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ATO Interpretative Decision

ATO ID 2001/120 (Withdrawn)

Fringe Benefits Tax
Fringe benefits tax 'otherwise deductible' rule

Attention This ATO ID is withdrawn as it is no longer necessary. The issue addressed in the ATO ID is covered by Draft Taxation Ruling TR 2017/D6 Income tax and fringe benefits tax: when are deductions allowed for employees' travel? .
Attention This document has changed over time. View its history.
FOI status: may be released
Status of this decision: Decision withdrawn 21 July 2017.

CautionCAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.


Whether the 'otherwise deductible' rule (ODR) contained in sections 37 and 52 of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) applies to reduce to nil the taxable value of the following fringe benefits provided by the employer to certain employees working at remote work sites:

 residual (accommodation) fringe benefits; and
 certain board (meal) fringe benefits.


1. There is no fringe benefits tax (FBT) liability in respect of the provision of accommodation, as the benefit is, depending on whether the employee is travelling in the course of performing the duties of that employment, either specifically made an exempt benefit under subsection 47(5) of the FBTAA or the taxable value of the benefit may be reduced to nil under the ODR in section 52 of the FBTAA.

2. In respect of the provision of meals to the employees, the taxable value of the board benefit is reduced to nil under the ODR in section 37 of the FBTAA.


1. During the FBT years the employer conducted operations at various remote locations throughout Australia. Activities at these locations included open cut mining, site preparation, civil earthworks projects, road construction and maintenance, ore cartage and plant hire.

2. Many of these locations were a substantial distance from cities and townships where employees, if they so chose, could have been accommodated and could have commuted to work daily.

3. Employees working at these remote locations therefore necessarily had to be provided with accommodation at or near these sites until the projects they were working on were completed or until their contracts of employment with the employer otherwise concluded.

4. The usual practice for the employer was to arrange transport to and from the nearest capital city to the remote work site.

5. Employees working at remote locations were entitled to be provided with three meals on each day while at the site.

6. The employees provided the employer with a Usual Place of Residence declaration stating that during the period they worked at a remote work site they also maintained a usual place of residence.

The relevant conditions of employment include:

 they are required to live away from their usual place of residence at various remote locations in the course of their employment;
 they are required to live at or near actual remote work sites;
 the taxpayer provides meals and accommodation at or near these remote work sites until the respective projects on which they are contracted to work, which may have a life of several years, are completed;
 they do not make a contribution towards the cost of their meals or accommodation;
 because of the remoteness of the sites and the conditions of their employment, the employees cannot choose accommodation or meals other than what is provided by the employer;
 they are neither able to bring their families to live with them at the camp sites nor, generally, to have visitors;
 they work rosters, often comprising 12 hour shifts on 13 successive days followed by 1 day off, of 7 or 14 weeks at the site followed by a week off;
 they are generally employed on a 'fly-in-fly-out' basis and are generally required to leave the camp during their rostered-off period;
 where they are required to leave the camp at the end of a roster then, depending on the remoteness of the camp, they may either drive out of the camp or be flown out, usually to the nearest state capital;
 while the projects may last a number of years, the employees do not spend inordinate amounts of time at the work site, very rarely spending more than 1 year, being the aggregate of a number of 7 or 14 week rosters worked, at the same work site; and
 typical facilities at the sites consist of demountable modules which provide single quarters accommodation for employees, a common dining area and shared laundry and bathroom facilities.

Reasons For Decision

1. In relation to employees who work at remote construction sites, paragraph 2 of Taxation Determination TD 96/7 provides that the provision of accommodation at the remote work site will not give rise to an FBT liability where the accommodation is not the usual place of residence of the relevant employees. Depending on whether the employee is travelling in the course of their employment, either the taxable value of the benefit is reduced to nil under the 'otherwise deductible' rule in section 52 of the FBTAA or the benefit is specifically exempted by subsection 47(5) of the FBTAA.

Section 31E of the FBTAA provides for employees who work on a fly-in-fly-out or drive-in-drive-out basis, allowing concessions to not be limited to 12 months as per section 31D of the FBTAA, if an employee lived away from his or her usual place of residence on or after 1 October 2012.

In this case, the employer has satisfied the Commissioner that the accommodation provided at the remote work site is not the usual place of residence of the relevant employees and the employees work on a fly-in-fly-out or drive-in-drive-out basis, so therefore the changes in section 31D do not apply.

2. The meals provided to the employees are board fringe benefits that have a taxable value of $2.00 each under paragraph 36(a) of the FBTAA. The 'otherwise deductible' rule in section 37 of the FBTAA may apply to reduce the taxable value of the board fringe benefit to nil depending on the particular facts of the case.

Accordingly, it is necessary to establish that the relevant employees would have been entitled to a deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) (former subsection 51(1) of the Income Tax Assessment Act 1936 (ITAA 1936)) had they incurred and paid unreimbursed expenditure on the meals.

The decision of Hill J in Roads and Traffic Authority of NSW v. FC of T (1993) 43 FCR 223 considered the circumstances in which various allowances paid to road construction and repair crews, who were required to camp away from home, could be considered to be paid to compensate for outgoings, which if incurred by the employee would have been deductible expenses. In the process of determining that the hypothetical expenditure on meals by the employees would have been deductible expenses according to the definition in subsection 136(1) of the FBTAA, that is they would have been deductible in terms of subsection 51(1) of the ITAA 1936, Hill J set down a general rule by which deductibility of such expenditure is to be determined (at 240):

   'Where a taxpayer is required by his employer, and for the purposes of his employer, to reside, for periods of time, away from home and at the work site, and that employee incurs expenditure for the cost of sustenance, or indeed other necessary expenditure which, if the taxpayer had been living at home, would clearly be private expenditure, the circumstance in which the expenditure is incurred, that is to say, the occasion of the outgoing operates to stamp that outgoing as having a business or employment related character.'

His Honour (at 240) noted the following features of the RTA employees' working conditions that supported claims for deductibility of expenditure on sustenance and other necessary items:

   '...they are required, as an incident of their employment, by their employer and for the purposes of their employer to live close by their work site for relatively short periods of time. No question arises of their choosing to live in these places. Each of the persons in question has a permanent house in which he lives when not in camp. None of the employees spend inordinate periods of time in the camps so that the camp becomes their home. Their house is retained and the employees in question travel home at weekends. They do not remain in the camps.'

However, Hill J did observe that where an employee has no private home and is employed indefinitely to work at a particular site, then that employee might be said to have chosen to live at the site so that the cost of the employee's accommodation there would be private.

The question of whether an employee has chosen to live at the site is one of fact and degree. In the present case, having regard to the relevant facts including:

 remoteness of the sites;
 living conditions at these sites;
 a general requirement for employees to leave the sites whilst not on duty;
 an inability to have family or friends visit the site;
 working conditions involving 12 hour shifts for 7 days a week;
 fixed period contracts of employment; and
 the limited life of most mining sites,

it could not be said that the employees had chosen the accommodation provided by the employer at or near the mine site to be their home, such that their usual place of residence had ceased to be their home.

Accordingly, it is possible to conclude on the facts of the case that an income tax deduction would have been allowable to the recipient of the board fringe benefit if the recipient had incurred unreimbursed expenditure in respect of the acquisition of the benefit. On this basis, the ODR in section 37 of the FBTAA will apply and the taxable value of the board fringe benefits is reduced to nil.

Amendment History

Date of Amendment Part Comment
16 January 2015 Throughout ATO ID Changed '(FBTAA)' to 'of the FBTAA' after the first instance.
changed '(ITAA)' to 'of the ITAA' after the first instance.
  Facts Minor grammatical edits.
  Reasons for decision Clarification provided.
  Legislative references Added section 31D and section 31E of the FBTAA.
  Business line Changed to Private Groups and High Wealth Individuals (PGH).

Date of decision: 10 July 2000

Legislative references:
Fringe Benefits Tax Assessment Act 1986
   section 31D
   section 31E
   paragraph 36(a)
   section 37
   subsection 47(5)
   section 52
   subsection 136(1)

Income Tax Assessment Act 1936
   subsection 51(1)

Income Tax Assessment Act 1997
   section 8-1

Case references:
FC of T v. Cooper
   (1991) 29 FCR 177

FC of T v. Toms
   89 ATC 4373
   (1989) 20 ATR 466

Roads and Traffic Authority of NSW v. FC of T
   (1993) 43 FCR 223

Related Public Rulings (including Determinations)
MT 2030
TD 93/230
TD 96/7

Fringe benefits tax
Fringe benefits
Board fringe benefits
Residual fringe benefits
FBT otherwise deductible rule
Exempt accommodation component
Exempt food component
FBT Living away from home
Living away from home food fringe benefits
Private living expenses

Siebel/TDMS reference number: CRS 1078; 1-AVNFTNV

Business line: Private Groups and High Wealth Individuals

Date of publication: 13 July 2001

ISSN: 1445-2782

ATO ID 2001/120 (Withdrawn) history   Top  
   Date   Version 
   10 July 2000   Original statement   
   16 January 2015   Updated statement   
 You are here ®  21 July 2017   Withdrawn   


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