The exemptions under sections 8(2) and 47(6) of the FBT Act apply where there is no private use of the vehicle during the year of tax and at a time when the benefit was provided other than:
– work-related travel of the employee: and
– other private use by the employee or an associate of the employee, being other use that was minor, infrequent and irregular.
‘Work related travel’ for the above purpose is defined to include travel by the employee between their place of residence and the place of employment or any other place from which or at which the employee performs duties of their employment. It also includes travel that is incidental to travel in the course of performing the duties of their employment.
The words ‘place of residence’ means –
(a) a place at which the person resides; or
(b) a place at which the person has sleeping accommodation
whether on a permanent or temporary basis, and whether or not on a shared basis.
The Scenario
It is now fairly common for taxpayers from regional centres or country towns to have full-time long term employment in a state capital city such as Melbourne or Sydney. Indeed, as a result of the COVID-19 pandemic, this type of arrangement is likely to increase! Employees in this situation commonly decide not to commute daily between their home and place of employment, but have a place residence in each centre.
Typically, that may involve the family living full-time in the ‘family home’ in the regional centre or country town (the first residence), and the employee living in the major city (the second residence) for perhaps five days, returning to the family home at weekends.
The question is if such an employee uses an ‘exempt vehicle’, for example a utility, to travel between the second residence and his/her place of work during the week, and then uses that utility to travel between the place employment and the first residence at the end of that period, and the first residence and the place employment at the start of that period, whether that travel is still ‘work related’ for the purposes of the section 8(2) and section 47(6) exemptions.
The Answer
Paragraph 12 of now withdrawn Miscellaneous Taxation Ruling MT 2030 stated that “A place of residence of a person is thus the place where he or she resides or has some form sleeping accommodation. The customary meaning the word ‘reside’ is to dwell permanently or for a considerable time, or have one’s abode for a time. In turn ‘residence’ means the place, especially the house, in which one resides; a dwelling place; or a dwelling“.
Given that a dwelling need only be a place which the person occupies or where they eat and sleep, it is our view that an employer could accept, in the circumstances outlined, than an employee has two places of residence for the purposes of ‘work related travel’.
In the scenario put forward, the ‘family home’ is a ‘place of residence’ (the first residence) and the city residence (the second residence) is also a ‘place of residence’ while the employee is residing at that location. This does not require a consideration as to whether one of those places of residence is the employee’s ‘usual place of residence’. That is a different concept.
Accordingly, where an employee uses a ‘utility’ to travel between:
- the second residence and his/her place of work during the week
- the place of employment and the first residence at the weekend, and
- the first residence and the place of employment at the end of that period
that travel will be ‘work related travel’ for the purposes of the section 8(2) and section 47(6) exemptions.
On the assumption the other use of the vehicle is for work related purposes and other private travel that is minor, infrequent and irregular, no FBT is payable.