Private ruling: Fringe Benefits Tax - remote area housing
Date of advice: 27 March 2025
Published: 19 May 2025
Ruling period: Fringe Benefits Tax (FBT) Year Ending 31 March 20XX | FBT Year Ending 31 March 20XX | FBT Year Ending 31 March 20XX | FBT Year Ending 31 March 20XX | FBT Year Ending 31 March 20XX
Date scheme commenced: 1 April 20XX

Ruling: Q1: Is XXX located in, or adjacent to, an 'eligible urban area' pursuant to subsection 140(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)? | A1: Yes. | Q2: Is the accommodation provided by the Employer to the Employee 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. | Q4: Will residential fuel (including gas and electricity) provided by the Employer to the Employee give rise to a property fringe benefit as per the definition in 136(1) the FBTAA? | A4: Yes. | Q5: Will the provision of the property fringe benefit by the Employer to the Employee be reduced in accordance with subsection 59(1) of the FBTAA? | A5: Yes. | Q6: Can the property fringe benefit in Question 5 be further reduced by the otherwise deductible ruling in section 44 of the FBTAA? | A6: No.

Relevant facts and circumstances: The Employer is a body corporate of a caravan park. The Caravan Park consists of individually owned strata sites, with a mix of park homes, caravans and annexes and vacant lots. The Employer holds a licence, under the Act, to operate the Caravan Park and employs a manager (the Employee) to manage and maintain the park common property, to assist the owners with enforcement of the strata rules and to be available to respond in case of an emergency. The Employer is required by law to ensure that the Employee resides in or near the Caravan Park and is accessible at all times. The Employee is provided with onsite accommodation on common property of the strata. That accommodation was constructed at the time of establishment of the Caravan Park to facilitate compliance with the Act. The accommodation is provided free of charge as part of the Employee's employment contract and in order to comply with the Employer's statutory obligation under the Act. The electricity, gas and water for the Employee's residence are in the name of the strata company and paid for by the Employer. The utilities for the Employee's residence all relate to their daily personal residential use. The Employer does not reimburse the Employee for any expenses incurred.

Relevant legislative provisions: Fringe Benefits Tax Assessment Act 1986 section 25 | Fringe Benefits Tax Assessment Act 1986 section 44 | Fringe Benefits Tax Assessment Act 1986 section 58ZC | Fringe Benefits Tax Assessment Act 1986 section 59A | Fringe Benefits Tax Assessment Act 1986 subsection 136(1) | Fringe Benefits Tax Assessment Act 1986 subsection 140(1) | Fringe Benefits Tax Assessment Act 1986 subsection 148(1) | Income Tax Assessment Act section 8-1

Reasons for decision: Summary: XXX is an area that is not located in, or adjacent to, an 'eligible urban area'. As such, Caravan Park X is considered to be a 'remote area' for FBT purposes. | Detailed Reasoning - Detailed reasoning: The term 'remote area' is not defined in the FBTAA, instead, the FBTAA has a definition of 'eligible urban area' in section 140. 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 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) 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 i. 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 elgible 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. | Detailed Reasoning - Application to your circumstances: XXX is not situated in either Zones A or B for income tax purposes. The closest eligible urban area, with a 1981 census population in excess of 130,000, is XXX with more than 100 kilometres from XXX. XXX with a 1981 census population of less than 130,000 is more than 40 kilometres from XXX. | Detailed Reasoning - Conclusion: It is considered that XXX 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 accommodation provided by the Employer to the Employee a 'housing benefit' under section 25 of the FBTAA? | Summary: The provision of a unit of accommodation by the Employer to the Employee will be satisfied as a housing benefit under section 25 of the FBTAA. | Detailed Reasoning - Detailed reasoning: Section 25 of the FBTAA, a 'housing benefit' will arise where a person grants a 'housing right' to another person, as follows: 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 (referred to in this section 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 'housing right' is defined in subsection 136(1) of the FBTAA as meaning a lease or licence being granted to a person to occupy or use a unit of accommodation as that person's current usual place of residence: housing right, in relation to a person, means 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 defined in subsection 136(1) of the FBTAA as including 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. | Detailed Reasoning - Application to your circumstances: The Employer provides the Employee with onsite accommodation in the Caravan Park free of charge as part of the Employee's employment contract and in order to comply with the Employer's statutory obligations. For the duration of the Employee's employment contract, the unit of accommodation constitutes the Employee's 'usual place of residence'. The accommodation provided falls within the definition of a 'unit of accommodation' as defined in subsection 136(1) of the FBTAA. As such, it is concluded that a 'housing benefit' is provided by the Employer to the Employee as per the definition in section 25 of the FBTAA. | 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 Employer to the Employee where the accommodation is their usual place of residence will be satisfied as an exempt remote housing benefit subject to section 58ZC of the FBTAA. | Detailed Reasoning - Detailed reasoning: A remote area housing benefit is defined in subsection 136(1) of the FBTAA as having the meaning given by subsection 58ZC(2).The conditions for a housing benefit to be a 'remote area housing benefit' are set out in subsection 58ZC(2) of the FBTAA, as stipulated below. 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 employee 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; or 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. We have concluded in question 2 that the Employer is providing a housing benefit to the current Employee. In determining whether the housing benefit provided to the Employee by the Employer is a remote area housing benefit, the requirements in subsection 58ZC(2) of the FBTAA are discussed below. | Detailed Reasoning - Paragraph 58ZC(2)(a) of the FBTAA - Accommodation must be located in a remote area: As stated in the detailed reasoning for Question 1, it is considered that XXX area is a remote area for FBT purposes as it is a location that is notin, 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 employee's usual place of employment must not be at a location in or adjacent to an eligible urban area during that period. The onsite accommodation in XXX is provided by the Employer to the current Employee as part of the Employee's employment contract as required by law. The Employee's usual place of employment is in XXX, and we have determined that the XXX area is not in, or adjacent to, an eligible urban area. Therefore 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 the employee 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 employee 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 employer satisfies subparagraph (ii) of 58ZC(2)(d). The Employer provides onsite residential accommodation to the Employee who works in the Caravan Park to comply with the Employer's statutory obligation. It is necessary for the Employer to provide the Employer accommodation in the Caravan Park to ensure that the Employer is accessible at all times in case of emergency as required by law. Other residential accommodation would not be suitable. The Commissioner accepts that the provision of housing by the Employer to its current Employee is necessary as the Employer is required to provide onsite accommodation to the Employee by law and other residential accommodation would not be suitable. Accordingly, subparagraph 58ZC(2)(d)(ii) is 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. As per the facts, the Employer provides the Employee with accommodation to comply with their statutory obligations. The Commissioner considers that the arrangement under which the Employer provides accommodation to its Employee is not for the purposes of enabling the Employer to obtain the benefit of the application of section 58ZC. This criterion is satisfied. As each of the relevant provisions in subsection 58ZC(2) of the FBTAA are satisfied, the accommodation provided by the Employer to the Employee in XXX constitutes an exempt remote area housing benefit. Where free water is provided to the Employee in accordance with a residential tenancy agreement between the Employer and the Employee, the water will form part of the housing benefit on which the remote area housing benefit is based. | Detailed Reasoning - Question 4: Will residential fuel (including gas and electricity) provided by the Employer to the Employee give rise to a property fringe benefit under subsection 136(1) of the FBTAA? | Summary: Electricity and gas provided by the Employer to the Employee are considered to be property fringe benefits as per the definition under subsection 136(1) of the FBTAA. | Detailed Reasoning - Detailed reasoning: A property fringe benefit is a property benefit which is also a 'fringe benefit' as defined in subsection 136(1) of the FBTAA. The definition of a 'fringe benefit' in subsection 136(1) of the FBTAA requires that the following conditions are satisfied: 1. A benefit is provided at any time during the year of tax. 2. The benefit is provided to an employee or an associate of the employee. 3. The benefit is provided by: a. their employer; or b. an associate of the employer; or c. a third party other than the employer or an associate under an arrangement between the employer or associate of the employer and the third party; or d. a third party other than the employer or an associate of the employer, if the employer or an associate of the employer: i. participates in or facilitates the provision or receipt of the benefit; or ii. participates in, facilitates or promotes a scheme or plan involving the provision of the benefit; and the employer or associate knows, or ought reasonably to know, that the employer or associate is doing so; 4. The benefit is provided in respect of the employment of the employee. 5. The benefit is not one that is specifically excluded as per paragraphs (f) to (s) of the definition of a fringe benefit in subsection 136(1) of the FBTAA. Subsection 136(1) of the FBTAA provides a broad definition of a 'benefit' as including: any right (including a right in relation to, and an interest in, real or personal property), privilege, service or facility and, without limiting the generality of the foregoing, includes a right, benefit, privilege, service or facility that is, or is to be, provided under: a. an arrangement for or in relation to: (i) the performance of work (including work of a professional nature), whether with or without the provision of ... property; (ii) the provision of, or of the use of facilities for, entertainment, recreation or instruction; or (iii) the conferring of rights, benefits or privileges for which remuneration is payable in the form of a royalty, tribute, levy or similar exaction; It is considered that the electricity and gas provided by the Employer to the Employee constitutes a benefit and the relevant category of benefit would be a property benefit. A property benefit is a benefit referred to in section 40 of the FBTAA but does not include a benefit that is a benefit by virtue of a provision of Subdivision A of Divisions 2 to 10 (inclusive) of Part III. Where, at a particular time, a person (in this section referred to as the 'provider') provides property to another person (in this section referred to as the 'recipient'), the provision of the property shall be taken to constitute a benefit provided by the provider to the recipient at that time. Section 136 defines Property as: (a) Intangible property and (b) tangible property. Tangible property is defined under section 136 as: goods and includes: (a) animals, including fish; and (b) gas and electricity. Under section 40 a property benefit is taken to be provided at the time the property is provided to the Employer. However, a property fringe benefit will only arise where the property is provided in respect of the employment of the employee. The phrase 'in respect of' is defined in subsection 136(1) to include by reason of, by virtue of, or for or in relation directly or indirectly to, the employment of the employee. However, any causal relationship between the property benefit and employment is not sufficient despite the extension to the meaning of 'in respect of' in subsection 148(1) of the FBTAA. Instead, what must be established is that there is a sufficient or material, rather than a causal, connection or relationship between the benefit and the employment ( J & G Knowles & Associates v FC of T 2000 ATC 4151; [2000] FCA 196). Based on the facts, the electricity and gas, being tangible property are paid for by the Employer and provided to the Employee for personal use in the onsite accommodation provided as part of the employment contract. If it were not for the employment relationship between the Employer and the Employee, the Employee would not have received the benefit. Therefore, it is considered that the benefit is provided in respect of the employment of the Employee. As there are no exemptions applicable, a property fringe benefit will arise as per the definition in subsection 136(1) of the FBTAA. | Detailed Reasoning - Conclusion: Electricity and gas provided by the Employer to the Employee are considered to be property fringe benefits as per the definition under subsection 136(1) of the FBTAA. | Detailed Reasoning - Question 5: Will the provision of the property fringe benefit by the Employer to the Employee be reduced in accordance with subsection 59(1) of the FBTAA? | Detailed Reasoning - Detailed reasoning: Section 59 states: If: (a) residential fuel is for use: (i) in connection with the recipients unit of accommodation; and (ii) during the subsistence of the recipients overall housing right; in relation to a remote area housing benefit, in relation to an employer in relation to a year of tax; and (b) any of the following conditions are satisfied: (i) the recipients expenditure in relation to an expense payment fringe benefit in relation to the employer in relation to the year of tax or a subsequent year of tax is in respect of the supply of that residential fuel; (ii) the recipients property in relation to a property fringe benefit in relation to the employer in relation to the year of tax is that residential fuel; (iii) the recipients benefit in relation to a residual fringe benefit in relation to the employer in relation to the year of tax is the benefit of the consumption of that residential fuel; the amount that, apart from this subsection and section 62, would be the taxable value of the fringe benefit referred to in paragraph (b) in relation to the year of tax is reduced by 50%. To qualify for a reduction under subsection 59(1), several requirements must be met. The primary requirement is that the recipient concerned is also the recipient of a remote area housing benefit as defined in subsection 58ZC(2) of the FBTAA. This test has been satisfied in our analysis for Question 3 above. On the basis that the provision of residential fuel by the Employer will be used in connection with the Employee's unit of accommodation in relation to a remote area housing benefit, paragraph 59(1)(a) of the FBTAA is satisfied. Also, as stated in our analysis of question 4, it is also satisfied the Employer provides a property fringe benefit at the time of providing the residential fuel including electricity and gas. Accordingly, condition (ii) of paragraph 59(1)(b) is also satisfied. | Detailed Reasoning - Conclusion: Where electricity and gas paid for and supplied by the Employer in relation to a remote area housing benefit, the taxable value of the fuel benefit can be reduced by 50%. | Detailed Reasoning - Question 6: Can the property fringe benefit in Question 5 be further reduced by the otherwise deductible rule (ODR) in section 44 of the FBTAA? | Summary: The property fringe benefit cannot be further reduced by the ODR rule as the Employee would not be entitled to a once-only deduction if they had incurred the expense. | Detailed Reasoning - Reduction of taxable value: The 'otherwise deductible' rule in section 44 of the FBTAA operates to reduce the taxable value of a property fringe benefit where the recipient of the benefit is an employee and the employee would have been entitled to a once-only deduction for the expense had they personally incurred it. Entitlement to an income tax deduction is determined by section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) which states that you can deduct from your assessable income any loss or outgoing to the extent that it is incurred in producing your assessable income, however you cannot deduct a loss or outgoing to the extent that it is a loss or outgoing of a private or domestic nature. You have advised that the utilities provided to the Employee all relate to their daily personal residential use. As the expense is private in nature, the Employee would not have been entitled to a once only deduction and therefore it is considered that the ODR would not apply to reduce the taxable value of the property fringe benefits under section 44 of the FBTAA.

Reasons for decision: These reasons for decision accompany the Notice of private ruling for the organisation. | This is to explain how we reached our decision. This is not part of the private ruling.