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ATO Interpretative Decision

ATO ID 2013/8

Fringe Benefits Tax
Employee required to change usual place of residence in order to perform duties of employment

FOI status: may be released

CAUTION: 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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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.


Issue

If an employee changes their usual place of residence to be closer to where they perform the duties of their employment, even though it is not required by their employer, is the employee still 'required' to change their usual place of residence in order to perform the duties of their employment for the purposes of subparagraph 58B(1)(b)(iii) of the Fringe Benefits Tax Assessment Act 1986 ( FBTAA)?

Decision

Yes. Even though the employer does not require the employee to change their usual place of residence, it is considered that the duties of the employee's employment are such that the employee is 'required' to change their usual place of residence in order to perform the duties of their employment for the purposes of subparagraph 58B(1)(b)(iii) of the FBTAA.

Facts

All legislative references are to the FBTAA.

An employee accepts a promotion from their employer. The employee is required to perform their new duties of employment over 3,000 kilometres away from their usual place of residence.

Under the applicable enterprise bargaining agreement, the employer cannot require the employee to change their usual place of residence in order to live closer to where the employee is required to perform their new duties of employment ('the new place of employment'). However, the employee is not permitted to perform their new duties of employment from where they performed their former duties of employment ('the former place of employment'). The employer will not provide transport for the employee to commute between their usual place of residence and the new place of employment.

The employee is required to be on call at certain times. The employee must sign on for duty within two hours of being contacted by their employer.

The employee changes their usual place of residence to a location near the new place of employment.

The employer reimburses the employee for the costs of the removal of the employee's household effects to the new residence. The reimbursement is an expense payment benefit within the meaning in section 20.

Reasons for Decision

Under section 58B, expense payment and residual benefits provided in respect of the removal or storage of household effects of an employee are exempt benefits under certain conditions. Subparagraph 58B(1)(b)(iii) applies to the situation where an employee changes their usual place of residence. That subparagraph provides that the removal or storage must be required solely because the employee is 'required' to change their usual place of residence in order to perform the duties of their employment.

The term 'required' is not defined in the FBTAA. Therefore, it must take its ordinary meaning in the context in which it is used. Relevantly , The Macquarie Dictionary [ Multimedia], version 5.0.0, 01/10/01, defines 'require' as: 'to have need of; need; to impose need or occasion for; make necessary or indispensable; to place under an obligation or necessity.'

Therefore, it is considered that the term 'required' as it is used in subparagraph 58B(1)(b)(iii) does not mean that the change of usual place of residence must be compulsory. Rather, the change may be one that is necessary in the circumstances in order for the employee to perform the duties of their employment.

In the Administrative Appeals Tribunal case of Re Compass Group (Vic) Pty Ltd (as trustee for White Roche & Associates Hybrid Trust) v. FC of T [ 2008] AATA 845; 2008 ATC 10-051; (2008) 71 ATR 720 (Compass), the Tribunal examined the meaning of the word 'required' in the context of living-away-from-home allowance benefits under former subsection 30(1).

In Compass an employee temporarily accepted a more senior position from his employer. The position required him to work an additional five and a half hours each week. The employee's usual place of residence was 60 kilometres from his place of employment. As a result of his extended working hours, the employee rented premises closer to his place of employment and stayed there during the week. His employer did not require him to do so. The employee intended to return to his home when the extended working arrangements came to an end. The employee was paid a weekly allowance by his employer for the additional costs he incurred in renting the property.

The Tribunal considered whether the employee was required to live away from his usual place of residence in order to perform the duties of his employment and, therefore, whether the allowance was a living-away-from-home allowance within the meaning in former subsection 30(1).

The Tribunal said in Compass:

   63. ...it would seem that the agent requiring the employee to live away from his or her usual place of residence must be the employer, the inherent nature of the employment or a mixture of the two. It would seem that regard must be had to both in order to answer whether the employee is so required...

   65. The word 'require' does not contemplate choice...

   70. ...I come to the conclusion that a reasonable person would conclude that he was not required to rent premises...but chose to...there is no evidence that suggests that his employer required or even requested that he do so in order that he could perform his duties...The work itself does not seem to have demanded or required it...the hours were not so extended and the commuting distance...not so great that it could be thought that the work itself required it so that he could perform the duties of his employment.

In this case, the employee is not required by their employer to change their usual place of residence. However, it is considered that the duties of the employee's employment are such that it is necessary for the employee to change their usual place of residence to effectively perform those duties. This is because:

·
 of the distance between the employee's usual place of residence and their new place of employment;
·
 the employee is not permitted to perform their new duties of employment from the former place of employment;
·
 the employer will not provide transport for the employee to commute between their usual place of residence and the new place of employment; and
·
 the employee is required to be on call at certain times and must sign on for duty within two hours of being contacted by their employer.

Therefore, it is considered that the employee is 'required' to change their usual place of residence in order to perform the duties of their employment for the purposes of subparagraph 58B(1)(b)(iii).

[Note: based on the same reasoning, it is also considered that the employee is required to change their usual place of residence in order to perform the duties of their employment for the purposes of sections 58AA, 58C, 58D, 61C and 143A.]

Date of decision: 24 January 2013

Year of income:Year ending 31 March 2013

Legislative References:
Fringe Benefits Tax Assessment Act 1986
   section 20
   subsection 30(1)
   section 58AA
   section 58B
   subparagraph 58B(1)(b)(iii)
   section 58C
   section 58D
   section 61C
   section 143A

Case References:
Re Compass Group (Vic) Pty Ltd (as trustee for White Roche & Associates Hybrid Trust) v. FC of T
   [2008] AATA 845
   2008 ATC 10-051
   (2008) 71 ATR 720

Other References
The Macquarie Dictionary [Multimedia], version 5.0.0, 01/10/01

Keywords
Expense payment fringe benefits
FBT living-away-from-home
FBT place of residence
FBT relocation transport
Fringe benefits tax
Removal & relocation expenses
Residual fringe benefits

Date of publication: 8 February 2013

ISSN: 1445-2782

 


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