Private ruling: FBT - exempt remote area housing benefit
Date of advice: 7 August 2025
Published: 20 October 2025
Ruling period: Fringe Benefits Tax (FBT) year ending 31 March 20XX
Date scheme commenced: 1 April 20XX

Ruling: Q1: Is Area X located in, or adjacent to, an 'eligible urban area' pursuant to subsection 140(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)? | A1: No. | Q2: Is the proposed accommodation provided by the Applicant to certain employees a 'housing benefit' under section 25 of the FBTAA? | A2: Yes. | Q3: If the answer to Question 2 is 'yes', is the housing benefit an exempt remote area housing benefit under section 58ZC of the FBTAA? | A3: Yes.

Relevant facts and circumstances: The Applicant and Company A are companies within the same group (the Group). The Applicant is a service entity that employs staff for the Group, and provides the services of those employees to Company A. Company A operates a medical practice (the Practice) in Area X. The Practice offers general medical services to the public. The Practice employs medical and administrative staff. Area X is located in a remote area. Area X has limited public transport. There is limited suitable rental accommodation available for employees in close proximity to the Practice. The Practice has difficulty recruiting and retaining staff due to the lack of suitable accommodation. In order to attract and retain the high calibre staff required to operate the Practice, the Applicant is proposing to provide accommodation as part of staff remuneration packages. It is customary for remote medical practices to provide accommodation to staff. The Applicant will enter into lease agreements for residential accommodation located near the Practice and then offer the right of use of the accommodation to staff as part of their remuneration package.

Relevant legislative provisions: Fringe Benefits Tax Assessment Act 1986 Section 25 | Fringe Benefits Tax Assessment Act 1986 Section 58ZC | Fringe Benefits Tax Assessment Act 1986 Subsection 136(1) | Fringe Benefits Tax Assessment Act 1986 Subsection 140(1)

Reasons for decision: Summary: The term 'remote area' is not defined in the FBTAA. Instead, the FBTAA has a definition of 'eligible urban area' in subsection 140(1). A place is in a remote area if it is not in, or adjacent to, an eligible urban area. Subsection 140(1) of the FBTAA sets out what is an 'eligible urban area' and what is a location that is 'adjacent to an eligible area'. It states that: In this act: (a) a reference to an eligible urban area is a reference to: (i) an area that: (A) is situated in an area described in Schedule 2 to the Income Tax Assessment Act 1936 ; and (B) is an urban centre with a census population of not less than 28,000; and (ii) an area that: (A) is not situated in an area described in Schedule 2 to the Income Tax Assessment Act 1936 ; and (B) is an urban centre with a census population of not less than 14,000; and (b) a reference to a location that is adjacent to an eligible urban area is a reference to a location that, as at the date of commencement of this section: (i) was situated less than 40 kilometres, by the shortest practicable surface route, from the centre point of an eligible urban area with a census population of less than 130,000; or (ii) was situated less than 100 kilometres, by the shortest practicable surface route, from the centre point of an eligible urban area with a census population of not less than 130,000 Paragraph 140(1)(a) of the FBTAA provides that an 'eligible urban area' is a reference to an area that is an urban centre with a census population of not less than 14,000 (or 28,000 for an urban centre located in Zone A or B in Schedule 2 to the Income Tax Assessment Act 1936 (ITAA 1936) for income tax purposes). Paragraph 140(1)(b) of the FBTAA defines a location that is 'adjacent to an eligible urban area' to include one that is: i. situated less than 40 kilometres from an urban centre with a census population of less than 130,000; or ii. situated less than 100 kilometres from an urban centre with a census population of 130,000 or more. Under this provision, an area will be treated as 'remote' where it is at least 40 kilometres from an eligible urban centre with a population of 14,000 or more (or 28,000 for an area located in either Zones A or B for income tax purposes) and at least 100 kilometres from an eligible urban centre with a population of 130,000 or more. All population figures are based on the 1981 census population figures. | Detailed Reasoning - Location in an eligible urban area: Area X is neither: • situated in an area described in Schedule 2 to the ITAA 1936, and an urban centre with a census population of not less than 28,000; nor • situated in an area described in Schedule 2 to the ITAA 1936, and an urban centre with a census population of not less than 14,000 Schedule 2 encompasses both Zone A and Zone B. Area X is situated in neither Zone A or Zone B. As such, it is not situated in an area described in Schedule 2. As such, in order to be located in an eligible urban area, it would have to have had a population of not less than 14,000 in the 1981 census. Area X had a population of less than 14,000 in the 1981 census. As such, Area X is not at a location in an eligible urban area. As the units of accommodation will be located in Area X, the units of accommodation will not be at a location in an eligible urban area. | Detailed Reasoning - Location adjacent to an eligible urban area: The closest eligible urban area (with a census population of greater than 130,000) is Area Y. For the units of accommodation to be in a location 'adjacent to an eligible urban area', the units of accommodation would have to be within 100 kilometres of the centre point of Area Y. Area X is approximately XXkm from Area Y by road. Area X is not adjacent to Area Y, for the purposes of the remote area housing exemption. As such, the units of accommodation will not be at a location adjacent to an eligible urban area. In addition, Area X is categorised as a remote area on the list of remote areas in Australia as published on the Australian Taxation Office (ATO) website. | Detailed Reasoning - Conclusion: It is considered that Area X is a remote area for FBT purposes as it is a location that is not in, or adjacent to, an eligible urban area. | Detailed Reasoning - Question 2: Is the proposed accommodation provided by the Applicant to certain employees a 'housing benefit' under section 25 of the FBTAA? | Summary: The accommodation benefit provided by the Applicant to its employees constitutes a 'housing benefit' as defined in section 25 of the FBTAA. | Detailed Reasoning - Detailed reasoning: Section 25 of the FBTAA, as stated below, provides that a 'housing benefit' will arise when a recipient is provided with the right to use a unit of accommodation by a provider and the accommodation is the recipient's usual place of residence: The subsistence during the whole or a part of a year of tax of a housing right granted by a person (in this section referred to as the provider) to another person (in this section referred to as the recipient) shall be taken to constitute a benefit provided by the provider to the recipient in respect of the year of tax. A 'benefit' is defined in subsection 136(1) of the FBTAA as: ...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; ... A 'housing right' is defined in subsection 136(1) of the FBTAA as: ...a lease or licence granted to the person to occupy or use a unit of accommodation, insofar as that lease or licence subsists at a time when the unit of accommodation is the person's usual place of residence. A 'unit of accommodation' is also defined in subsection 136(1) of the FBTAA to include a house, flat or home unit, accommodation in a hotel, hostel, motel or guesthouse, accommodation in a bunkhouse or other living quarters, accommodation in a ship, vessel or floating structure and a caravan or mobile home. The term 'usual place of residence' is not defined within the FBTAA, however subsection 136(1) of the FBTAA defines a 'place of residence' as: (a) a place at which the 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. In the absence of a legislative reference, it is relevant to refer to the ordinary meaning of 'usual'. The Macquarie Dictionary Online defines 'usual' to mean 'habitual or customary' or 'in common use'. Whether a place is an employee's usual place of residence is a question of fact, based on all the circumstances. The following factors may be considered when deciding where an employee's usual place of residence is: • an employee's usual place of residence is normally found near to their fixed or permanent employment base • the terms of the employee's employment contract or award may indicate whether their move to a new place of residence is merely temporary or of a more lasting nature • the longer the employee is required to work at a place, the more indicative it is that the move is not temporary in nature. | Detailed Reasoning - Application to your circumstances: The Applicant (the employer and 'provider') is proposing to enter into lease agreements for residential accommodation (including houses, apartments/flats) located near the Practice and then offer the right of use of the accommodation to staff as part of their remuneration package. It is accepted that the proposed housing will meet the definition of a 'unit of accommodation.' Although the accommodation has not been provided as yet, it is accepted that the intention is for the provided units of accommodation to be the place at which the employee habitually resides and for the units of accommodation to be relatively near to the place of employment. As such, it is accepted that the units of accommodation provided will constitute the 'usual place of residence' of the employees. As there will be a lease in place which grants an employee the right to occupy or use the dwelling, and that lease subsists at a time when the unit of accommodation is the employee's usual place of residence, a 'housing right' as defined in subsection 136(1) of the FBTAA is provided by the Applicant to the employee. On the basis that a 'housing right' is provided by the Applicant to an employee, the definition of a 'housing benefit' in turn is also satisfied as per the definition of that term in section 25 and subsection 136(1) of the FBTAA. | Detailed Reasoning - Conclusion: It is considered that the Applicant is providing a housing benefit to employees where the accommodation provided is their usual place of residence. | Detailed Reasoning - Question 3: If the answer to Question 2 is 'yes', is the housing benefit an exempt remote area housing benefit under section 58ZC of the FBTAA? | Summary: The accommodation benefit provided by the Applicant to its employees, where the accommodation is their usual place of residence, will be satisfied as an exempt remote area housing benefit pursuant to section 58ZC of the FBTAA. | Detailed Reasoning - Detailed reasoning: A benefit provided by an employer in relation to housing is a 'remote area housing benefit' which is an 'exempt benefit' under section 58ZC of the FBTAA, provided certain conditions are satisfied. Section 58ZC states: 58ZC(1) Remote area housing benefit to be exempt A housing benefit that is a remote area housing benefit is an exempt benefit. 58ZC(2) What constitutes remote area housing benefit A housing benefit in relation to an employer for a year of tax and for a unit of accommodation, being a benefit provided to an employee of the employer in respect of the employee's employment, is a remote area housing benefit if: a) during the whole of the tenancy period, the unit of accommodation was located in a State or internal Territory and was not at a location in, or adjacent to, an eligible urban area; and b) during the whole of the tenancy period, the recipient was a current employee of the employer and the usual place of employment of the recipient was not at a location in, or adjacent to, an eligible urban area; and c) (Repealed) d) It would be concluded that it was necessary for the employer, during the year of tax, to provide, or to arrange for the provision of, residential accommodation for employees of the employer because: (i) the nature of the employer's business was such that employees of the employer were liable to be frequently required to change their places of residence; or (ii) there was not, at or near the place or places at which the employees of the employer were employed, sufficient suitable residential accommodation for those employees (other than residential accommodation provided by or on behalf of the employer); or (iii) it is customary for employers in the industry in which the recipient was employed during the tenancy period to provide residential accommodation for their employees free of charge or for a rent or other consideration that is less than the market value of the right to occupy or use the accommodation concerned; and e) the recipient's overall housing right was not granted to the recipient under: (i) a non-arm's length arrangement; or (ii) an arrangement that was entered into by any of the parties to the arrangement for the purpose, or for purposes that included the purpose, of enabling the employer to obtain the benefit of the application of this section. Subsection 58ZC(1) provides that a housing benefit that is a remote area housing benefit is an exempt benefit. A 'housing benefit' is defined in subsection 136(1) of the FBTAA to mean a benefit referred to in section 25 of the FBTAA. Section 25 defines such a benefit as one where a person grants a housing right to another person. We have concluded in the response to Question 2 that the Applicant is providing a housing benefit to current employees where the accommodation provided is the employees' usual place of residence. In determining whether such a housing benefit provided to an employee of the Applicant is a remote area housing benefit, the requirements in subsection 58ZC(2) of the FBTAA are discussed below. | Detailed Reasoning - Subsection 58ZC(2) of the FBTAA - What constitutes remote area housing benefit: Housing benefits provided to employees may be exempted under subsection 58ZC(1) as a 'remote area housing benefit', provided the conditions in subsection 58ZC(2) are satisfied. | Detailed Reasoning - Paragraph 58ZC(2)(a) of the FBTAA - Accommodation must be located in a remote area: As stated in the detailed reasoning provided for Question 1 above, it is considered that the Area X is a remote area for FBT purposes as it is a location that is not in, or adjacent to, an eligible urban area. This criterion is satisfied. | Detailed Reasoning - Paragraph 58ZC(2)(b) of the FBTAA - During the whole of the tenancy period, the recipient must be a current employee: The exemption is only available if the benefit is provided to a current employee of the employer - not a former or future employee - for the whole of the tenancy period. Further, the employees' usual place of employment must not be at a location in or adjacent to an eligible urban area during that period. The proposal is to offer the accommodation to current employees (to retain them) and to prospective (future) employees, to attract them. Any future employee to whom the offer of accommodation is provided, as part of their remuneration package, will be a current employee at the time the actual accommodation is provided, and will remain so during the whole of the tenancy period, the accommodation being provided as a benefit in respect of the employment of that employee. The employees' usual place of employment is in Area X, and we have determined that the Area X is not in, or adjacent to, an eligible urban area. This criterion is satisfied. | Detailed Reasoning - Paragraph 58ZC(2)(d) of the FBTAA - Provision of accommodation is necessary: It must be necessary for the employer to provide residential accommodation to employees for any of the reasons provided in paragraph 58ZC(2)(d) of the FBTAA. There may be several underlying reasons why a particular employer, located in a remote area, may consider it necessary to provide housing benefits to employees including the retention of existing employees or to make it more attractive for suitable potential employees to want to take up employment with that employer. Nonetheless, to satisfy the requirements of subparagraph 58ZC(2)(d)(ii) of the FBTAA, the reason that the employer finds it necessary to provide residential accommodation for employees must be because there was not, at or near the place or places at which the employees of the employer were employed, sufficient suitable residential accommodation for those employees (other than residential accommodation provided by or on behalf of the employer). It must be considered whether the Applicant satisfies subparagraph (ii) of paragraph 58ZC(2)(d). According to the information in the facts, the Applicant have stated that the proposed provision of residential accommodation to employees who work in Area X is to support their employees. The Applicant has advised that most staff struggle to secure suitable accommodation when re-locating to Area X, due to an insufficient supply of suitable accommodation. In addition, it is only rental accommodation which can be considered when assessing the availability of 'suitable' residential accommodation, as buying a property is not a realistic option, given that employees only move to Area X for the purpose of undertaking their employment. This is especially true for XXX who are required to move frequently, due to their training. The Employer has advised that, of the rental properties currently available in Area X: • Most properties are too large (3-4 bedrooms) for employees who do not have a family. The rent on such properties is a significant financial burden on employees, and the upkeep (including of lawns and gardens) is too onerous for employees with demanding work schedules. • Competition for the limited 'suitable properties' (including townhouses and apartments) is very strong, making them hard to secure, and potentially expensive. • Most properties are leased on an annual basis, whereas staff generally prefer shorter leases. • Many of the properties are of 'poor condition' • Anecdotally, it may be the cases that agents prefer to lease properties to locals, rather than to people from another location. A search online conducted on DD MM 20YY shows a total of 22 properties available for rent. Of those 22 properties, 17 are either 3-bedroom (10) or 4-bedroom (7) houses. Another property is on an acreage. That leaves only 4 2-bedroom properties, 2 of which are houses, and 2 of which are apartments/units/flats. It is agreed that there is not sufficient suitable residential accommodation at or near the place at which the employees are (or will be) employed, and for that reason, it is necessary for the Applicant to provide accommodation for employees. The Commissioner accepts that the proposed provision of housing by the Applicant to its current employees is necessary as sufficient suitable residential accommodation is not otherwise available for employees in Area X. Accordingly, subparagraph 58ZC(2)(d)(ii) is satisfied. As it is only necessary for one of subparagraphs 58ZC(2)(d)(i), (ii) and (iii) to be satisfied, it is not necessary to provide a view on whether subparagraphs 58ZC(2)(d)(i) and (iii) are satisfied. This criterion is satisfied. | Detailed Reasoning - Paragraph 58ZC(2)(e) of the FBTAA - The arrangement must be at arm's length and not for the purposes of the employer obtaining a benefit: The arrangement under which the accommodation is provided must be an arm's length arrangement and must not be provided under an arrangement for the purposes of obtaining the concessions provided by section 58ZC of the FBTAA. As per the Facts, the Applicant intends to offer housing rights to current and prospective staff in order to retain current staff and attract high calibre and suitably qualified prospective staff to the Practice. The Applicant sees this as a necessity to ensure they can attract quality staff to remote areas in a competitive market. The Commissioner considers that the arrangement under which the Applicant proposes to provide accommodation to its employees is not for the purposes of enabling the Applicant to obtain the benefit of the application of section 58ZC of the FBTAA. This criterion is satisfied. As each of the conditions in subsection 58ZC(2) of the FBTAA are satisfied, the housing benefits provided to employees of the Applicant constitute a 'remote area housing benefit'. As such, the remote area housing benefits provided to employees of the Applicant are exempt from FBT pursuant to subsection 58ZC(1) of the FBTAA. | Detailed Reasoning - Conclusion: It is concluded that the accommodation benefits provided by the Applicant in Area X are exempt remote area housing benefits, as all relevant requirements in section 58ZC of the FBTAA are satisfied.