,000 - exempt in terms of section 58B (b) Meal expenses of $200 (i.e. lunch/dinner incurred during a visit to the new work location as part of the search for suitable accommodation) - exempt in terms of section 58F (c) $1,000 for temporary accommodation for two weeks at the new work location (whilst searching for permanent accommodation) - is partly included in the taxable value of the fringe benefit - see the reasons for decision (d) A rental bond of $1,200 in respect of a 12 month lease (to be refunded when the lease expires/terminates) - this is a fringe benefit Issue 2 | Q5: For any non-exempt FBT items, if the cost is under $300 could it be considered exempt from FBT under the minor benefit provisions of section 58P of the FBTAA? | A5: Generally no, it depends upon the circumstances in each instance. See the reasons for decision.


Relevant legislative provisions: Fringe Benefits Tax Assessment Act 1986 Section 17 | Subsection 17(4) | Paragraph 17(4)(c) | Section 20 | Section 22 | Subsection 22(c) | Section 58B | Subsection 58B(1) | Section 58C | Subsection 58C(1) | Subsection 58C(2) | Subsection 58C(3) | Subsection 58C(5) | Section 58D | Subsection 58D(1) | Subparagraph 58D(1)(e)(ii) | Subparagraph 58D(1)(e)(iii) | Subsection 58D(2) | Subparagraph 58D(2)(e)(ii) | Section 58F | Subparagraph 58F(c)(i) | Section 58P | Subsection 58P(1) | Paragraph 58P(1)(e) | Paragraph 58P(1)(f) | Section 61B | Section 61C | Sub-subparagraph 61C(1)(a)(i)(A) | Paragraph 61C(1)(b) | Paragraph 61C(1)(d) | Paragraph 61C(1)(e) | Paragraph 61C(3)(a) | Subparagraph 61C(3)(b)(ii) | Subparagraph 61C(3)(c)(i) | Subparagraph 61C(3)(c)(iv) | Section 62 | Section 136 | Subsection 136(1) | Section 143A | Paragraph 143A(a)(ii) | Paragraph 143A(c)(iii) | Paragraph 143A(d)(iii) | Subsection 143A(e) | Subsection 143A(f) | Subsection 143A(g) | Income Tax Assessment Act 1997 Section 15-2 | Section 26-30 | Section 28-13 | Taxation Administration Act 1956 Subsection 12-1(3)

Reasons for decision: Summary: All legislative references are to provisions of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) unless otherwise specified. | Summary: The relocation expenses reimbursed to the employee have been examined in detail below and the decision on each is as follows: (a) Furniture removalist fees of $4,000 are an exempt benefit in terms of section 58B; (b) Family meal expenses of $300 are an exempt benefit in terms of section 58F; (c) Connection/re-connection fees for electricity, gas, water and telephone services of $400 are an exempt benefit in terms of section 58D with respect to the amount attributable to electricity, gas and telephone connection/re-connection while the amount attributable to water connection/re-connection is an exempt minor benefit in terms of section 58P; (d) Rental bond of $1,200 is in respect of both the short-term lease period of two months and the long-term lease of 12 months and thereby falls under two provisions as follows: a. short-term lease - the rental bond is an exempt benefit in terms of section 17; b. long-term lease - the rental bond is a fringe benefit (e) School uniform costs of $400 is a fringe benefit; (f) $3,600 for temporary accommodation for the initial two months at the new work location has a nil taxable value in terms of section 61C; (g) Relocation Allowance of $1,000 is assessable income of the employee in terms of section 15-2 of the ITAA 1997. It is subject to pay as you go withholding provisions under Division 12 of the TAA; and (h) Sofa repair $400 is an expense payment benefit which is a fringe benefit in the year of tax. | Detailed Reasoning - Detailed reasoning: Relocation expenses come within the terms of miscellaneous exempt benefits in Division 13 or the reduction of taxable value of miscellaneous fringe benefits in Division 14 as follows: (a) Furniture removalist fees of $4,000 Section 58B in Division 13 exempts from fringe benefits tax the benefits in relation to removals and storage of household effects as a result of relocation. This is subject to a number of conditions as set out in subsection 58B(1) being met. Those conditions are: • the benefit is an expense payment benefit where the recipient's expenditure is in respect of the removal or storage of household effects of the employee - subparagraph58B(1)(a)(i); • the removal or storage is required solely because the employee is required to change their usual place of residence in order to perform the duties of that employment - subparagraph 58B(1)(b)(iii); • the removal or storage is required to enable a family member to take up residence, or to continue to reside, at the employee's new usual place of residence - subparagraph 58B(1)(c)(iii); • the removal takes place, or the storage commences to be provided, within 12 months after the day on which the employee commenced to perform the duties of that employment at the employee's new place of employment and the benefit is not provided under a non-arm's length arrangement - subparagraphs 58B(1)(d)(i) & (ii); • documentary evidence of the recipient's expenditure is obtained by the recipient and that documentary evidence, or a copy is given to the employer before the declaration date - paragraph 58B(1)(e); and • the removal or storage was not provided in connection with travel undertaken by the employee in the course of performing the duties of that employment - paragraph 58B(1)(f). Note: The term "family member" as given in subsection 136(1) means:- (a) the employee (b) the spouse of the employee; and (c) a child of the employee. As these conditions are met the benefit (being reimbursement of furniture removalist fees of $4,000) is an exempt benefit in relation to the year of tax. (b) Family meal expenses of $300 (i.e. lunch/dinner incurred during the abovementioned visit) Section 58F exempts from fringe benefits tax a "benefit in respect of relocation transport". Section 143A also deals with relocation transport and that provision specifies the conditions to be met in order for a benefit to be treated as a "benefit in respect of relocation transport". The relevant conditions in section 143A are: • an expense payment benefit where the recipient's expenditure is in respect of the provision of transport, or meals or accommodation in connection with transport - paragraph 143A(a)(ii); • the transport, meals or accommodation is for a family member - subsection 143A(b); • the transport is required solely because the employee is required to change their usual place of residence in order to perform the duties of that employment - paragraph 143A(c)(iii); • the transport is provided to enable a family member to take up residence at the employee's new usual place of residence - paragraph 143A(d)(iii); • if the transport is for the spouse or a child, of the employee it is not provided to enable the spouse or child to accompany the employee while the employee is performing the duties of employment nor is it within the terms of section 26-30 of the ITAA 1997 - subsection 143A(e); • if the transport is for the employee it is not provided while the employee is undertaking travel in the course of performing the duties of that employment - subsection 143A(f); and • the benefit is not provided under a non-arm's length arrangement - subsection 143A(g). All of these conditions are met. Therefore the benefit shall be taken to be in respect of relocation transport. Section 58F provides that a relocation transport benefit is an exempt benefit where the following conditions are met: • it is an expense payment benefit - subsection 58F(a); • the benefit is in respect of relocation transport - subsection 58F(b); and • in the case of an expense payment benefit the benefit is not a reimbursement in respect of an amount of Division 28 car expenses incurred by the recipient in relation to a car owned or leased by the employee being a reimbursement calculated by reference to the distance travelled by the car; and 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 - paragraphs 58B(c)(i) & (ii). Note: Division 28 of the ITAA 1997 sets out the rules for working out deductions for car expenses. The meaning of car expenses is given in section 28-13 of the ITAA 1997. As these conditions are met the benefit (being family meal expenses of $300) is an exempt benefit in relation to the year of tax. (c) Connection/re-connection fees for electricity, gas, water and telephone services of $400 where the amount for the water supply is less than $300. Section 58D exempts from fringe benefits tax a benefit in relation to the connection or re-connection of certain utilities as a result of relocation. Subsection 58D(1) contains a provision relating to the telephone service while subsection 58D(2) relates to gas or electricity. There is no provision which exempts benefits related to the connection or re-connection of the water supply. However, this is an exempt minor benefit in terms of section 58P See the discussion of non-exempt FBT items at Issue 2 Question 1 below. | Detailed Reasoning - Telephone: Subsection 58D(1) applies to telephone services where the benefit provided is in respect of a year of tax in respect of the employment of an employee. Where: • the benefit is an expense payment benefit and the recipient's expenditure is in respect of the act of connecting or re-connecting a telephone service to a unit of accommodation - subparagraph 58D(1)(a)(i). • the unit of accommodation is for the accommodation of family members - paragraph 58D(1)(b); • the accommodation is required solely because the employee is required to change their usual place of residence in order to perform the duties of their employment - subparagraph 58D(1)(c)(ii); • documentary evidence of the recipient's expenditure is obtained by the recipient and that documentary evidence, or a copy is given to the employer before the declaration date - paragraph 58D(1)(d); • the telephone service is connected or re-connected not later than 12 months after the day on which the employee commenced to perform the duties of that employment at the employee's new place of employment; 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; and the benefit was not provided under a non-arm's length arrangement. subparagraphs 58D(1)(e)(i), (ii) & (iii). As these conditions are met the benefit (being reimbursement of the cost of telephone connection or re-connection) is an exempt benefit in relation to the year of tax. | Detailed Reasoning - Gas or electricity: Subsection 58D(2) applies to gas or electricity supply where the benefit is provided is in respect of a year of tax in respect of the employment of an employee. Where: • the benefit is an expense payment where the recipient's expenditure is in respect of the act of re-connecting gas or electricity to a unit of accommodation - subparagraph 58D(2)(a)(i). • the unit of accommodation is for the accommodation of family members - paragraph 58D(2)(b); • the accommodation is required solely because the employee is required to change their usual place of residence in order to perform the duties of their employment - subparagraph 58D(2)(c)(ii); • documentary evidence of the recipient's expenditure is obtained by the recipient and that documentary evidence, or a copy, is given to the employer before the declaration date - paragraph 58D(2)(d) • the gas or electricity supply is re-connected not later than 12 months after the day on which the employee commenced to perform the duties of that employment at the employee's new place of employment; and the benefit was not provided under a non-arm's length arrangement - subparagraph 58D(2)(e)(i) & (ii). As these conditions are met the benefit (being reimbursement of the cost of gas or electricity re-connection) is an exempt benefit in relation to the year of tax. | Detailed Reasoning - Water: There is no provision which exempts benefits related to the connection or re-connection of the water supply. However, this is an exempt minor benefit in terms of section 58P. See the discussion of non-exempt FBT items at Issue 2 Question 1 below. (d) A rental bond of $1,200 (to be refunded when the lease expires/terminates) In this scenario there are two different periods of rental accommodation, one is a short term rental period of 2 months, and the other is a long term rental period of 12 months. (i) Short term rental accommodation It is stated in the above facts for this scenario that "temporary rental accommodation" is utilised for the initial two months at the new location pending long term accommodation being found. Accordingly where the loan relates to a rental bond in connection with that short-term rental accommodation section 17 in Division 4 is a relevant provision. Section 17 exempts from fringe benefits tax a benefit in relation to a loan for the purpose of paying deposits such as a rental bond. Subsection 17(4) provides that a loan for such a purpose will be an exempt loan where specified conditions are met. The conditions are: • the making of the loan consisting of the advance by the employer to the employee constitutes a benefit in respect of the employment of the employee in respect of the year of tax - paragraph 17(4)(a); • the sole purpose of the making of the loan is to enable the employee to pay a rental bond in respect of accommodation - subparagraph 17(4)(b)(i): • the employee is required to repay the loan not later than 12 months after the loan is made - paragraph 17(4)(c) (Note: This condition is met because the lease is for two months only.); • a benefit is provided in any year of tax to the employee in respect of that employment as an expense payment benefit where the recipient's expenditure is in respect of a lease or licence in respect of that accommodation - subparagraph 17(4)(d)(i); and • the benefit referred to at the dot point immediately above is a fringe benefit in relation to the year of tax and, under section 61C, the taxable value of the fringe benefit is reduced by the extent to which that taxable value is attributable to the subsistence of a lease or licence in respect of the accommodation during a particular period in that year of tax -subparagraph 17(4)(e)(ii). (Note: The relevant provisions in section 61C are sub-subparagraph 61C(1)(a)(i)(A), paragraph 61C(1)(b), paragraph 61C(1)(d), paragraph 61C(1)(e), paragraph 61C(3)(a) subparagraph 61C(3)(b)(ii), subparagraph 61C(3)(c)(i) and subparagraph 61C(3)(c)(iv). All of those provisions are met so that the "attributable percentage" in paragraph 61C(3)(c) is 100% and thus the taxable value of the benefit is nil. See a full discussion of these provisions which appears below in question 1(f) about a payment for temporary accommodation.) As the condition listed at each dot point is met the benefit (being a loan for the purpose of paying a rental bond in respect of short term rental accommodation for two months) is an exempt benefit in relation to the year of tax. (ii) Long term rental accommodation Where the loan was for the purpose of paying a rental bond in respect of long term accommodation for a lease period of 12 months the condition in paragraph 17(4)(c) that the loan must be repaid not later than 12 months after the loan is made would not be met. This means that this essential condition necessary for the section 17 exemption to apply cannot be satisfied. Therefore the benefit (being a loan for the purpose of paying a rental bond in respect of long term rental accommodation of 12 months) is the provision of a fringe benefit in relation to the year of tax. (e) School uniform costs of $400 This is an expense payment fringe benefit in terms of section 20. There is no exemption in the legislation for this fringe benefit. The payment is the provision of a fringe benefit in relation to the year of tax. (f) $3,600 for temporary accommodation for the initial two months at the new work location (during the period of searching for suitable long-term rental accommodation) Section 61C in Division 14 concerns the reduction of the taxable value of the benefit for temporary accommodation relating to relocation. The relevant conditions set down in section 61C in order for that provision to apply so that the taxable value is reduced to nil are: • the fringe benefit provided is an expense payment fringe benefit where the recipient's expenditure is in respect of a lease or licence in respect of a unit of accommodation occupied or used for the temporary accommodation of family members - sub-subparagraph 61C(1)(a)(i)(A); • the temporary accommodation is required solely because the employee is required to change their usual place of residence in order to perform the duties of that employment - paragraph 61C(1)(b), • the unit of accommodation is located at or near the employee's new place of employment and the employee or an associate of the employee before, on, or as soon as reasonably practical after, the day (the relocation day) on which the employee commenced at the new place of employment, commenced sustained reasonable efforts to acquire, or to acquire the right to occupy or use, a unit of accommodation intended to provide a long-term place of residence for the employee - paragraph 61C(1)(d); and • the fringe benefit is not provided under a non-arm's length arrangement - paragraph 61C(1)(e). Those conditions are met so that it is necessary to further consider the terms of subsection 61C(3) which deals with the situation where the temporary accommodation is near the new place of residence. Subsection 61C(3) provides as follows; Where: • the condition in the second last dot point above applies, that is, where paragraph 61C(1)(d) applies then further provisions apply as set out below and other conditions need to be met - paragraph 61C(3)(a); and • the employee not later than 4 months after the relocation day, pursuant to a contract commences to occupy or use a unit of accommodation to provide a long-term place of residence for the employee - subparagraph 61C(3)(b)(ii); • a percentage (the attributable percentage) of the taxable value of the fringe benefit in relation to the year of tax is attributable to the subsistence of a lease during the whole or a part of the period commencing 7 days before the relocation day and ending on the day that occurred during the initial accommodation search period, when a contract was entered into for the right to occupy or use, a unit of accommodation to provide a long-term place of residence for the employee but subject to the employee commencing to occupy or use that unit of accommodation on the day on which the employee could reasonably have been expected to commence to do so - subparagraph 61C(3)(c)(i). the amount of the taxable value of the fringe benefit shall be reduced by the attributable percentage. The conditions are met so that the attributable percentage is 100% and consequently the taxable value is reduced to nil. Therefore the benefit (being a payment for temporary rental accommodation) has a nil taxable value in terms of subsection 61C(3). Note that section 62 does not apply because the benefit in this case is not an "eligible fringe benefit" as defined in section 62. (g) Relocation Allowance of $1,000 The Relocation Allowance is assessable income of the employee in terms of section 15-2 of the ITAA 1997. It is subject to pay as you go withholding provisions under Division 12 of the TAA.. The presentation of a receipt for $400 evidencing expenditure incurred to repair the damage caused to a sofa during relocation does not alter the treatment of the Relocation Allowance pursuant to income tax provisions as described above. However, in terms of subsection 12-1(3) of the TAA where there is an expense payment benefit involved in working out how much to withhold from the Relocation Allowance disregard so much of the payment as is an expense payment benefit in terms of section 136 of the FBTAA. See the discussion below regarding the expense payment benefit for the sofa repair which is the provision of a fringe benefit. (h) Sofa repair $400 This is an expense payment benefit. There is no exemption in the legislation for this benefit. The $400 payment is the provision of a fringe benefit in relation to the year of tax in which it is made. | Detailed Reasoning - Scenario 2: Summary The relocation expenses reimbursed to the employee have been examined in detail below and the decision on each is as follows: (a) Furniture removal fees of $4,000 are an exempt benefit in terms of section 58B; (b) Family meal expenses of $310 are an exempt benefit in terms of section 58F; (c) $480 for 600 kilometres travelled during the visit (paid at 80 cents per kilometre) is not an exempt benefit in terms of section 58F, it is a fringe benefit; (d) Connection/re-connection fees for electricity, gas and telephone services are an exempt benefit in terms of section 58D: There is no provision which exempts benefits related to the connection or re-connection of the water supply. However, this is an exempt minor benefit in terms of section 58P. See the discussion of non-exempt FBT items at Issue 2 Question 1 below. (e) School uniform costs of $400 are a fringe benefit; (f) $3,600 for temporary accommodation for the initial two months at the new work location (during period when searching for a new home) is an expense payment benefit with a taxable value of nil in terms of section 61C; (g) Sale of former residence - solicitor's fees ($1,000); commission and advertising ($10,000); mortgage discharge and associated fees ($1,000) are exempt benefits in terms of section 58C; (h) Purchase of new residence - solicitors fees ($1,000), stamp duty ($20,000), mortgage registration and associated bank fees ($1,000) are exempt benefits in terms of section 58C. | Detailed Reasoning - Detailed reasoning: (a) Furniture removal fees of $4,000 This is the same item as in Scenario 1 at Question 1(a). See the detailed reasoning in Scenario1 as the same reasoning applies here. The same legislative provision, section 58B, is relevant and the same conditions need to be met in order for that provision to apply so that the benefit is an exempt benefit. As these conditions are met the benefit (being reimbursement of furniture removalist fees of $4,000) is an exempt benefit in relation to the year of tax. (b) Family meal expenses of $310 (during the visit) This is the same item as in Scenario 1 at Question 1(b). There is a minor difference in that the expenses are $10 more than in Scenario 1 but this is not material. See the detailed reasoning in Scenario1 as the same reasoning applies here. The same legislative provision, section 58F, is relevant and the same conditions need to be met in order for that provision to apply so that the benefit is an exempt benefit. Those conditions have been met and therefore the benefit (being family meal expenses of $310) is an exempt benefit in relation to the year of tax. (c) $480 for 600 kilometres travelled during the visit (paid at 80 cents per kilometre) This payment is in respect of relocation transport but it is not an exempt benefit in terms of section 58F which relates to relocation transport. In this scenario the reimbursement in respect of the use of the car is calculated on the basis of the distance travelled by the car. However, paragraph 58F(c)(i) specifically prescribes that in the case of an expense payment benefit a necessary condition is that the benefit is not a reimbursement calculated by reference to the distance travelled by the car. Yet in this scenario that is precisely how the payment is made. Accordingly this means that the payment cannot be exempt in terms of section 58F. Further the payment does not qualify as an exempt car expense payment benefit in terms of section 22 because subsection 22(c) excludes a benefit in respect of relocation expenses. Nor does section 24 apply. Section 24 provides for the reduction of the taxable value of an expense payment fringe benefit where the expenditure is an allowable deduction to the employee. Yet, the expenditure for car expenses incurred in visiting the new location as part of a search for a new house is not an allowable deduction to the employee. Therefore, it is necessary to consider section 61B in Division 14 which provides for the reduction of the taxable value of certain expense payment fringe benefits in respect of relocation transport. The conditions which need to be satisfied in order for section 61B to apply are: Where: a. an expense payment fringe benefit in respect of relocation transport is provided to an employee or an associate of the employee in respect of the employment of the employee -subsection 61B(a) ; b. the fringe benefit is the reimbursement of the recipient in respect of a Division 28 car expense incurred by the recipient in relation to the recipient's car being a reimbursement calculated by reference to the distance travelled by the car - subsection 61B(b); and c. the recipient gives to the employer, before the declaration date, a declaration, in a form approved by the Commissioner setting out the particulars of the car and the number of whole kilometres travelled by the car in providing a transport benefit that is in respect of relocation transport - paragraphs 61B(c)(i) & (ii); The above conditions have been met. Accordingly, the amount that would be the taxable value of the fringe benefit in respect of relocation transport shall be reduced by so much of the amount of the reimbursement as does not exceed the reimbursement that would have been paid if it had been calculated on the basis of the sum of the basic car rate and the supplementary car rate (where two or more family members travelled in the car in respect of the relocation transport). The reimbursement does not exceed the relevant sum. Therefore the benefit (being a payment for relocation transport) has a nil taxable value in terms of subsection 61B. (d) Connection/re-connection fees for electricity, gas, water and telephone services for $400 where the amount for the water supply is less than $300. This is the same item as in Scenario 1 at Question 1(c). See the detailed reasoning in Scenario1 as the same reasoning applies here. The same legislative provision, section 58D, is relevant and the same conditions need to be met in order for that provision to apply so that the benefit is an exempt benefit. Section 58D exempts from fringe benefits tax a benefit in relation to the connection or re-connection of certain utilities as a result of relocation. Subsection 58D(1) contains a provision containing conditions relating to the telephone service while subsection 58D(2) relates to gas or electricity. As these conditions are met the benefit (being reimbursement of the cost of telephone connection or re-connection) is an exempt benefit in relation to the year of tax. Subsection 58D(2) contains a provision containing conditions relating to gas or electricity. As these conditions are met the benefit (being reimbursement of the cost of gas or electricity re-connection) is an exempt benefit in relation to the year of tax. There is no provision which exempts benefits related to the connection or re-connection of the water supply. However, this is an exempt minor benefit in terms of section 58P. See the discussion of non-exempt FBT items at Issue 2 Question 1 below. (e) School uniform costs of $400 This is an expense payment fringe benefit in terms of section 20. There is no exemption in the legislation for this fringe benefit. The payment is the provision of a fringe benefit in relation to the year of tax. (f) $3,600 for temporary accommodation for the initial two months at the new work location (during period when searching for a new home) Section 61C in Division 14 concerns the reduction of the taxable value for temporary accommodation relating to relocation. The relevant conditions set down in section 61C in order for that provision to apply so that the taxable value is reduced to nil are: • the fringe benefit provided is an expense payment fringe benefit where the recipient's expenditure is in respect of a lease or licence in respect of a unit of accommodation occupied or used for the temporary accommodation of family members - sub-subparagraph 61C(1)(a)(i)(A); • the temporary accommodation is required solely because the employee is required to change their usual place of residence in order to perform the duties of that employment - paragraph 61C(1)(b), • the unit of accommodation is located at or near the employee's new place of employment and the employee or an associate of the employee before, on, or as soon as reasonably practical after, the day (the relocation day) on which the employee commenced at the new place of employment, commenced sustained reasonable efforts to acquire, or to acquire the right to occupy or use, a unit of accommodation intended to provide a long-term place of residence for the employee - paragraph 61C(1)(d); and • the fringe benefit is not provided under a non-arm's length arrangement - paragraph 61C(1)(e). Those conditions are met so that it is necessary to further consider the terms of subsection 61C(3) which deals with the situation where the temporary accommodation is near the new place of residence. Subsection 61C(3) provides as follows; Where: • the condition in the second last dot point above applies, that is, where paragraph 61C(1)(d) applies, then further provisions apply as set out below and other conditions need to be met - paragraph 61C(3)(a); • the employee not later than 4 months after the relocation day, pursuant to a contract commences to occupy or use a unit of accommodation intended to provide a long-term place of residence for the employee - subparagraph 61C(3)(b)(ii); and • a percentage (the attributable percentage) of the taxable value of the fringe benefit is attributable to the subsistence of a lease during the whole of the period commencing 7 days before the relocation day and ending on the day that occurred during the initial accommodation search period {as defined in subsection 61C(5)}, when a contract was entered into for the acquisition of a unit of accommodation to provide a long-term place of residence for the employee but subject to the employee commencing to occupy or use that unit of accommodation on the day on which the employee could reasonably have been expected to commence to do so - subparagraph 61C(3)(c)(i). the amount of the taxable value of the fringe benefit shall be reduced by the attributable percentage. The conditions are met so that the attributable percentage is 100% and consequently the taxable value is reduced to nil. Therefore the benefit (being a payment for temporary rental accommodation) has a nil taxable value in terms of subsection 61C(3). Note that section 62 does not apply because the benefit in this case is not an "eligible fringe benefit" as defined in section 62. (g) Sale of former residence 14 months after the new employment day - solicitor's fees ($1,000); commission and advertising ($10,000); mortgage discharge and associated fees ($1,000) In this scenario the sale occurs in January 2013 which is fourteen (14) months after the employee commenced at the new location. Section 58C exempts from fringe benefits tax the benefits in relation to the sale or acquisition of a dwelling as a result of relocation. The pre-conditions for the application of the relevant exemption are set out in subsection 58C(1) in the following terms: Where: • during a particular period (the "former home holding period") an employee of the employer holds a prescribed interest in land on which there is a building constituting a dwelling - sub-subparagraph 58C(1)(a)(i)(A); • the employee sells the interest solely because the employee is required to change their usual place of residence in order to perform the duties of their employment - paragraph 58C(1)(b); • the employer first notifies the employee at a time (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 - paragraph 58C(1)(c); and • at the notice time the employee occupied the dwelling as their usual place of employment - paragraph 58C(1)(d); the following conditions as contained in subsection 58C(2) have effect. Where: • an expense payment benefit is provided where the recipient's expenditure is incidental to the sale of that interest in land - subparagraph 58C(2)(a)(i); • the employee entered into a contract for the sale of the interest 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 - paragraph 58C(2)(aa); • documentary evidence of the recipient's expenditure is obtained by the recipient and the documentary evidence or a copy, is given to the employer before the declaration date - paragraph 58C(2)(d) • the benefit is not provided under a non-arm's length arrangement - paragraph 58C(2)(e); the benefit is an exempt benefit in relation to the year of tax. As these conditions are met In this scenario the benefits {being reimbursement of solicitor's fees ($1,000); commission and advertising ($10,000); mortgage discharge and associated fees ($1,000)} are exempt benefits in relation to the year of tax. (h) Purchase of new residence - solicitor's fees ($1,000), stamp duty ($20,000), mortgage registration and associated bank fees ($1,000) In this scenario the purchase occurs in January 2012 which is two (2) months after the employee commenced at the new location. Section 58C deals with exempt benefits relating to the sale or acquisition of a dwelling as a result of relocation The pre-conditions for the application of the relevant exemption are set out in subsection 58C(1) in the following terms. Where: • during a particular period (the "former home holding period") an employee holds a prescribed interest in land on which there is a building constituting a dwelling - sub-subparagraph 58C(1)(a)(i)(A); • the employee sells the interest solely because the employee is required to change their usual place of residence in order to perform the duties of their employment - paragraph 58C(1)(b); • the employer first notifies the employee at a time (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 - paragraph 58C(1)(c); and • at the notice time the employee occupied the dwelling as their usual place of employment - paragraph 58C(1)(d); the following conditions as contained in subsection 58C(3) have effect. Where: • at a particular time the employee acquires a prescribed interest in land on which there is a building constituting another dwelling - sub-subparagraph 58C(3)(a)(i)(A); • the employee acquires the interest solely because the employee is required to change their usual place of residence in order to perform the duties of that employment at the employee's new place of employment - paragraph 58C(3)(b); • the employee entered into a contract for the acquisition of the interest on a day (the contract day) within 4 years after the new employment day - paragraph 58C(3)(c); • on the contract day, the employee holds an interest in another dwelling in a situation where if that interest were sold within 2 years after the new employment day and a benefit of a kind referred to in subsection 58C(2) were provided in relation that interest the benefit would be an exempt benefit under subsection 58C(2) and not more than 2 years have elapsed since the new employment day - paragraph 58C(3)(ca); • immediately after the completion of the acquisition, the employee occupied the other dwelling as their usual place of residence - paragraph 58C(3)(d); • an expense payment benefit where the recipient's expenditure is incidental to the acquisition of that interest - subparagraph 58C(3)(e)(i); • documentary evidence of the recipient's expenditure is obtained by the recipient and that documentary evidence, or a copy, is given to the employer before the declaration date - paragraph 58C(3)(g); and • the benefit is not provided under a non-arm's length arrangement - paragraph 58C(3)(h); the benefit is an exempt benefit. As these conditions are met In this scenario the benefits {being reimbursement of solicitor's fees ($1,000); stamp duty ($20,000); mortgage registration and associated fees ($1,000)} are exempt benefits in relation to the year of tax. | Summary: The relocation expenses reimbursed to the employee have been examined in detail below and the decision on each is as follows: (a) Furniture removal fees of $3,000 are an exempt benefit in terms of section 58B; (b) Family meal expenses of $250 are an exempt benefit in terms of section 58F; (c) $60 for petrol used during the visit to new work location is an exempt benefit in terms of section 58F. (d) (i) Connection/re-connection fees for electricity, gas and telephone services are an exempt benefit in terms of section 58D: (ii) Connection/re-connection fees for water are an exempt minor benefit in terms of section 58P; (e) School uniform costs of $250 are an exempt minor benefit; (f) $3,600 for temporary accommodation for the initial two months at the new work location (during period when searching for a new home) is an expense payment benefit with a taxable value of nil in terms of section 61C; (g) Sale of former residence more than 2 years after the new employment day - solicitor's fees ($1,000); commission and advertising ($10,000); mortgage discharge and associated fees ($1,000) are fringe benefits; (h) Purchase of new residence - solicitor's fees ($1,000), stamp duty ($20,000), mortgage registration and associated bank fees ($1,000) are initially exempt benefits in the 2011-2012 FBT year in terms of subsection 58C(3). However, when the former residence is not sold within 2 years after the new employment day a benefit equivalent to the exempt benefit is a fringe benefit in the 2013-2014 FBT year in terms of subsection 58C(5). | Detailed Reasoning - Detailed reasoning: (a) Furniture removal fees of $4,000 This is the same item as in Scenario 1 at Question 1(a). See the detailed reasoning in Scenario1 as the same reasoning applies here. The same legislative provision, section 58B, is relevant and the same conditions need to be met in order for that provision to apply so that the benefit is an exempt benefit. As the conditions are met the benefit (being reimbursement of furniture removalist fees of $4,000) is an exempt benefit in relation to the year of tax. (b) Family meal expense of $250 (during the visit) This is the same item as in Scenario 1 at Question 1(b). There is a minor difference in that the expenses are $50 less than in Scenario 1 but this is not material. See the detailed reasoning in Scenario1 as the same reasoning applies here. The same legislative provisions, section 143A and section 58F, are relevant and the same conditions need to be met in order for those provisions to apply so that the benefit is an exempt benefit in terms of section 58F. Those conditions have been met and therefore the benefit (being family meal expenses of $250) is an exempt benefit in relation to the year of tax. (c) $60 for petrol used during the visit Section 58F which deals with relocation transport provides that the benefit is an exempt benefit where the following conditions are met: • it is an expense payment benefit - subsection 58F(a); • the benefit is in respect of relocation transport - subsection 58F(b); and • the expense payment benefit is not constituted by the reimbursement in respect of an amount of Division 28 car expenses incurred by the recipient employee in relation to the employee's car, being a reimbursement calculated by reference to the distance travelled by the car - paragraph 58F(c)(i); and • documentary evidence of the recipients expenditure is obtained by the recipient and the documentary evidence or a copy, is provided to the employer before the declaration date - paragraph 58F(c)(ii); the benefit is an exempt benefit. Those conditions have been met in this scenario and therefore the benefit (being $60 for petrol) is an exempt benefit in relation to the year of tax. (d) Connection/re-connection fees for electricity, gas, water and telephone services of $400 This is the same item as in Scenario 1 at Question 1(c). See the detailed reasoning in Scenario1 as the same reasoning applies here. The same legislative provision, section 58D, is relevant and the same conditions need to be met in order for that provision to apply so that the benefit is an exempt benefit. Section 58D exempts from fringe benefits tax a benefit in relation to the connection or re-connection of certain utilities as a result of relocation. Subsection 58D(1) contains a provision containing conditions relating to the telephone service. As these conditions are met the benefit (being reimbursement of the cost of telephone connection or re-connection) is an exempt benefit in relation to the year of tax. Subsection 58D(2) contains a provision containing conditions relating to gas or electricity. As these conditions are met the benefit (being reimbursement of the cost of gas or electricity re-connection) is an exempt benefit in relation to the year of tax. There is no provision which exempts benefits related to the connection or re-connection of the water supply. However, the payment is an exempt minor benefit in terms of section 58P. See the discussion of non-exempt FBT items at Issue 2 Question 1 below. (e) School uniform costs of $250 This payment is an exempt minor benefit in terms of section 58P. See the discussion of non-exempt FBT items at Issue 2 Question 1 below. (f) $3,600 for temporary accommodation for initial two months at the new work location This is the same item with the same circumstances as in Scenario 2 at Question 2(f). See the detailed reasoning in Scenario 2 as the same reasoning applies here. The same legislative provision, section 61C, is relevant and the same conditions need to be met in order for that provision to apply so that the taxable value of the benefit is reduced to nil. The conditions are met so that the attributable percentage is 100% and consequently the taxable value is reduced to nil. Therefore the benefit (being a payment for temporary rental accommodation) has a nil taxable value in terms of subsection 61C(3). Note that section 62 does not apply because the benefit in this case is not an "eligible fringe benefit" as defined in section 62. (g) Sale of former residence more than 2 years after the new employment day - solicitor's fees ($1,000); commission and advertising ($10,000); mortgage discharge and associated fees ($1,000) In this scenario the sale contract is entered into after 15 November 2013 which is more than 2 years after the employee commenced at the new location. Section 58C exempts from fringe benefits tax the benefits in relation to the sale or acquisition of a dwelling as a result of relocation. The pre-conditions for the application of the relevant exemption are set out in subsection 58C(1) in the following terms. Where: • during a particular period (the "former home holding period") an employee holds a prescribed interest in land on which there is a building constituting a dwelling - sub-subparagraph 58C(1)(a)(i)(A); • the employee sells the interest because the employee is required to change their usual place of residence in order to perform the duties of their employment - paragraph 58C(1)(b); • the employer first notifies the employee at a time (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 - paragraph 58C(1)(c); and • at the notice time the employee occupied the dwelling as their usual place of employment - paragraph 58C(1)(d); the following conditions as contained in subsection 58C(2) have effect. Where: • an expense payment benefit is provided where the recipient's expenditure is incidental to the sale of that interest in land - subparagraph 58C(2)(a)(i); • the employee entered into a contract for the sale of the interest 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 - paragraph 58C(2)(aa); • documentary evidence of the recipient's expenditure is obtained by the recipient and the documentary evidence, or a copy, is given to the employer before the declaration date - paragraph 58C(2)(d); and • the benefit is not provided under a non-arm's length arrangement - paragraph 58C(2)(e); the benefit is an exempt benefit in relation to the year of tax. However, the benefit is not an exempt benefit in terms of section 58C because the condition in the second dot point immediately above is not met, that is, the sale contract was not entered into within 2 years after the new employment date, it was entered into more than 2 years after the employee commenced employment at the new place of employment, This benefit is an expense payment fringe benefit in terms of section 20. There is no exemption in the legislation for this benefit. Therefore the payment is the provision of a fringe benefit in relation to the year of tax. (h) Purchase of new residence - solicitor's fees ($1,000), stamp duty ($20,000), mortgage registration and associated bank fees ($1,000) In this scenario the purchase occurs in January 2012 which is two (2) months after the employee commenced at the new location. Section 58C deals with exempt benefits relating to the sale or acquisition of a dwelling as a result of relocation The pre-conditions for the application of the relevant exemption are set out in subsection 58C(1) in the following terms. Where: • during a particular period (the "former home holding period") an employee of the employer holds a prescribed interest in land on which there is a building constituting a dwelling - sub-subparagraph 58C(1)(a)(i)(A); • the employee sells the interest because the employee is required to change their usual place of residence in order to perform the duties of their employment - paragraph 58C(1)(b); • the employer first notifies the employee at a time (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 - paragraph 58C(1)(c); and • at the notice time the employee occupied the dwelling as their usual place of employment - paragraph 58C(1)(d) the following conditions as contained in subsection 58C(3) have effect. Where; • at a particular time the employee acquires a prescribed interest in land on which there is a building constituting another dwelling - sub-subparagraph 58C(3)(a)(i)(A); • the employee acquires the interest because the employee is required to change their usual place of residence in order to perform the duties of that employment at the employee's new place of employment - paragraph 58C(b); • the employee entered into a contract for the acquisition of the interest on a day (the contract day) within 4 years after the new employment day - paragraph 58C(c); • on the contract day, the employee holds an interest in another dwelling in a situation where if that interest were sold within 2 years after the new employment day and if a benefit of a kind referred to in subsection 58C(2) were provided in relation to that interest 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(3)(ca); • immediately after the completion of the acquisition the employee occupied the other dwelling as their usual place of residence - paragraph 58C(3)(d); • an expense payment benefit where the recipient's expenditure is incidental to the acquisition of that interest - subparagraph 58C(3)(e)(i); • documentary evidence of the recipient's expenditure is obtained by the recipient and that documentary evidence, or a copy, is given to the employer before the declaration date - paragraph 58C(3)(g); and • the benefit is not provided under a non-arm's length arrangement - paragraph 58C(3)(h); the benefit is an exempt benefit. In the 2011-2012 FBT year at the time the incidental expenses in connection with the purchase of the home at the new location was incurred by the employee and the reimbursement was claimed by and paid to the employee the above conditions would be met so that the payment would be an exempt benefit in terms of subsection 58C(3) in relation to the year of tax. However, in the 2013-2014 FBT year when 2 years had elapsed since the new employment day when the employee had commenced at the new place of employment yet the employee's former home remained unsold, a benefit equivalent to that provided in 2011-2012 would become subject to FBT in the 2013-2014 FBT year. This is in terms of subsection 58C(5). The application of these provisions is illustrated in Example 7.1 and Example 7.2 in the Explanatory Memorandum to Taxation Laws Amendment (2004 Measures No. 6) Act 2005 (Act No. 23 of 2005) which introduced these provisions into the legislation. | Detailed Reasoning - Example 7.1: Frances was required to relocate from Geelong to Ballarat in order to perform her duties as a police officer. She commenced her duties in Ballarat on 1 January 2005. Frances purchases a new house in Ballarat on 12 February 2005. Her employer pays the conveyancing costs associated with the purchase of the new house on 16 February 2005. Frances then sells her old house in Geelong on 15 October 2006. The conveyancing costs paid by Frances's employer are FBT exempt. This is because Frances enters into a contract for the sale of her house in Geelong within two years of commencing employment in Ballarat. This is despite the fact that at the time the employer pays Frances's conveyancing costs, Frances has not yet sold her house in Geelong. This benefit would not have been exempt under the previous provisions. | Detailed Reasoning - No sale of old dwelling: 7.16 In the situation where an employee has not sold their dwelling at the old locality at the time the employer paid the costs incidental to the purchase of the new dwelling, and the employee fails to sell their old dwelling within two years of the new employment day, the benefit provided will become FBT liable in the year of tax in which the period of two years since the new employment day expires. | Detailed Reasoning - Example 7.2: Assume the same situation as in Example 7.1, except that Frances fails to sell her home in Geelong by 1 January 2007. The conveyancing costs paid by Frances's employer are exempt at the time they are provided. However, as Frances did not sell her dwelling within two years of the new employment day, the benefit provided on 16 February 2005 will now become FBT liable in the 2006-2007 FBT year. (i) Relocation Allowance of $1,000 The Relocation Allowance is assessable income of the employee in terms of section 15-2 of the ITAA 1997. It is subject to pay as you go withholding provisions under Division 12 of the TAA.. | Detailed Reasoning - Scenario 4: Summary (a) Furniture removal fees of $3,000 are an exempt benefit in terms of section 58B; (b) Meal expenses of $200 (incurred during search for accommodation) are an exempt benefit in terms of section 58F; (c) Temporary accommodation expenses of $1,000 (while searching for long-term rental accommodation) will be partly included in the taxable value of the fringe benefit - see the detailed reasoning below; (d) Rental bond of $1,200 is the provision of a fringe benefit in the year of tax. | Detailed Reasoning - Detailed reasoning: This scenario differs from each of the preceding scenarios in that unlike those other scenarios in which the employee had a spouse and children the employee in this scenario is a single person. (a) Furniture removal fees of $3,000 Section 58B in Division 13 exempts from fringe benefits tax the benefit in relation to removals and storage of household effects as a result of relocation. This is subject to the conditions as set out in subsection 58B(1) being met. Subsection 58B(1) exempts the benefit provided in respect of the employment of the employee: Where: a. the benefit provided is an expense payment benefit where the recipient's expenditure is in respect of the removal or storage of household effects of the employee - subparagraph 58B(1)(a)(i); b. the removal or storage is required solely because the employee is required to change their usual place of residence in order to perform the duties of that employment - subparagraph 58B(1)(b)(iii); c. the removal or storage is required to enable a family member to take up residence at the employee's new usual place of residence - subparagraph 58B(1)(c)(iii); d. the removal takes place within 12 months after the day on which the employee commenced to perform the duties of that employment at the employee's new place of employment - subparagraph 58B(1)(d)(i); and e. the benefit is not provided under a non-arm's length arrangement - subparagraph 58B(1)(d)(ii); f. documentary evidence of the recipient's expenditure is obtained by the recipient and that documentary evidence of that expenditure or a copy, is given to the employer before the declaration date - paragraph 58B(1)(e); and g. the removal or storage was not provided in connection with travel undertaken by the employee in the course of performing the duties of that employment - paragraph 58B(1)(f); the benefit is an exempt benefit in relation to the year of tax. As the conditions are met the benefit (being furniture removal fees of $3,000) is an exempt benefit in relation to the year of tax. (b) Meal expenses of $200 (incurred during the search for accommodation) This is the same item as in Scenario 1 at Question 1(b). There is a minor difference in that the expenses are $100 less than in Scenario 1 but this is not material. See the detailed reasoning in Scenario1 as the same reasoning applies here. The same legislative provisions section 143A and section 58F are relevant and the same conditions need to be met in order for those provisions to apply so that the benefit is an exempt benefit. Those conditions have been met and therefore the benefit (being meal expenses of $200) is an exempt benefit in relation to the year of tax. (c) Temporary accommodation expenses of $1,000 (whilst searching for long-term rental accommodation) In this scenario the lease payments in respect of the temporary accommodation commenced more than 7 days before the relocation day. Therefore this scenario is different from each preceding scenario where the lease payments did not commence more than 7 days before the relocation day. Section 61C in Division 14 concerns the reduction of the taxable value for temporary accommodation relating to relocation. Subsection 61C(1) sets out the conditions to be met in order for the application of the reduction and that provision reads. Where: • an expense payment fringe benefit where the recipient's expenditure is in respect of a lease of a unit of accommodation occupied or used for the temporary accommodation of a family member - sub-subparagraph 61C(1)(a)(i)(A); • the temporary accommodation is required solely because the employee is required to change their usual place of residence in order to perform the duties of the employment - paragraph 61C(1)(b); • the unit of accommodation is located at or near the employee's new place of employment - the employee either before, on, or as soon as reasonably practicable after the day (the relocation day) on which the employee commenced to perform the duties of that employment at the employee's new place of employment, commenced sustained reasonable efforts to acquire the right to occupy or use, a unit of accommodation to provide a long-term place of residence for the employee - paragraph 61C(1)(d); and • the fringe benefit is not provided under a non-arm's length arrangement - paragraph 61C(1)(e); the following conditions as contained in subsection 61C(3) have effect. Where: • the second last dot point as listed immediately above applies, that is, paragraph 61C(1)(d) applies - paragraph 61C(3)(a): • the employee not later than 4 months after the relocation day, pursuant to a contract commenced to occupy a unit of accommodation intended to provide a long-term place of residence for the employee - subparagraph 61C(3)(b)(ii); and • a percentage (the attributable percentage) of the taxable value of the fringe benefit for the year of tax is attributable to the subsistence of the lease during the whole of the period commencing 7 days before the relocation day and ending on the day during the initial accommodation search period on which a contract was entered into for the right to occupy or use a unit of accommodation intended to provide a long-term place of residence for the employee subject to the employee commencing to occupy that unit of accommodation on the day on which the employee could reasonably be expected to commence to do so - subparagraph 61C(3)(c)(i); the amount that would be the taxable value of the fringe benefit in relation to the year of tax shall be reduced by the attributable percentage. However, in this scenario because the lease commenced more than 7 days before the relocation date the attributable percentage is less than 100. Therefore there is a taxable value of the expense payment benefit in respect of the temporary accommodation relating to relocation that is a fringe benefit. An example would be where the leasing of the temporary accommodation commenced two weeks (or 14 days) before the relocation day and continued to two weeks (or 14 days) after the relocation day when the employee moved to permanent long-term accommodation. In such a case the attributable percentage would be calculated as being 75%. This is because in making the calculation of the attributable percentage the period referable to the subsistence of the lease is limited to 7 days prior to the commencement day. So in this example where the lease is for 28 days a period of 7 days or 25% of the total period falls outside the calculation period for the attributable percentage. Thus 25% of the expense payment benefit would be a fringe benefit. In a situation where the total rent was say $5,000 then $1,250 would be the taxable value of the expense payment benefit in respect of the temporary accommodation relating to relocation. (d) Rental bond of $1,200 Section 17 in Division 4 exempts from fringe benefits tax a benefit in relation to a loan for the purpose of paying deposits such as a rental bond. Subsection 17(4) provides that a loan for such a purpose will be an exempt loan benefit where specified conditions are met. Subsection 17(4) applies where: • the making of a loan consisting of an advance by an employer to an employee of the employer constitutes a benefit in respect of the employment of the employee in respect of the year of tax (the current year of tax) - paragraph 17(4)(a) • the sole purpose of the making of the loan is to enable the employee to pay a rental bond in respect of accommodation - subparagraph 17(4)(b)(i): • the employee is required to repay the loan not later than 12 months after the loan is made - paragraph 17(4)(c); • a benefit is provided in, or in respect of, any year of tax to the employee in respect of that employment as an expense payment benefit where the recipient's expenditure is in respect of a lease or licence in respect of that accommodation - subparagraph 17(4)(d)(i); and • the benefit referred to at the dot point immediately above is a fringe benefit in relation to the year of tax and, under section 61C, the taxable value of the fringe benefit is reduced by the extent to which that taxable value is attributable to the subsistence of a lease or licence in respect of the accommodation during a particular period in that year of tax - 17(4)(e)(ii); the making of the loan is an exempt benefit in relation to the current year of tax. However, the condition listed at the third dot point regarding the repayment of the loan within 12 months is not met and thus the loan is not an exempt loan. Therefore the benefit (being a loan for the purpose of paying a rental bond in respect of long term rental accommodation of 12 months) is the provision of a fringe benefit in relation to the year of tax. | Summary: Section 58P provides that minor benefits will be treated as exempt benefits subject to specified criteria being met. A minor benefit is defined as a benefit with a notional taxable value less than $300. In the scenarios presented the benefits provided in respect of the connection/re-connection of the water supply in scenarios 1, 2 and 3 as well as the school uniform expenses in scenario 3 fall for consideration under section 58P. In each instance on balance, having regard to the way in which the criteria in paragraph 58P(1)(f) are met, it is concluded that it would be unreasonable to treat the benefit as a fringe benefit. | Detailed Reasoning - Detailed reasoning: Section 58P provides that minor benefits will be treated as exempt benefits subject to the tests in subsection 58P(1) being met and the consideration of associated benefits in terms of subsection 58P(2). Subsection 58P(1) relevantly provides that where the notional taxable value of the minor benefit in relation to the current year of tax is less than $300 {paragraph 58P(1)(e)} and subject to specified conditions it would be concluded that it would be unreasonable to treat the minor benefit as a fringe benefit in relation to the employer in relation to the current year of tax the minor benefit is an exempt benefit in relation to the current year of tax. The matters to which regard is to be given include: • the infrequency and irregularity with which associated benefits, being benefits that are identical or similar to the minor benefit or benefits provided in connection with the provision of the minor benefit, have been or can reasonably be expected to be provided - subparagraph 58P(1)(f)(i); • the amount that is the sum of the notional taxable values of the minor benefit and any associated benefits being benefits that are identical or similar to the minor benefit in relation to the current year of tax or any other year of tax - subparagraph 58P(1)(f)(ii); • the amount that is, or might reasonably be expected to be, the sum of the notional taxable values of any other associated benefits in relation to the current year of tax or any other year of tax - subparagraph 58P(1)(f)(iii); • the practical difficulty for the employer in determining the notional taxable value in relation to the current year of tax of the minor benefit (if the minor benefit is not a car benefit) and the associated benefits (if those associated benefits are not car benefits) - subparagraph 58P(1)(f)(iv); and • the circumstances surrounding the provision of the minor benefit and any associated benefits including whether the benefit concerned was provided to assist the employee to deal with an unexpected event and whether the benefit was provided otherwise than wholly or principally by way of reward for services rendered or to be rendered by the employee - subparagraph 58P(1)(f)(v); it would be concluded that it would be unreasonable to treat the minor benefit as a fringe benefit in relation to the employee in relation to the current year of tax. Subsection 58P(2) defines an associated benefit in relation to a minor benefit. The minor benefits at issue here are: • the connection/reconnection fees for the water supply being a portion of $400 where that portion is less than $300, in each of Scenario 1, Scenario 2 and Scenario 3; and • the school uniform costs of $250 in Scenario 3; Taxation Ruling TR 2007/12 titled " Fringe benefits tax: minor benefits " contains the ATO view on such benefits. At paragraphs 9 and 10 it is stated: 9. In considering the application of the exemption under section 58P it is necessary to look to the nature of the benefit provided and give due weight to each of the criteria. The weight given to each criterion will also vary depending on the circumstances surrounding the provision of each benefit. 10. Section 58P does not apply to exempt all benefits that have a notional taxable value of less than $300. Turning to the matters to which regard is to be given in paragraph 58P(1)(f) it is noted that the words "infrequency and irregularity' and "identical or similar" are not defined in the legislation and therefore have their ordinary meaning. | Detailed Reasoning - Water supply connection/re-connection: It is understood that generally the relocation of an employee is infrequent and irregular which means that the payment of benefits connected with such a relocation would satisfy the criteria in subparagraph 58P(1)(f)(i) as being "infrequent and irregular". This view is confirmed when the duration of the employee's posting at the respective new location is considered. In each of the scenarios the recipient employee has either entered into a 12 month lease of a unit of accommodation that is located at or near the new place of employment or has purchased a new home at or near the new place of employment. Each of these actions means that the employee is unlikely to relocate again within 12 months and therefore the benefit is unlikely to be provided again within 12 months. Hence the provision of the benefit can be said to be "infrequent and irregular". With respect to the matter of "identical or similar" benefits being provided in the current year of tax it is noted that benefits in respect of telephone, gas and electricity supply are provided. The benefits with respect to those utilities are considered to be similar benefits. In each scenario the total of the benefits for all utilities is $400. In relation to subparagraph 58P(1)(f)(iv) and the practical difficulty for the employer to determine the notional taxable value of the minor benefit it is probable that no difficulty would exist because of the nature of the documentary evidence of the reimbursed expense provided to the employer by the recipient employee. As to whether the criteria in subparagraph 58P(1)(f)(v) are met it is considered that the need to incur the expense for the water supply connection/re-connection could not be foreseen by the employee and thus it would be an unexpected event that would satisfy sub-subparagraph 58P(1)(f)(v)(A). In addition in the circumstances of each scenario notice of the need to relocate to the new work location was given to the employee by the employer only one month before the relocation date. Thus in view of that relative short notice the relocation itself is an unexpected event. Further the benefit which was provided otherwise than wholly or principally by way of reward for services rendered or to be rendered by the employee satisfies sub-subparagraph 58P(1)(f)(v)(B). Therefore on balance, having regard to the way in which the above criteria in paragraph 58P(1)(f) are met, it is concluded that it would be unreasonable to treat the benefit as a fringe benefit. Accordingly, the payment for connection/re-connection fees for water supply is an exempt benefit under section 58P. | Detailed Reasoning - School uniform costs: This expense payment benefit like the benefit regarding the water supply arises because of the relocation of the employee and therefore the matters to be considered and the reasoning are similar to that for the above water supply benefit. It is understood that generally the relocation of an employee is infrequent and irregular which means that the payment of benefits connected with such a relocation would satisfy the criteria in subparagraph 58P(1)(f)(i) as being "infrequent and irregular". No similar or identical benefit is provided to the employee in the year of tax. In relation to subparagraph 58P(1)(f)(iv) and the practical difficulty for the employer to determine the notional taxable value of the minor benefit it is probable that no difficulty would exist because of the nature of the documentary evidence of the reimbursed expense provided to the employer by the recipient employee. The need for a different and therefore new school uniform could reasonably be anticipated by the employee as a consequence of relocation and the need for the employee's children to attend a school at the new work location. Accordingly such an event cannot be said to be an "unexpected event". However, in the circumstances of each scenario notice of the need to relocate to the new work location was given to the employee by the employer only one month before the relocation date. Thus in view of that relative short notice the relocation itself is an unexpected event. Accordingly, this satisfies the criteria in sub-subparagraph 58P(1)(f)(v)(A). Further the benefit which was provided otherwise than wholly or principally by way of reward for services rendered or to be rendered by the employee satisfies sub-subparagraph 58P(1)(f)(v)(B). Therefore on balance, having regard to the way in which the above criteria in paragraph 58P(1)(f) are met, it is concluded that it would be unreasonable to treat the benefit as a fringe benefit. Accordingly, the payment for school uniforms is an exempt benefit under section 58P.

Relevant facts: The following is drawn from the information provided with your application and in correspondence. | From time-to-time the entity (as the employer) relocates employees from one part of an Australian state to another part of the state in order for the employee to take up a new position. Although the circumstances vary for each relocation there are four general scenarios that commonly arise. | The four separate relocation assistance scenarios are as follows: | Scenario 1: An existing employee who rents a property in their home town, relocates to a different part of the state, and rents a new property after relocating. | A full-time employee, living and working in a country town, is permanently appointed to a position in another part of the state. The employee does not own a home and does not intend to purchase a home at the new location. Prior to the appointment, the employee, spouse and two children of primary school age occupied a rented house. | A telephone service was provided to the unit of accommodation that was the employee's usual place of residence immediately before the change to the employee's usual place of residence which was required in order to perform the duties of that employment. | The employee is notified in writing on 15 October 2011 that they will commence in the new position on 15 November 2011. The family visits the new location in early November and incurs expenses for lunch and dinner as part of their search for suitable accommodation. As suitable long-term accommodation is not available temporary rental accommodation is used for the first two months. The rental of that temporary accommodation commenced on 8 November 2011. In January 2012 the family moves to long-term rental accommodation and the children commence at their new school soon after. | After the presentation of receipts the following is reimbursed to the employee: | (b) family meal expenses of $300 (i.e. lunch and dinner incurred during a visit to the new work location as part of the search for suitable accommodation) | (c) connection/re-connection fees for electricity, gas, water and telephone services of $400 (the amount for the water supply is less than $300) | (d) a rental bond of $1,200 (to be refunded when the lease ends) - the employee is not required to repay this within 12 months | (f) $3,600 for temporary accommodation for the initial two months at the new location (during the period searching for suitable long-term accommodation) | A "Relocation Allowance" of $1,000 is also paid. This payment is designed to compensate the relocated employee for damage or wear and tear on items during the move to the new location, regardless of whether receipts are presented or not. In this case the employee presents a receipt for $400 for repairs to a sofa on which the fabric was torn during the move. No other receipts are presented. | Scenario 2: An existing employee who owns a property in their home town, relocates to a different part of the state, and buys a new property later selling his/her old property 14 months after relocating. | A full-time employee, living and working in a country town, is permanently appointed to a position in another part of the state. At that time the employee and family including two children who attend primary school lived in their own home. | The employee is notified in writing on 15 October 2011 that they will commence in the new position on 15 November 2011. The family visits the new location in early November and incurs expenses for lunch and dinner as part of their search for a new house to purchase. | The employee provides the employer with a declaration setting out the particulars of the car and the number of whole kilometres travelled in providing the relocation transport. The benefit paid in respect of the use of the employee's car to visit the new location is on a cents per kilometre basis in accordance with the actual distance travelled. This benefit is at a rate which does not exceed the sum of the basic car rate plus the supplementary car rate as prescribed in section 61B. | Temporary accommodation is rented for two months during the search for suitable accommodation. Note that lease payments for this temporary accommodation commence not more than 7 days before the relocation day. | A new house is then purchased with settlement in January 2012. The family then moves to the new house and the children commence at their new school soon after. | A telephone service was provided to the unit of accommodation that was the employee's usual place of residence immediately before the change to the employee's usual place of residence in order to perform the duties of that employment. | The employee's original home is sold (settled) in January 2014, that is, 14 months after commencing work at the new location. | (b) family meal expenses of $310 (i.e. lunch and dinner incurred during the visit to search for accommodation) | (d) connection/re-connection fees for electricity, gas, water and telephone services of $400 - the amount for the water supply is less than $300 | (f) $3,600 for temporary accommodation for the initial two months at the new location (during the period searching for a new house) | (g) Sale of original home | - solicitor's fees of $1,000 | -- commission and advertising charges of $10,000 | -- mortgage discharge and associated administrative fees of $1,000 | -- mortgage registration and associated bank fees of $1,000 | Scenario 3: An existing employee who owns a property in their home town, relocates to a different part of the state, and buys a new property later selling their old property 25 months after relocating. | The employee is notified in writing on 15 October 2011 that they will commence in the new position on 15 November 2011. The family visits the new location in early November and incurs expenses for lunch and dinner as part of their search for a new house to purchase. Temporary rental accommodation is used for the first two months during the search for a new house. Note that lease payments for this temporary accommodation commence not more than 7 days before the relocation day. A new house is then purchased with settlement in January 2012. The family then moves to the new house and the children commence at their new school soon after. | The employee enters into a contract for the sale of the employee's original home after 15 November 2013 with settlement of that contract in late December 2013. That is to say that the sale of the original home took place 25 months after commencing work at the new location. | (b) family meal expenses of $250 (i.e. lunch and dinner incurred during the search for accommodation) | A Relocation Allowance of $1,000 is also paid. This payment is designed to compensate relocated employees for damage or wear and tear on items during the move, regardless of whether receipts are presented or not. No receipts are presented. | Scenario 4: A new employee who rents a property in their home town, relocates to a different part of the state, and rents a new property after relocating. | A person commences employment and undertakes an initial training course at the employer's premises. New employees are treated as probationary employees and are paid a salary during training. Prior to completion of the training course the employees are formally advised of the location to which they will be posted. The employee's posting in this case is to a regional town some 700 kilometres from their home town. In their home town the employee lives in a rented property and intends to rent a similar property at the new location. | The employee is notified in writing on 15 October 2011 that they will commence at their first placement on 15 November 2011. The employee visits the new location in early November and incurs expenses for lunch and dinner as part of the search for suitable accommodation. As suitable long-term accommodation is not available temporary rental accommodation is used for the first two weeks. Note that lease payments for this temporary accommodation commence more than 7 days before the relocation day. The employee then secures long-term accommodation and enters into a 12 month lease agreement. | (b) meal expenses of $200 (i.e. lunch and dinner incurred during the search for accommodation) | (c) $1,000 for temporary accommodation for the initial two weeks at the first placement (incurred whilst searching for suitable long-term accommodation) - this is in a motel or similar accommodation | Assumptions: 1. Documentary evidence of the recipient employee's expenditure is obtained by the recipient employee and that documentary evidence, or a copy, is given to the employer before the declaration date. This is in terms of paragraph 58B(1)(e); paragraph 58C(2)(d); paragraph 58C(3)(g); paragraph 58D(1)(d); paragraph 58D(2)(d) and paragraph 58F(c)(ii). | 2. The benefit is not provided under a non-arm's length arrangement. This is in terms of subparagraph 58B(1)(d)(ii); paragraph 58C(2)(c); paragraph 58C(3)(h); subparagraph 58D((1)(e)(iii); subparagraph 58D(2)(e)(ii) and subsection 143A(g).