In last months newsletter we discussed the Bechtel case as it applied to the travel costs of certain fly-in fly-out (FIFO) workers. The employer was unsuccessful in arguing the ‘otherwise deductible’ rule was available to reduce the taxable value of the flight costs incurred by the employer in transporting the workers to the worksite. The worksite was not in a remote area so the specific residual benefit exemption for FIFO travel was not applicable.
Living away from home accommodation and food concessions for FIFO and drive-in drive-out (DIDO) workers do not require the worker to maintain an Australian home elsewhere nor limit the concessions to a 12 month period at the same location posting.
Pursuant to section 31E of the FBTAA, the requirements for FIFO & DIDO employees are that:
(a) the employee, on a regular and rotational basis:
- works for a number of days and has a number of days off (but not the same days in consecutive weeks); and
- on completion of the working days, travels from his or her usual place of employment to his or her normal residence and, on completion of the days off, returns to that usual place of employment; and
(b) it is customary for such arrangements to exist for employees performing similar duties in that industry;
(d) it would be unreasonable to expect the employee to travel on a daily basis on work days between his or her usual place of employment and his or her normal residence; and
(e) it is reasonable to expect the employee will resume living at his or her normal residence where the duties of that employment no longer require him or her to live away from it.
Paragraph (a) requires that the work be undertaken on a “regular and rotational” basis. This term is not defined in the FBTAA and so it is relevant to consider the ordinary meanings of the terms “regular” and “rotational” in the context in which they are used in the FBTAA.
The Macquarie Dictionary defines ‘regular’ as:
usual; normal; customary; conforming in form or arrangement; characterised by fixed principle, uniform procedure, etc; recurring at fixed times; periodic; adhering to rule or procedure.
The word “rotational” in the employment context is defined in the Cambridge Dictionaries Online as:
relating to a system in which the person who does a particular job is regularly changed: The shifts work on a rotational basis. Depending on the department, some recruits will participate in rotational placements.
Where an employee:
i. performs the duties of their employment on the basis that they alone are responsible for the day to day operations for which they are employed
ii. the employee does not job share nor does anyone else perform the duties of that employee’s employment when they are not on duty
the ATO takes the view that in such cases, the employee remains solely responsible for performing the duties of their employment, and as such is not working on a regular and rotational basis.
Accordingly the living away from home FIFO/DIDO requirements will not be met.
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