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FBT Q&A – Motel accommodation: car garaged at or near place of residence?

Question

Under the statutory formula method of calculating a car fringe benefit, does a car fringe benefit arise where an employee who regularly travels to rural areas as part of their duties, and who regularly stays at motels overnight whilst on work-related travel, is provided with an employer provided car to undertake the travel?

Answer

Yes.

Under the statutory formula method, a car benefit will arise at any time of day in respect of the employment of the employee where a car held by the provider is either:

  1. applied to a private use by the employee or associate, or
  2. taken to be available for the private use of the employee or associate of the employee.

For the purposes of (ii) above, a car shall be taken to be available for private use where it is garaged or kept at or near a place of residence of the employee or an associate of the employee. Subsection 136(1) of the FBT Act defines a ‘place of residence’ as:

  1. a place of residence at which the person resides; or
  2. a place at which the person has sleeping accommodation,

whether on a permanent or temporary basis and whether or not on a shared basis.

Where an employee is travelling away from home, accommodation in the form of a motel/hotel room or caravan is ‘sleeping accommodation’ that is used on a temporary basis and so would be considered a ‘place of residence’.

We note that there appears a strong ground to argue the employee is on work-related travel when on such travel and so use of the operating cost method is likely to provide a significantly more favourable FBT outcome.

 

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