FBT Q&A – Seasonal staff COVID-19 quarantining costs

Question

We are recruiting seasonal workers for fruit picking employment from other states. These seasonal workers must / or may need to be in quarantine for a period on arrival and on their return home from their employment as a result of COVID-19.

If we, as their employer reimburse them for all quarantine expenses, here and in their home state, what FBT implication would there be?

Any guidance, assistance would be appreciated as the number of seasonal workers is significant.

Answer

The FBT Act contains an exemption for benefits provided to employees consisting of ’emergency assistance’.  To qualify for the exemption the following conditions must be satisfied:

1. The benefit must be provided in respect of the employment of the employee.
2. A person is, or may become, a victim of an emergency.
3. The sole purpose of the benefit must be to provide emergency assistance.
4. Where the emergency assistance is health care, additional conditions must be satisfied.

The ATO appear to accept that the exemption can apply to COVID 19 employee quarantining costs. The ATO view can be found at the following ATO web page link (click here) and is reproduced below:

Accommodation, food and transport

You will not have to pay FBT if you provide emergency accommodation, food, transport or other assistance to an employee if:

          – the benefit is emergency assistance to provide immediate relief, and

          – the employee is, or is at risk of being, adversely affected by COVID-19.

In the context of COVID-19, the FBT emergency assistance exemption applies if you provide emergency accommodation, food, transport or other assistance to an affected employee. For example:

– expenses incurred relocating an employee, including paying for flights home to Australia

– expenses incurred for food and temporary accommodation if an employee cannot travel due to restrictions (domestic, interstate or intrastate)

– benefits provided that allow an employee to self-isolate or quarantine

– transporting or paying for an employee’s transport expenses including car hire and transport to temporary accommodation.

The ATO website content also provides the following information which also supports the exemption applying in your scenario:

Temporary accommodation and meals for fly-in fly-out and drive-in drive-out employees

You will not have to pay FBT for benefits considered emergency assistance. This includes providing temporary accommodation and meals to fly-in fly-out or drive-in drive-out employees who are unable to return to their normal residence due to COVID-19 domestic and international travel restrictions

Given you will be recruiting a large number of seasonal workers it may be prudent for you to engage with the ATO (potentially via a private binding ruling) to confirm the quarantining costs will be exempt in accordance with the published guidance reproduced above.

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.