FBT Q&A ‘ Short term appointment in remote area: reimbursement of accommodation

FBT, Public
Author: Steve Griffiths
1 Jun 2017

Question

A new employee has his accommodation expenses reimbursed. The accommodation is a B&B and is not owned or leased by us.

The accommodation is in a remote area according to the FBT legislation.

The employee is not from the local area and is employed by us for a short term (less than 12 month) project.  We want to know the best way to pay for his accommodation so as to minimise our FBT exposure.

If we don’t own/lease the accommodation we are reimbursing, is it still an exempt remote area housing fringe benefit?

Answer

As you do not own or lease the accommodation, no housing benefit can be provided and therefore the remote area housing exemption is not available.

There is a 50% reduction available where an employer pays or reimburses an employee’s remote area housing rent. However, one of the conditions for this to be available is that the accommodation is the employees ‘usual place of residence’. Given the short term nature of the posting and that the employee is from a different area this may be difficult to demonstrate.

However, on the bass the assignment is short term and up to 12 months, there is a reasonably strong argument that the employee is living away from home.

Section 21 of the FBT Act provides an exemption for situations where an employer pays or reimburses an employee’s accommodation during a period where they are living away from home. However, one of the conditions to be satisfied is that the employee is maintaining a home in the former locality.

Assuming the requirement to maintain a home in the former locality is met, a declaration will be required from the employee to this effect.

This article provides a general summary of the subject covered as at the date it is published. It cannot be relied upon in relation to any specific instance. TaxEd Pty Ltd and any person connected with its production disclaim any liability in connection with any use. It is not intended to be, nor should it be relied upon as, a substitute for professional advice.

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