Fringe Benefits Tax Assessment Act 1986

No. 39 of 1986

An Act relating to the assessment and collection of the tax imposed by the Fringe Benefits Tax Act 1986, and for related purposes

[Assented to 24 June 1986]

BE IT ENACTED by the Queen, and the Senate and the House of Representatives of the Commonwealth of Australia, as follows:

PART I—PRELIMINARY

Short title

1. This Act may be cited as the Fringe Benefits Tax Assessment Act 1986.

Commencement

2. This Act shall come into operation on the day on which it receives the Royal Assent.

PART II—ADMINISTRATION

General administration of Act

3. The Commissioner has the general administration of this Act.

Annual report

4. (1) The Commissioner shall, as soon as practicable after 30 June in each year, prepare and furnish to the Minister a report on the working of this Act, including any breaches or evasions of this Act of which the Commissioner has notice.

(2) The Minister shall cause a copy of a report furnished under sub-section (1) to be laid before each House of the Parliament within 15 sitting days of that House after the day on which the Minister receives the report.

(3) For the purposes of section 34c of the Acts Interpretation Act 1901, a report that is required by sub-section (1) to be furnished as soon as practicable after 30 June in a year shall be taken to be a periodic report relating to the working of this Act during the year ending on that 30 June.

Secrecy

5. (1) In this section, “officer” means a person—

(a) who is or has been appointed or employed by the Commonwealth; or

(b) to whom powers or functions have been delegated by the Commissioner,

and who, by reason of the appointment or employment or in the course of the employment, or by reason of, or in the course of the exercise of powers or the performance of functions under, the delegation, as the case may be, may acquire or has acquired information with respect to the affairs of any other person disclosed or obtained under or for the purposes of this Act.

(2) For the purposes of this section, a person who, although not appointed or employed by the Commonwealth, performs services for the Commonwealth shall be taken to be employed by the Commonwealth.

(3) Subject to sub-section (5), a person who is or has been an officer shall not, except for the purposes of this Act or otherwise than in the performance of the person’s duties as an officer, directly or indirectly—

(a) make a record of any information with respect to the affairs of a second person; or

(b) divulge or communicate to a second person any information with respect to the affairs of a third person,

being information disclosed or obtained under or for the purposes of this Act and acquired by the person by reason of the person’s appointment or employment by the Commonwealth or in the course of such employment, or by reason of the delegation to the person of powers or functions by the Commissioner, or in the course of the exercise of such powers or performance of such functions, as the case may be.

Penalty: $5,000 or imprisonment for 12 months, or both.

(4) Except where it is necessary to do so for the purpose of carrying into effect the provisions of this Act, a person who is or has been an officer shall not be required—

(a) to produce in court any document made or given under or for the purposes of this Act; or

(b) to divulge or communicate to a court a matter or thing with respect to information disclosed or obtained under or for the purposes of this Act,

being a document or information acquired by the person by reason of the person’s appointment or employment by the Commonwealth or in the course of such employment, or by reason of the delegation to the person of powers or functions by the Commissioner, or in the course of the exercise of such powers or the performance of such functions, as the case may be.

(5) Nothing in sub-section (3) shall be taken to prohibit the Commissioner, a Deputy Commissioner or a person authorised by the Commissioner or a Deputy Commissioner from communicating any information to a person performing, as an officer, duties arising under an Act administered by the Commissioner or regulations under such an Act for the purpose of enabling the person to perform those duties.

(6) For the purposes of sub-section (3), an officer shall be deemed to have communicated information to another person in contravention of that sub-section if the officer communicates the information to any Minister.

(7) An officer shall, if and when required by the Commissioner or a Deputy Commissioner to do so, make an oath or declaration, in a manner and form specified by the Commissioner in writing, to maintain secrecy in conformity with the provisions of this section.

PART III—FRINGE BENEFITS

Division 1—Preliminary

Part not to limit generality of “benefit”

6. The provisions of this Part do not limit the generality of the expression “benefit”.

Division 2—Car Fringe Benefits

Subdivision A—Car Benefits

Car benefits

7. (1) Where—

(a) at any time on a day, in respect of the employment of an employee, a car held by a person (in this sub-section referred to as the “provider”)—

(i) is applied to a private use by the employee or an associate of the employee; or

(ii) is taken to be available for the private use of the employee or an associate of the employee; and

(b) either of the following conditions is satisfied:

(i) the provider is the employer, or an associate of the employer, of the employee;

(ii) the car is so applied or available, as the case may be, under an arrangement between—

(a) the provider or another person; and

(b) the employer, or an associate of the employer, of the employee,

that application or availability of the car shall be taken to constitute a benefit provided on that day by the provider to the employee or associate in respect of the employment of the employee.

(2) Where, at a particular time, the following conditions are satisfied in relation to an employee of an employer:

(a) a car is held by a person, being—

(i) the employer;

(ii) an associate of the employer; or

(iii) a person (other than the employer or an associate of the employer) with whom, or in respect of whom, the employer or an associate of the employer has an arrangement relating to the use or availability of the car;

(b) the car is garaged or kept at or near a place of residence of the employee or of an associate of the employee,

the car shall be taken, for the purposes of this Act, to be available at that time for the private use of the employee or associate, as the case may be.

(3) Where, at a particular time, the following conditions are satisfied in relation to an employee of an employer:

(a) a car is held by a person, being—

(i) the employer;

(ii) an associate of the employer; or

(b) the car is not at business premises of—

(i) the employer;

(ii) an associate of the employer; or

(iii) a person (other than the employer or an associate of the employer) with whom, or in respect of whom, the employer

or an associate of the employer has an arrangement relating to the use or availability of the car;

(i) the employee is entitled to apply the car to a private use;

(ii) the employee is not performing the duties of his or her employment and has custody or control of the car;

(iii) an associate of the employee is entitled to use, or has custody or control of, the car,

the car shall be taken, for the purposes of this Act, to be available at that time for the private use of the employee or associate, as the case may be.

(4) For the purposes of sub-section (3), where a prohibition on the application of a car, or on the application of a car for a private use, by a person is not consistently enforced, the person shall be deemed to be entitled to use the car, or to apply the car to a private use, notwithstanding the prohibition.

(5) For the purposes of this Act, a car shall be deemed to be applied by a person if it is applied in accordance with the directions, instructions or wishes of the person.

(6) For the purposes of this Division, a car that is let on hire to a person under a hire-purchase agreement shall be deemed—

(a) to have been purchased by the person at the time when the person first took the car on hire; and

(b) to have been owned by the person at all material times.

(7) A reference in this Division to a car held by a person (in this sub-section referred to as the “provider”) does not include a reference to—

(a) a taxi let on hire to the provider; or

(b) a car let on hire to the provider under an agreement of a kind ordinarily entered into by persons taking cars on hire intermittently as occasion requires on an hourly, daily, weekly or other short-term basis unless the car has been or may reasonably be expected to be on hire under successive agreements of a kind that result in substantial continuity of the hiring of the car.

Exempt car benefits

8. (1) Except insofar as section 7 provides that the application or availability of a car held by a person is a benefit, the application or availability of a car held by a person is an exempt benefit.

(2) A car benefit provided in a year of tax in respect of the employment of a current employee is an exempt benefit in relation to the year of tax if—

(a) the car is—

(i) a taxi, panel van or utility truck; or

(ii) any other road vehicle designed to carry a load of less than 1 tonne (other than a vehicle designed for the principal purpose of carrying passengers); and

(b) either of the following conditions is satisfied:

(i) the car was not applied to a private use at any time during the year of tax when the benefit was provided;

(ii) all private use of the car during the year of tax and at a time when the benefit was provided consisted of work-related travel of the employee.

Subdivision B—Taxable Value of Car Fringe Benefits

Taxable value of car fringe benefits—statutory formula

9. (1) Subject to this Subdivision, where one or more car fringe benefits in relation to an employer in relation to a year of tax relate to a particular car held by a particular person (in this section referred to as the “provider”), the taxable value of that fringe benefit, or the aggregate of the taxable values of those fringe benefits, as the case may be, in relation to that year of tax, is the amount calculated in accordance with the formula where—

A is the base value of the car;

B is the statutory fraction;

C is the number of days during that year of tax on which the car fringe benefits were provided by the provider;

D is the number of days in that year of tax; and

E is the amount (if any) of the recipient’s payment.

(2) For the purposes of this section—

(a) the base value of the car is the sum of—

(i) where, at the earliest holding time, the car was owned by the provider or an associate of the provider, the amount calculated in accordance with the formula AB, where—

A is the cost price of the car to the provider or associate, as the case may be; and

B is—

(a) in a case where the commencement of the year of tax is later than the fourth anniversary of the earliest holding time—2/3; or

(b) in any other case—1;

(ii) in a case to which sub-paragraph (i) does not apply—the amount calculated in accordance with the formula AB, where—

A is the leased car value of the car at the earliest holding time; and

B is—

(a) in a case where the commencement of the year of tax is later than the fourth anniversary of the earliest holding time—2/3; or

(b) in any other case—1; and

(iii) the cost price of each non-business accessory that—

(a) was fitted to the car after the earliest holding time and before the end of the year of tax; and

(b) remained fitted to the car at a time during the year of tax when the car was held by the provider;

(b) the earliest holding time, in relation to a car held by the provider at a particular time (in this paragraph referred to as the “current time”), is the earliest time before the current time when the car was held by the provider or an associate of the provider;

(i) in the case of the transitional year of tax—

(a) where the annualised number of whole kilometres travelled by the car during the year of tax was more than 30,000—0.045;

(b) where the annualised number of whole kilometres travelled by the car during the year of tax was not less than 18,750 and not more than 30,000—0.075;

(c) where the annualised number of whole kilometres travelled by the car during the year of tax was not less than 11,250 and not more than 18,749—0.135; or

(d) in any other case—0.18; and

(ii) in relation to a standard year of tax—

(a) where the annualised number of whole kilometres travelled by the car during the year of tax was more than 40,000—0.06;

(b) where the annualised number of whole kilometres travelled by the car during the year of tax was not less than 25,000 and not more than 40,000—0.1;

(c) where the annualised number of whole kilometres travelled by the car during the year of tax was not less than 15,000 and not more than 24,999—0.18; or

(d) in any other case—0.24;

(d) the annualised number of whole kilometres travelled by the car during the year of tax is the number calculated in accordance with the formula , where—

A is the number of whole kilometres travelled by the car during the period in the year of tax when the car was held by the

provider (in this sub-section referred to as the “holding period”);

B is the number of days in the year of tax; and

C is the number of days in the holding period; and

(e) the amount of the recipient’s payment is the sum of—

(i) in a case where expenses were incurred to the provider or employer during the holding period by recipients of the car fringe benefits by way of consideration for the provision of the car fringe benefits—the amount of those expenses paid by the recipients less any amount paid or payable to the recipients by way of reimbursement of those expenses; and

(ii) in a case where—

(a) car expenses in respect of the car were incurred during the holding period by recipients of the car fringe benefits; and

(b) documentary evidence of those expenses is obtained by the persons incurring the expenses and given to the employer before the declaration date,

the amount of those expenses paid by the recipients less any amount paid or payable to the recipients by way of reimbursement of those expenses.

Taxable value of car fringe benefits—cost basis

10. (1) An employer may, in relation to a particular car, elect that this section apply in relation to all the car fringe benefits in relation to the employer in relation to a year of tax that relate to that car.

(2) Where an election is made under sub-section (1), the taxable value, or the aggregate of the taxable values, as the case requires, of the car fringe benefits in relation to the employer in relation to the year of tax that relate to the car while it was held by a particular person (in this section referred to as the “provider”) continuously during a particular period (in this section referred to as the “holding period”) in the year of tax is the amount calculated in accordance with the formula , where—

A is the operating cost of the car during the holding period;

B is the number of whole private kilometres travelled by the car during the holding period;

C is the number of whole kilometres travelled by the car in the holding period; and

D is the amount (if any) of the recipient’s payment.

(3) For the purposes of sub-section (2)—

(a) the operating cost of the car during the holding period is the sum of—

(i) any car expenses (other than expenses in respect of registration and insurance) relating to the car incurred during the holding period (whether the expenses are incurred by the provider or by any other person), not including, in a case where the car is leased to the provider, any car expenses incurred by the lessor pursuant to the lease agreement;

(ii) so much of any expense paid or payable in respect of the registration of, or insurance in respect of, the car as is attributable to the holding period (whether the expenses are incurred by the provider or by any other person), not including—

(a) in a case where the car is owned by the provider—any expense incurred before the provider became the owner of the car; or

(b) in a case where the car is leased to the provider—any expense incurred by the lessor pursuant to the lease agreement;

(iii) in a case where the car is owned by the provider—

(a) the amount of depreciation that is deemed to have been incurred by the provider in respect of the car in respect of the year of tax; and

(b) the amount of interest that is deemed to have been incurred by the provider in respect of the car in respect of the year of tax;

(iv) in a case where the car is owned by the provider and a non-business accessory was fitted to the car during the period when the car was owned by the provider and remained fitted to the car at a time during the holding period—

(a) the amount of depreciation that would be deemed to have been incurred by the provider in respect of the accessory in respect of the year of tax if the accessory were a car; and

(b) the amount of interest that would be deemed to have been incurred by the provider in respect of the accessory in respect of the year of tax if the accessory were a car;

(v) in a case where the car is leased to the provider—

(a) where sub-sub-paragraph (b) does not apply—so much of the charges paid or payable under the lease agreement as are attributable to the holding period; or

(b) where the lessor was entitled to privileges or exemptions in relation to sales tax or customs duty in respect of a transaction by which the lessor purchased the car—the amount that could reasonably be expected to have been applicable under sub-sub-paragraph (a)

if the lessor had not been entitled to those privileges or exemptions; and

(vi) in a case where the car is neither owned by, nor leased to, the provider—the amount of depreciation and interest that would be deemed to have been incurred by the provider in respect of the car in respect of the year of tax if the car had been purchased by the provider at the time when the provider commenced to hold the car for a consideration equal to the leased car value of the car at that time;

(b) the number of whole private kilometres travelled by the car during the holding period is—

(i) in a case where relevant car documents in relation to the car are maintained by or on behalf of the provider during the holding period and, if the provider is not the employer, are given to the employer before the declaration date, the number ascertained in accordance with the formula , where—

A is the number of whole kilometres travelled by the car during the holding period; and

B is the number of whole kilometres travelled by the car during the holding period in respect of business journeys undertaken in the car; and

(ii) in any other case—the number of whole kilometres travelled by the car during the holding period; and

(ii) in a case where—

(a) car expenses in respect of the car were incurred during the holding period by recipients of the car fringe benefits; and

(b) documentary evidence of those expenses is obtained by the persons incurring the expenses and given to the employer before the declaration date,

the amount of those expenses paid by the recipients less any amount paid or payable to the recipients by way of reimbursement of those expenses.

(4) An election by an employer under sub-section (1) in relation to a year of tax—

(a) shall be made by notice in writing to the Commissioner; and

(b) shall be lodged with the Commissioner on or before the declaration date.

(5) Where—

(a) an employer is entitled to make, but does not make, an election under sub-section (1) in relation to a car in relation to a year of tax; or

(b) an associate of an employer is entitled to make, but does not make, an election under sub-section (1) in relation to a car in relation to a year of tax, not being a year of tax in relation to which the employer makes an election under sub-section (1) in relation to the car,

the employer is not entitled to make an election under sub-section (1) in relation to the car in relation to a later year of tax.

(6) Where an employer—

(a) makes an election under sub-section (1) in relation to a car in relation to a year of tax; and

(b) is entitled to make an election under sub-section (1) in relation to the car in relation to a later year of tax,

the employer shall be deemed, for the purposes of this section, to have made the election referred to in paragraph (b).

Calculation of depreciation and interest

11. (1) For the purposes of this Subdivision, the amount of depreciation that is deemed to have been incurred by a person in respect of a car in respect of a year of tax is the amount calculated in accordance with the formula , where—

A is—

(a) where the car was owned by the person at the beginning of the year of tax—the depreciated value of the car at that time; or

(b) in any other case—the cost price of the car to the person;

B is 0.225;

C is the number of days in the period in the year of tax during which the car was owned by the person; and

D is—

(d) in the case of a standard year of tax—the number of days in the year of tax.

(2) For the purposes of this Subdivision, the amount of interest that is deemed to have been incurred by a person in respect of a car in respect of a year of tax is the amount calculated in accordance with the formula , where—

A is—

(a) where the car was owned by the person at the beginning of the year of tax—the depreciated value of the car at that time; or

(b) in any other case—the cost price of the car to the person;

B is the statutory interest rate in relation to the year of tax;

C is the number of days in the period in the year of tax during which the car was owned by the person; and

D is—

(d) in the case of a standard year of tax—the number of days in the year of tax.

Depreciated value

12. A reference in this Subdivision to the depreciated value of a car at a particular time (in this section referred to as the “relevant time”) is a reference to—

(a) if the relevant time is the beginning of the transitional year of tax—the cost price of the car to the person who owns the car at the relevant time reduced by the total amount of depreciation that would have been deemed to have been incurred by the person in respect of the car for the period (in this paragraph referred to as the “relevant period”) before that time when it was owned by the person if—

(i) the depreciation deemed to have been incurred for the relevant period were calculated in accordance with sub-section 11 (1); and

(ii) each year commencing on 1 July were a standard year of tax; and

(b) if the relevant time is the beginning of a standard year of tax—the amount calculated in accordance with the formula , where—

A is—

(i) if the car was owned by the person at the beginning of the transitional year of tax—the depreciated value of the car at the beginning of the transitional year of tax; or

(ii) in any other case—the cost price of the car to the person; and

B is the total amount of depreciation (if any) that would have been deemed to have been incurred by the person in respect of the car for the period (in this paragraph referred to as the “relevant period”) after the beginning of the transitional year of tax and before the relevant time when the car was owned by the person if the depreciation deemed to have been incurred

for the relevant period were calculated in accordance with sub-section 11 (1).

Expenditure to be increased in certain circumstances

13. (1) The following provisions apply for the purpose of determining the base value of a car for the purposes of section 9 or the operating cost of a car for the purposes of section 10.

(2) Where the amount (if any) of expenditure incurred by a person under a transaction that is not an arm’s length transaction is less than the amount (in this sub-section referred to as the “increased amount”) of expenditure that could reasonably have been expected to have been incurred by the person under the transaction if it had been an arm’s length transaction, the person shall be deemed, under the transaction, to have incurred the increased amount of expenditure.

(3) The reference in sub-section (2) to expenditure does not include a reference to expenditure by a recipient of a car benefit in relation to the car by way of reimbursement of expenditure incurred by another person.

(4) Where, in a case to which sub-section (2) does not apply—

(a) a person acquires any property, or is provided with any benefit; and

(b) the person incurs no expenditure in respect of the acquisition of that property or the provision of that benefit,

the person shall be deemed to have incurred, in respect of the acquisition of that property or the provision of that benefit, expenditure equal to the amount that the person could reasonably be expected to have been required to pay to purchase that property, or obtain the provision of that benefit, on the open market.

Division 3—Debt Waiver Fringe Benefits

Subdivision A—Debt Waiver Benefits

Debt waiver benefits

14. Where, at a particular time, a person (in this section referred to as the “provider”) waives the obligation of another person (in this section referred to as the “recipient”) to pay or repay to the provider an amount, the waiver shall be taken to constitute a benefit provided at that time by the provider to the recipient.

Subdivision B—Taxable Value of Debt Waiver Fringe Benefits

Taxable value of debt waiver fringe benefits

15. The taxable value in relation to a year of tax of a debt waiver fringe benefit provided in the year of tax is the amount the payment or repayment of which is waived.

Division 4—Loan Fringe Benefits

Subdivision A—Loan Benefits

Loan benefits

16. (1) Where a person (in this sub-section referred to as the “provider”) makes a loan to another person (in this sub-section referred to as the “recipient”), the making of the loan shall be taken to constitute a benefit provided by the provider to the recipient and that benefit shall be taken to be provided in respect of each year of tax during the whole or a part of which the recipient is under an obligation to repay the whole or any part of the loan.

(2) For the purposes of this Act, where—

(a) a person (in this sub-section referred to as the “debtor”) is under an obligation to pay or repay an amount (in this sub-section referred to as the “principal amount”) to another person (in this sub-section referred to as the “creditor”);

(b) the principal amount is not the whole or a part of the amount of a loan; and

(c) after the due date for payment or repayment of the principal amount, the whole or part of the principal amount remains unpaid,

the following provisions have effect:

(d) the creditor shall be deemed, immediately after the due date, to have made a loan (in this sub-section referred to as the “deemed loan”) of the principal amount to the debtor;

(e) at any time when the debtor is under an obligation to repay any part of the principal amount, the debtor shall be deemed to be under an obligation to repay that part of the deemed loan;

(f) the deemed loan shall be deemed to have been made—

(i) if interest accrues on so much of the principal amount as remains from time to time unpaid—at the rate of interest at which that interest accrues; or

(ii) in any other case—at a nil rate of interest.

(3) For the purposes of this Act, where a person (in this sub-section referred to as the “provider”) makes a deferred interest loan (in this sub-section referred to as the “principal loan”) to another person (in this sub-section referred to as the “recipient”)—

(a) the provider shall be deemed, at the end of—

(i) the period of 6 months commencing on the day on which the principal loan was made; and

(ii) each subsequent period of 6 months,

(being in either case a period ending on or after 1 July 1986 during the whole of which the recipient is under an obligation to repay the whole or any part of the principal loan) to have made a loan (in this sub-section referred to as the “deemed loan”) to the recipient

of an amount equal to the amount by which the interest (in this sub-section referred to as the “accrued interest”) that has accrued on the principal loan in respect of that period exceeds the amount (if any) paid in respect of the accrued interest before the end of that period;

(b) where any part of the accrued interest becomes payable or is paid after the time when the deemed loan is deemed to have been made, the deemed loan shall be reduced accordingly; and

(4) In sub-section (3), “deferred interest loan” means a loan in respect of which interest is payable at a rate exceeding nil, other than—

(a) a loan where the whole of the interest is due for payment within 6 months after the loan is made; or

(b) a loan where—

(i) the interest is payable by instalments;

(ii) the intervals between instalments do not exceed 6 months; and

(iii) the first instalment is due for payment within 6 months after the loan is made.

(5) For the purposes of this Act, where no interest is payable in respect of a loan, a nil rate of interest shall be taken to be payable in respect of the loan.

Exempt loan benefits 17.

(1) Where—

(a) a loan is made by a person who carries on a business that consists of or includes making loans to members of the public; and

(b) the rate of interest payable in respect of the loan—

(i) is specified in a document in existence at the time the loan is made;

(ii) is not less than the rate of interest in respect of a similar arm’s length loan made by the person, at or about that time, to a member of the public in the ordinary course of carrying on that business; and

(iii) cannot be varied,

the making of the loan is an exempt benefit.

(2) Where—

(a) a loan is made by a person who carries on a business that consists of or includes making loans to members of the public; and

(b) the rate of interest from time to time payable in respect of the loan in respect of a year of tax is not less than the rate of interest applicable at the time concerned in respect of a similar arm’s length loan made by the person, at or about the time the loan referred to

in paragraph (a) is made, to a member of the public in the ordinary course of carrying on that business, the making of the loan is an exempt benefit in relation to that year of tax.

(3) Where—

(a) a loan consists of an advance by an employer to a current employee of the employer in respect of his or her employment;

(b) the sole purpose of the making of the loan is to enable the employee to meet expenses incurred by the employee—

(i) in the course of performing the duties of his or her employment; and

(ii) not later than 6 months after the loan is made;

(c) the amount of the loan does not substantially exceed the amount of those expenses that could reasonably be expected to be incurred by the employee; and

(d) the employee is required—

(i) to account to the employer, not later than 6 months after the loan is made, for expenses met from the loan; and

(ii) to repay (whether by set-off or otherwise) any amount not so accounted for,

the making of the loan is an exempt benefit.

Subdivision B—Taxable Value of Loan Fringe Benefits

Taxable value of loan fringe benefits

18. (1) Subject to this Part, the taxable value, in relation to a year of tax, of a loan fringe benefit provided in respect of the year of tax is the amount (if any) by which the notional amount of interest in relation to the loan in respect of the year of tax exceeds the amount of interest that has accrued on the loan in respect of the year of tax.

(2) In this section—

“eligible pre-commencement loan” means a loan made before 1 July 1986 at a rate of interest that—

(a) is specified in a document in existence at the time when the loan was made; and

(b) cannot be varied;

“notional amount of interest”, in relation to a loan in relation to a year of tax, means the amount of interest that would have accrued on the loan in respect of the year of tax if the interest were calculated on the daily balance of the loan at—

(a) where the loan is an eligible pre-commencement loan—

(i) the statutory interest rate in relation to the time when the loan was made; or

(ii) the statutory interest rate in relation to the year of tax,

whichever is the less;

(b) where the loan is not an eligible pre-commencement loan, was made before 3 April 1986 and is a housing loan relating to a dwelling—

(i) the statutory interest rate in relation to the year of tax; or

(ii) 13.5% per annum, whichever is the less; or

Reduction of taxable value

19. (1) Where—

(a) the recipient of a loan fringe benefit in relation to an employer in relation to a year of tax is an employee of the employer;

(b) if the recipient had, on the last day of the period during the year of tax when the recipient was under an obligation to repay the whole or any part of the loan, incurred and paid interest in respect of the loan in respect of that period and had not been reimbursed in respect of any part of that interest—

(i) a once-only deduction would, or would but for section 82a, and Subdivisions F and G of Division 3 of Part III, of the Income Tax Assessment Act 1936, have been allowable under that Act to the recipient in respect of a percentage (in this sub-section referred to as the “deductible percentage”) of that interest; and

(ii) that deduction would not be—

(a) a deduction in respect of rental property loan interest within the meaning of Subdivision G of Division 3 of Part III of that Act; or

(b) an eligible rental property deduction within the meaning of Subdivision G of Division 3 of Part III of that Act;

(c) the recipient gives to the employer, before the declaration date, a declaration, in a form approved by the Commissioner, in respect of the loan concerned; and

(d) where the loan was used by the recipient to purchase a car owned by the recipient during a period (in this paragraph referred to as the “holding period”) in the year of tax—the recipient gives to the employer, before the declaration date—

(i) a declaration, in a form approved by the Commissioner, that purports to set out—

(a) the holding period;

(b) the number of whole business kilometres travelled by the car during the holding period; and

(ii) where the average number of business kilometres per week travelled by the car during the holding period exceeded 96—

(a) a declaration referred to in sub-paragraph (i); or

(b) a declaration, in a form approved by the Commissioner, that purports to set out the holding period and includes a statement by the recipient that the average number of business kilometres per week travelled by the car during the holding period exceeded 96,

the taxable value, but for section 60, of the loan fringe benefit in relation to the year of tax is the amount calculated in accordance with the formula where—

A is the amount that, but for this sub-section and section 60, would be the taxable value of the loan fringe benefit in relation to the year of tax; and

B is—

(e) in a case where paragraph (d) does not apply—the deductible percentage;

(f) where paragraph (d) applies and a declaration referred to in sub-paragraph (d) (i) has been given to the employer—

(i) in a case to which sub-paragraph (ii) of this paragraph does not apply—the deductible percentage or 331/3%, whichever is the less; or

(ii) in a case where the declaration contains a statement that relevant car documents were maintained by or on behalf of the recipient and the declaration is accompanied by a copy of those documents—the deductible percentage; or

(g) where sub-paragraph (d) (ii) applies but a declaration referred to in sub-paragraph (d) (i) has not been given to the employer—331/3%.

(2) Where a part of a loan to which a loan fringe benefit relates is used by an employee to purchase a particular car, sub-section (1) applies as if that part of the loan had been a separate loan.

Division 5—Expense Payment Fringe Benefits

Subdivision A—Expense Payment Benefits

Expense payment benefits

20. Where a person (in this section referred to as the “provider”)—(a) makes a payment in discharge, in whole or in part, of an obligation of another person (in this section referred to as the “recipient”) to pay an amount to a third person in respect of expenditure incurred by the recipient; or

(b) reimburses another person (in this section also referred to as the “recipient”), in whole or in part, in respect of an amount of expenditure incurred by the recipient,

the making of the payment referred to in paragraph (a), or the reimbursement referred to in paragraph (b), shall be taken to constitute the provision of a benefit by the provider to the recipient.

Exempt accommodation expense payment benefits

21. Where—

(a) an expense payment benefit is provided in a year of tax to a current employee of an employer in respect of his or her employment;

(b) the recipients expenditure is in respect of accommodation for eligible family members and is not expenditure to which paragraph 24 (1) (b) applies;

(c) the accommodation is required solely by reason that the employee is required to live away from his or her usual place of residence in order to perform the duties of his or her employment; and

(d) the employee gives to the employer, before the declaration date, a declaration, in a form approved by the Commissioner, purporting to set out—

(i) the employee’s usual place of residence; and

(ii) the place at which the employee actually resided while living away from his or her usual place of residence,

the benefit is an exempt benefit in relation to the year of tax.

Exempt car expense payment benefits

22. Where—

(a) an expense payment benefit provided to an employee of an employer in respect of his or her employment is constituted by the reimbursement of the employee, in whole or in part, in respect of an amount of a car expense, within the meaning of Subdivision F of Division 3 of Part III of the Income Tax Assessment Act 1936, incurred by the employee in relation to a car owned by, or leased to, the employee;

(b) in a case where the car is leased to the employee—the recipients expenditure is not attributable to a period when the lessor is the provider of a car benefit in relation to the car in relation to the employee;

(d) the reimbursement is calculated by reference to the distance travelled by the car,

the expense payment benefit is an exempt benefit.

Subdivision B—Taxable Value of Expense Payment Fringe Benefits

Taxable value of expense payment fringe benefits

23. Subject to this Part, the taxable value in relation to a year of tax of an expense payment fringe benefit provided during the year of tax is the amount of the payment referred to in paragraph 20 (a), or the reimbursement referred to in paragraph 20 (b), as the case requires, reduced, in a case to which paragraph 20 (a) applies, by the amount of the recipients contribution.

Reduction of taxable value

24. (1) Where—

(a) the recipient of an expense payment fringe benefit in relation to an employer in relation to a year of tax is an employee of the employer;

(b) if the recipient had paid the whole of the recipients expenditure and had not been reimbursed in respect of any part of that expenditure—

(i) a once-only deduction would, or would but for section 82a, and Subdivisions F and G of Division 3 of Part III, of the Income Tax Assessment Act 1936, have been allowable to the recipient under that Act, in respect of a percentage (in this sub-section referred to as the “deductible percentage”) of the expenditure; and

(ii) that deduction would not be—

(a) a deduction in respect of rental property loan interest within the meaning of Subdivision G of Division 3 of Part III of that Act; or

(b) an eligible rental property deduction within the meaning of Subdivision G of Division 3 of Part III of that Act;

(c) in the case of an expense payment fringe benefit that is not an eligible incidental travel expense benefit or an eligible overtime meal expense benefit—

(i) where the fringe benefit is an eligible small expense payment benefit—

(a) documentary evidence of the recipients expenditure is obtained by the recipient and that documentary evidence, or a copy, is given to the employer before the declaration date; or

(b) substitute documentary evidence of the recipients expenditure is maintained by or on behalf of the provider and, if the provider is not the employer, that documentary evidence, or a copy, is given to the employer before the declaration date; or

(ii) in any other case—documentary evidence of the recipients expenditure is obtained by the recipient and that documentary

evidence, or a copy, is given to the employer before the declaration date;

(d) where the expense payment fringe benefit is an extended travel expense payment benefit—the recipient gives to the employer, before the declaration date, a travel diary in relation to the travel undertaken by the recipient to which the fringe benefit relates;

(e) except where the expense payment fringe benefit is—

(i) an exclusive employee expense payment benefit;

(ii) an eligible overtime meal expense payment benefit;

(iii) an eligible incidental travel expense payment benefit;

(iv) an extended travel expense payment benefit; or

(v) a car expense payment benefit,

the recipient gives to the employer, before the declaration date, a declaration, in a form approved by the Commissioner, in respect of the recipients expenditure; and

(f) where the expense fringe benefit is a car expense payment benefit in respect of a car owned by, or leased to, the recipient during a period (in this paragraph referred to as the “holding period”) in the year of tax—the recipient gives to the employer, before the declaration date—

(i) a declaration, in a form approved by the Commissioner, that purports to set out—

(a) the holding period;

(b) the number of whole business kilometres travelled by the car during the holding period; and

(ii) where the average number of business kilometres per week travelled by the car during the holding period exceeded 96—

(a) a declaration referred to in sub-paragraph (i); or

the taxable value, but for this sub-section and Division 13, of the expense payment fringe benefit in relation to the year of tax shall be reduced by the amount calculated in accordance with the formula AB, where—

A is—

(g) in a case where paragraph (f) does not apply—the deductible percentage;

(h) where paragraph (f) applies and a declaration referred to in sub-paragraph (f) (i) has been given to the employer—

(i) in a case to which sub-paragraph (ii) of this paragraph does not apply—the deductible percentage or 331/3%, whichever is the less; or

(j) where sub-paragraph (f) (ii) applies but a declaration referred to in sub-paragraph (f) (i) has not been given to the employer—331/3%; and

B is the amount of the recipients expenditure.

(2) For the purposes of the application of this section in relation to a fringe benefit, where the recipient—

(a) while undertaking travel referred to in paragraph (1) (d), engages in an activity in the course of producing assessable income of the recipient; and

(b) does not make, as mentioned in the definition of “travel diary” in sub-section 136 (1), an entry relating to the activity, being an entry of the kind referred to in that definition,

the activity shall be deemed not to have been engaged in by the recipient in the course of producing assessable income.

(3) Where the sum of—

(a) the recipients expenditure in respect of a small expense payment fringe benefit in relation to an employee in relation to an employer in relation to a year of tax; and

(b) the total of the recipients expenditure in respect of all other small expense payment fringe benefits in relation to the employer in relation to the employee in relation to the year of tax, being fringe benefits provided before the fringe benefit referred to in paragraph (a),

does not exceed $200, the fringe benefit referred to in paragraph (a) is an eligible small expense payment fringe benefit.

(4) For the purposes of paragraph (1) (c), the part of a petty cash book or similar document—

(a) that contains an entry in the English language setting out the particulars that would be set out in documentary evidence of the recipients expenditure in relation to an expense payment fringe benefit (other than particulars of the date on which the documentary evidence was made out); and

(b) that is signed by or on behalf of the provider of the benefit,

shall be deemed to be substitute documentary evidence of the recipients expenditure.

(5) Where—

(a) the recipients expenditure in relation to each of 2 or more expense payment fringe benefits (whether or not in relation to the same year of tax) is the same expenditure; and

(b) paragraph (1) (b) applies in relation to the recipients expenditure, this Act applies, and shall be deemed always to have applied, as if all the payments or reimbursements to which those fringe benefits relate had been made at the time when the first of those payments or reimbursements was made and not otherwise, and nothing in section 74 prevents the amendment of an assessment for the purpose of giving effect to this sub-section.

Division 6—Housing Fringe Benefits

Subdivision A—Housing Benefits

Housing benefits

25. The subsistence during the whole or a part of a year of tax of a housing right granted by a person (in this section referred to as the “provider”) to another person (in this section referred to as the “recipient”) shall be taken to constitute a benefit provided by the provider to the recipient in respect of the year of tax.

Subdivision B—Taxable Value of Housing Fringe Benefits

Taxable value of non-remote housing fringe benefits

26. (1) The taxable value of a housing fringe benefit provided in respect of the employment of an employee (not being a remote area housing fringe benefit) in relation to a year of tax is—

(a) where the recipients unit of accommodation is not located in a State or internal Territory—so much of the market value of the recipients current housing right as exceeds the recipients rent;

(b) where—

(i) paragraph (a) does not apply;

(ii) the recipients unit of accommodation is a caravan or mobile home or is in a hotel, motel, hostel or guesthouse; and

(iii) during the whole or a part of the tenancy period, the provider carried on a business consisting of or including the provision to outsiders, in respect of identical or similar units of accommodation in the hotel, motel, hostel or guesthouse, of leases or licences that are identical or similar to the recipients overall housing right,

the amount calculated in accordance with the formula AB, where—

A is the market value of the recipients current housing right; and

B is—

(iv) in a case where, if the fringe benefit were not a housing fringe benefit, it would be an in-house residual fringe benefit—0.75; and

(v) in any other case—1,

reduced by the recipients rent; and

A is the statutory annual value of the recipients current housing right;

B is the number of whole days in the tenancy period; and

C is—

(i) in the case of the transitional year of tax—365; and

(ii) in the case of a standard year of tax—the number of days in the year of tax,

reduced by the recipients rent.

(2) For the purposes of the application of sub-section (1) in relation to a housing fringe benefit in relation to an employer in relation to a year of tax (in this sub-section referred to as the “current year of tax”), the statutory annual value of the recipients current housing right is—

(a) if the current year of tax is a base year of tax in relation to the recipients current housing right—the amount calculated in accordance with the formula , where—

A is the market value of the recipients current housing right;

B is—

(i) in a case where the current year of tax is the transitional year of tax—365; and

(ii) in a case where the current year of tax is a standard year of tax—the number of days in the current year of tax; and

C is the number of whole days in the tenancy period; and

(b) in any other case—the amount ascertained in accordance with the formula AB, where—

A is—

(i) if the year of tax immediately preceding the current year of tax was a base year of tax for the purpose of calculating the taxable value of—

(a) a housing fringe benefit in relation to the employer in respect of the recipients overall housing right or in respect of an equivalent housing right; or

(b) each of 2 or more such housing fringe benefits,

the statutory annual value for the purposes of calculating the taxable value of the fringe benefit referred to in sub-sub-paragraph (a) or the weighted average of the statutory annual values for the purpose of calculating

the taxable values of the housing fringe benefits referred to in sub-sub-paragraph (b) (those statutory annual values being weighted on the basis of the lengths of the respective periods during that preceding year of tax during which the housing rights to which those housing fringe benefits relate subsisted), as the case may be; and

(ii) in any other case—the statutory annual value for the purpose of calculating the taxable values of housing fringe benefits in relation to the employer in relation to the year of tax immediately preceding the current year of tax, being housing fringe benefits in respect of the recipients overall housing right or equivalent housing rights; and

B is the indexation factor in respect of the current year of tax in respect of the State or Territory in which the recipients unit of accommodation is situated.

(3) For the purposes of the application of sub-section (2) in relation to a housing fringe benefit in relation to an employer in relation to a year of tax (in this sub-section referred to as the “current year of tax”), the current year of tax is a base year of tax in relation to the recipients current housing right if—

(a) the current year of tax is the transitional year of tax;

(b) there was no housing fringe benefit, in relation to the employer in relation to the year of tax immediately preceding the current year of tax, in respect of the recipients overall housing right or in respect of an equivalent housing right; or

(i) in relation to each of the 9 years of tax immediately preceding the current year of tax there was a housing fringe benefit in relation to the employer in respect of the recipients overall housing right or an equivalent housing right;

(ii) none of those 9 years of tax was a base year of tax for the purpose of calculating the taxable value of a housing fringe benefit to which sub-paragraph (i) applies.

(4) For the purposes of this section—

(a) 2 or more housing rights shall be taken to be included in the same class of housing rights if—

(i) the housing rights are in respect of the same unit of accommodation; and

(ii) the conditions (other than as to duration or consideration) of the housing rights are the same or substantially the same; and

(b) a housing right shall be taken to be equivalent to another housing right if each of those housing rights is included in the same class of housing rights.

(5) For the purposes of this section, where a material alteration to a unit of accommodation results in an increase or decrease of not less than 10% in the market value of the right to occupy or use the unit—

(a) the unit of accommodation after the alteration shall be deemed to be a different unit of accommodation from the unit of accommodation before the alteration; and

(b) if the alteration occurs during the subsistence of a housing right granted to a person in respect of the unit of accommodation, that housing right, as it subsists after the alteration, shall be deemed to have been granted to the person in respect of the unit of accommodation as it existed after the alteration and to have been so granted in the same circumstances as the first-mentioned housing right.

(6) A reference in sub-section (5) to a material alteration to a unit of accommodation is a reference to—

(a) additions or improvements made to, or other work carried out in relation to;

(b) any damage to; or

the unit of accommodation or any building, place or facility associated with the occupation or use of the unit of accommodation.

Determination of market value of housing right

27. (1) For the purposes of determining the market value of the recipients current housing right in relation to a housing fringe benefit, where the recipient is entitled, pursuant to the housing right, to require a second person to—

(a) make a payment in discharge, in whole or in part, of an obligation of the recipient to pay an amount to a third person in respect of expenditure incurred by the recipient; or

(b) to reimburse the recipient, in whole or in part, in respect of an amount of expenditure incurred by the recipient,

that entitlement shall be disregarded.

(2) For the purposes of determining the market value of the recipients current housing right in relation to a housing fringe benefit provided in respect of the employment of an employee, any onerous conditions that are attached to the housing right and that relate to his or her employment shall be disregarded.

Indexation factor for valuation purposes

28. (1) For the purposes of this Subdivision, the indexation factor in respect of a year of tax (in this sub-section referred to as the “current year of tax”) in respect of a State or Territory is the number (calculated to 3

decimal places) ascertained, as at the date on which the rent index number in respect of the State or Territory for the December quarter immediately preceding the current year of tax was first published, by dividing the sum of—

(a) the rent index number in respect of the State or Territory in respect of the December quarter immediately preceding the current year of tax; and

(b) the rent index numbers in respect of the State or Territory in respect of the 3 quarters that immediately preceded that quarter,

by the sum of—

(c) the rent index number in respect of the State or Territory in respect of the December quarter immediately preceding the year of tax that next preceded the current year of tax; and

(d) the rent index numbers in respect of the State or Territory in respect of the 3 quarters that immediately preceded the last-mentioned quarter.

(2) Subject to sub-section (3), if at any time, whether before or after the commencement of this section, the Australian Statistician has published or publishes a rent index number in respect of a State or Territory in respect of a quarter in substitution for a rent index number in respect of the State or Territory previously published in respect of that quarter, the publication of the later rent index number shall be disregarded for the purposes of this section.

(3) If at any time, whether before or after the commencement of this section, the Australian Statistician has changed or changes the reference base for the rent sub-group of the Consumer Price Index, then, for the purposes of the application of this section after the change took place or takes place, regard shall be had only to the index numbers published in terms of the new reference base.

(4) Where the factor ascertained in accordance with sub-section (1) in relation to a year of tax would, if it were calculated to 4 decimal places, end with a number greater than 4, the factor ascertained in accordance with that sub-section in relation to that year of tax shall be taken to be the factor calculated to 3 decimal places in accordance with that sub-section and increased by 0.001.

(5) For the purposes of this Subdivision—

(a) the Jervis Bay Territory shall be deemed to be part of the State of New South Wales; and

(b) the Territory of Christmas Island shall be deemed to be part of the Northern Territory.

Taxable value of remote area accommodation

29. (1) The taxable value of a remote area housing fringe benefit in relation to an employer in relation to a year of tax is—

(a) if the employer has made an election under sub-section (2) in relation to the year of tax—the amount calculated in

accordance with the formula , where—

A is the statutory annual rent amount in relation to the year of tax;

B is the number of whole days in the tenancy period; and

C is—

(i) in the case of the transitional year of tax—365; and

(ii) in any other case—the number of days in the year of tax,

reduced by the recipients rent;

(b) where—

(i) paragraph (a) does not apply; and

(ii) if the housing fringe benefit were not a remote area housing fringe benefit, the taxable value of the fringe benefit would be calculated under paragraph 26 (1) (b),

the amount that would be calculated under that paragraph if component B in the formula in that paragraph were 0.6; or

(c) in any other case—the amount that would be calculated under paragraph 26 (1) (c) if the amount represented by component A in the formula in that paragraph were reduced by 40%.

(2) An employer may elect, on or before the declaration date, that paragraph (1) (a) be applied in determining the taxable values of all remote area housing fringe benefits in relation to the employer in relation to the year of tax.

(3) Where an employer makes an election under sub-section (2) in relation to a year of tax, the employer shall be deemed also to have made an election under that sub-section in respect of each subsequent year of tax.

(4) For the purposes of this section, a housing fringe benefit in relation to an employer in relation to a year of tax in relation to a unit of accommodation shall be taken to be a remote area housing fringe benefit if–

(a) during the whole of the tenancy period, the unit of accommodation was located in a State or internal Territory and was not at a location in, or adjacent to, an eligible urban area;

(b) during the whole of the tenancy period, the recipient was a current employee of the employer and the usual place of employment of the recipient was not at a location in, or adjacent to, an eligible urban area;

(c) it is customary for employers in the industry in which the recipient was employed during the tenancy period to provide residential accommodation for their employees without charge or for a rent or other consideration that is less than the market value of the right to occupy or use the accommodation concerned;

(d) it would be concluded that it was necessary for the employer, during the year of tax, to provide or to arrange for the provision of residential accommodation for employees of the employer by reason that—

(i) the nature of the employer’s business was such that employees of the employer were liable to be frequently required to change their places of residence;

(ii) there was not, at or near the place or places at which the employees of the employer were employed, sufficient suitable residential accommodation for those employees (other than residential accommodation provided by or on behalf of the employer); or

(iii) it is customary for employers in the industry in which the recipient was employed during the tenancy period to provide residential accommodation for their employees free of charge or for a rent or other consideration that is less than the market value of the right to occupy or use the accommodation concerned; and

(e) the recipients overall housing right was not granted to the recipient pursuant to—

(i) an arrangement other than an arm’s length arrangement; or

(ii) an arrangement that was entered into by any of the parties to the arrangement for the purpose, or for purposes that included the purpose, of enabling the employer to obtain the benefit of the application of this section.

(5) For the purposes of sub-section (4)—

(a) where a unit of accommodation is at a location in, or adjacent to, an eligible urban area and adjacent to, or in close proximity to, another unit of accommodation that is occupied or used and is not at a location in, or adjacent to, an eligible urban area, the Commissioner may, if the Commissioner considers that it is appropriate to do so having regard to all the circumstances, treat the first-mentioned unit of accommodation as not being at a location in, or adjacent to, an eligible urban area; and

(b) where the usual place of employment of a person is at a location in, or adjacent to, an eligible urban area and adjacent to, or in close proximity to, another location at which persons are employed, being another location that is not in, or adjacent to, an eligible urban area, the Commissioner may, if the Commissioner considers that it is appropriate to do so having regard to all the circumstances, treat

that place of employment of the first-mentioned person as not being at a location in, or adjacent to, an eligible urban area.

Division 7—Living-away-from-home Allowance Fringe Benefits

Subdivision A—Living-away-from-home Allowance Benefits

Living-away-from-home allowance benefits

30. Where—

(a) at a particular time, in respect of the employment of an employee of an employer, the employer pays an allowance to the employee; and

(b) it would be concluded that the whole or a part of the allowance is in the nature of compensation to the employee for—

(i) additional expenses (not being deductible expenses) incurred by the employee during a period; or

(ii) additional expenses (not being deductible expenses) incurred by the employee, and other additional disadvantages to which the employee is subject, during a period,

by reason that the employee is required to live away from his or her usual place of residence in order to perform the duties of his or her employment,

the payment of the whole, or of the part, as the case may be, of the allowance constitutes a benefit provided by the employer to the employee at that time.

Subdivision B—Taxable Value of Living-away-from-home Allowance Fringe Benefits

Taxable value of living-away-from-home allowance fringe benefits

31. The taxable value of a living-away-from-home allowance fringe benefit in relation to a year of tax is the amount of the recipients allowance reduced by—

(a) any exempt accommodation component; and

(b) any exempt food component.

Division 8—Airline Transport Fringe Benefits

Subdivision A—Airline Transport Benefits

Airline transport benefits

32. Where—

(a) in respect of the employment of an employee of an employer, a person (in this section referred to as the “provider”) provides transport, in a passenger aircraft of the provider, to another person (in this section referred to as the “recipient”), being the employee or an associate of the employee;

(b) at or about the time when that transport commences to be provided—

(i) the provider is an airline operator; and

(ii) either of the following conditions is satisfied:

(a) the employer, or an associate of the employer, is an airline operator;

(b) the employer is a travel agent; and

(c) the transport is provided subject to the stand-by restrictions that customarily apply in relation to the provision of airline transport to employees in the airline industry,

the provision of that transport and any incidental services provided on board the aircraft shall be deemed to constitute a benefit provided by the provider to the recipient at the time when the transport commences to be provided, and not otherwise.

Subdivision B—Taxable Value of Airline Transport Fringe Benefits

Taxable value of airline transport fringe benefits

33. Subject to this Part, the taxable value of an airline transport fringe benefit in relation to a year of tax is the stand-by value of the recipients transport reduced by the amount of the recipients contribution.

Reduction of taxable value

34. (1) Where—

(a) the recipient of an airline transport fringe benefit in relation to an employer in relation to a year of tax is an employee of the employer;

(b) if the recipient had, at the comparison time, incurred and paid expenditure in respect of the provision of the recipients transport and had not been reimbursed in respect of any part of that expenditure, a once-only deduction would, or would but for section 82a, and Subdivision F of Division 3 of Part III, of the Income Tax Assessment Act 1936, have been allowable to the recipient under that Act in respect of a percentage (in this sub-section referred to as the “deductible percentage”) of the expenditure;

(i) an exclusive employee airline transport benefit; or

(ii) an extended travel airline transport benefit,

the recipient gives to the employer, before the declaration date, a declaration, in a form approved by the Commissioner, in respect of the recipients transport; and

(d) where the fringe benefit is an extended travel airline transport benefit—the recipient gives to the employer, before the declaration date, a travel diary in relation to the travel undertaken by the recipient in connection with the recipients transport,

the amount that, but for this sub-section and Division 13, would be the taxable value of that fringe benefit in relation to the year of tax shall be reduced by the deductible percentage.

(2) For the purposes of the application of this section in relation to a fringe benefit, where the recipient—

(a) while undertaking travel referred to in paragraph (1) (d), engages in an activity in the course of producing assessable income of the recipient; and

(b) does not make, as mentioned in the definition of “travel diary” in sub-section 136 (1), an entry relating to the activity, being an entry of the kind referred to in that definition,

the activity shall be deemed not to have been engaged in by the recipient in the course of producing assessable income.

Division 9—Board Fringe Benefits

Subdivision A—Board Benefits

Board benefits

35. Where, at a particular time, a person (in this section referred to as the “provider”) provides a board meal to another person (in this section referred to as the “recipient”), the provision of the meal shall be taken to constitute a benefit provided by the provider to the recipient at that time.

Subdivision B—Taxable Value of Board Fringe Benefits

Taxable value of board fringe benefits

36. Subject to this Part, the taxable value of a board fringe benefit in relation to a year of tax is—

(a) in a case where the recipient had attained the age of 12 years before the beginning of the year of tax—$2.00; or

(b) in any other case—$1.00,

reduced by the amount of the recipients contribution.

Reduction of taxable value

37. Where—

(a) the recipient of a board fringe benefit in relation to an employer in relation to a year of tax is an employee of the employer; and

(b) if the recipient had, at the time when the benefit was provided, incurred and paid expenditure in respect of the provision of the recipients meal and had not been reimbursed in respect of any part of that expenditure, a deduction would, or would but for section 82a, and Subdivision F of Division 3 of Part III, of the Income Tax Assessment Act 1936, have been allowable under section 51 of that Act to the recipient in a year of income in respect of a percentage

(in this sub-section referred to as the “deductible percentage”) of the expenditure,

the amount that, but for this section, would be the taxable value of that fringe benefit in relation to the year of tax shall be reduced by the deductible percentage.

Division 10—Tax-exempt Body Entertainment Fringe Benefits

Subdivision A—Tax-exempt Body Entertainment Benefits

Tax-exempt body entertainment benefits

38. Where, at a particular time, a person (in this section referred to as the “provider”) incurs non-deductible exempt entertainment expenditure that is wholly or partly in respect of the provision, in respect of the employment of an employee, of entertainment to a person (in this section referred to as the “recipient”) being the employee or an associate of the employee, the incurring of the expenditure shall be taken to constitute a benefit provided by the provider to the recipient at that time in respect of that employment.

Subdivision B—Taxable Value of Tax-exempt Body Entertainment Fringe Benefits

Taxable value of tax-exempt body entertainment fringe benefits

39. The taxable value of a tax-exempt body entertainment fringe benefit in relation to an employer in relation to a year of tax is so much of the expenditure referred to in section 38 as is attributable to the provision of the entertainment referred to in that section.

Division 11—Property Fringe Benefits

Subdivision A—Property Benefits

Property benefits

40. Where, at a particular time, a person (in this section referred to as the “provider”) provides property to another person (in this section referred to as the “recipient”), the provision of the property shall be taken to constitute a benefit provided by the provider to the recipient at that time.

Exempt property benefits

41. Where—

(a) a property benefit is provided to a current employee of an employer in respect of his or her employment; and

(b) the property is provided to, and consumed by, the employee on a working day and on business premises of—

(i) the employer; or

(ii) if the employer is a company, of the employer or of a company that is related to the employer,

the benefit is an exempt benefit.

Subdivision B—Taxable Value of Property Fringe Benefits

Taxable value of in-house property fringe benefits

42. (1) Subject to this Part, the taxable value of an in-house property fringe benefit in relation to an employer in relation to a year of tax is—

(a) where the recipients property was manufactured, produced, processed or treated by the provider—

(i) if identical property that was manufactured, produced, processed or treated, as the case may be, by the provider was, at or about the provision time, sold by the provider in the ordinary course of business to purchasers being manufacturers, wholesalers or retailers, an amount equal to—

(a) if any of that identical property was, at or about the provision time, sold by the provider under an arm’s length transaction or arm’s length transactions—the lowest price at which it was sold under such a transaction; or

(b) if sub-sub-paragraph (a) does not apply—the lowest price at which any of that identical property could reasonably be expected to have been sold by the provider at or about the provision time under an arm’s length transaction,

increased, where sales tax was not, or would not have been, payable, by the provider in respect of the sale concerned, by the amount of any sales tax payable by the provider in respect of the provision of the recipient’s property to the recipient;

(ii) where sub-paragraph (i) does not apply but identical property that was manufactured, produced, processed or treated, as the case may be, by the provider was, at or about the provision time, sold by the provider—

(a) in the ordinary course of business to members of the public under an arm’s length transaction or arm’s length transactions; and

(b) in similar circumstances and subject to identical terms and conditions (other than as to price) as those that applied in relation to the provision of the recipients property to the recipient,

an amount equal to 75% of the lowest price at which that property was so sold to a member of the public; or

(iii) in any other case—an amount equal to 75% of the notional value of the recipients property at the provision time;

(b) where paragraph (a) does not apply and the property was acquired by the provider—an amount equal to the lesser of—

(i) the arm’s length price in respect of the acquisition of the recipients property by the provider increased, in a case where sales tax was not payable by the person from whom the provider acquired the property in respect of the disposal of the property to the provider, by the amount of any sales tax payable in respect of the provision of the recipients property to the recipient; or

(ii) the notional value of the recipients property at the provision time; or

(c) in any other case—an amount equal to 75% of the notional value of the recipients property at the provision time, reduced by the amount of the recipients contribution.

(2) In sub-section (1), “arm’s length price”, in respect of the acquisition of the recipients property by the provider, means—

(a) if the recipients property was acquired by the provider in the ordinary course of business under an arm’s length transaction—the cost price of the recipients property to the provider; or

(b) in any other case—the amount that the provider could reasonably be expected to have been required to pay to acquire the recipients property under an arm’s length transaction in the ordinary course of business.

Taxable value of external property fringe benefits

43. Subject to this Part, the taxable value of an external property fringe benefit in relation to an employer in relation to a year of tax is—

(a) where the provider was the employer or an associate of the employer and the recipients property was purchased by the provider under an arm’s length transaction at or about the provision time—the cost price of the recipients property to the provider;

(b) where the provider was not the employer or an associate of the employer and the employer, or an associate of the employer, incurred expenditure to the provider under an arm’s length transaction in respect of the provision of the property—the amount of that expenditure; or

reduced by the amount of the recipients contribution.

Reduction of taxable value

44. (1) Where—

(a) the recipient of a property fringe benefit in relation to an employer in relation to a year of tax is an employee of the employer;

(b) if the recipient had, at the provision time, incurred and paid expenditure in respect of the purchase of the recipients property and had not been reimbursed in respect of any part of that expenditure—

(i) a once-only deduction would, or would but for section 82a, and Subdivisions F and G of Division 3 of Part III, of the Income Tax Assessment Act 1936, have been allowable to the recipient under that Act in respect of a percentage (in this sub-section referred to as the “deductible percentage”) of the expenditure; and

(ii) the deduction would not be an eligible rental property deduction within the meaning of Subdivision G of Division 3 of Part III of that Act;

(i) an exclusive employee property benefit;

(ii) an extended travel property benefit; or

(iii) a car property benefit,

the recipient gives to the employer, before the declaration date, a declaration, in a form approved by the Commissioner, in respect of the recipients property;

(d) where the property fringe benefit is an extended travel property benefit—the recipient gives to the employer, before the declaration date, a travel diary in relation to the travel undertaken by the recipient to which the fringe benefit relates; and

(e) where the property fringe benefit is a car property benefit in respect of a car owned by, or leased to, the recipient during a period (in this section referred to as the “holding period”) in the year of tax—the recipient gives to the employer, before the declaration date—

(i) a declaration, in a form approved by the Commissioner, that purports to set out—

(a) the holding period;

(b) the number of whole business kilometres travelled by the car during the holding period; and

(ii) where the average number of business kilometres per week travelled by the car during the holding period exceeded 96—

(a) a declaration referred to in sub-paragraph (i); or

the taxable value, but for Division 13, of the property fringe benefit in relation to the year of tax is the amount calculated in accordance with the formula , where—

A is the amount that, but for this sub-section and Division 13, would be the taxable value of the property fringe benefit in relation to the year of tax; and

B is—

(f) in a case where paragraph (e) does not apply—the deductible percentage;

(g) where paragraph (e) applies and a declaration referred to in sub-paragraph (e) (i) has been given to the employer—

(i) in a case to which sub-paragraph (ii) of this paragraph does not apply—the deductible percentage or 331/3%, whichever is the less; or

(h) where sub-paragraph (e) (ii) applies but a declaration referred to in sub-paragraph (e) (i) has not been given to the employer—331/3%.

(2) For the purposes of the application of this section in relation to a fringe benefit, where the recipient—

(a) while undertaking travel referred to in paragraph (1) (d), engages in an activity in the course of producing assessable income of the recipient; and

(b) does not make, as mentioned in the definition of “travel diary” in sub-section 136 (1), an entry relating to the activity, being an entry of the kind referred to in that definition,

the activity shall be deemed not to have been engaged in by the recipient in the course of producing assessable income.

Division 12—Residual Fringe Benefits

Subdivision A—Residual Benefits

Residual benefits

45. A benefit is a residual benefit for the purposes of this Act if the benefit is not a benefit by virtue of a provision of Subdivision A of Divisions 2 to 11 (inclusive).

Year of tax in which residual benefits taxed

46. (1) Subject to this section, a residual benefit that is provided during a period shall be deemed to have been provided in respect of each year of tax during which any part of that period occurred.

(2) Where—

(a) a residual benefit (in this sub-section referred to as the “eligible benefit”), not being a residual benefit constituted by a lease or licence in respect of property, is provided on the basis that, in respect of each of a number of regular periods (in this sub-section

referred to as a “billing period”) commencing on or after 1 July 1986 (whether or not there were any such periods before that date), a payment is to be made in respect of the provision of the benefit during the billing period; and

(b) identical benefits are provided to members of the public on the same basis and in the ordinary course of a business carried on by the person providing the eligible benefit,

the following provisions have effect:

(d) each such separate residual benefit shall be deemed to have been provided at the time at which the payment in respect of the billing period concerned is due and payable, and not otherwise.

Exempt residual benefits

47. (1) Where—

(a) in respect of the employment of a current employee, the employer, or an associate of the employer, provides a residual benefit to the employee that consists of transport of the employee, otherwise than in an aircraft—

(i) between—

(a) the place of residence of the employee; and

(b) the place of employment of the employee or any other place from which or at which the employee performs duties of his or her employment; or

(ii) in a case where the place referred to in sub-sub-paragraph (i) (b) is in a metropolitan area—on a regular and scheduled service over a route wholly within that metropolitan area;

(b) where the provider is the employer—the employer carries on a business of providing transport to members of the public;

(c) where the provider is an associate of the employer—the employer and the associate each carries on a business of providing transport to members of the public;

(d) the transport referred to in paragraph (a) is provided in the same, or substantially the same, circumstances as transport provided to members of the public in the ordinary course of carrying on a business of providing transport to members of the public; and

(e) the employee is employed in the business of providing transport to members of the public,

the benefit is an exempt benefit.

(2) Where—

(a) a residual benefit provided to a current employee in respect of his or her employment consists of—

(i) the provision, or use, of a recreational facility; or

(ii) the care of children of the employee in a child care facility; and

(b) the recreational facility or child care facility, as the case may be, is located on business premises of—

(i) the employer; or

(ii) if the employer is a company, of the employer or of a company that is related to the employer,

the benefit is an exempt benefit.

(3) Where a residual benefit provided to a current employee in respect of his or her employment consists of the use, on a working day, of property that is located on business premises of, and is wholly or principally used directly in connection with business operations of—

(a) the employer; or

(b) if the employer is a company—the employer or a company that is related to the employer,

the benefit is an exempt benefit.

(4) For the purposes of sub-section (3), toilets, bathroom facilities, food or drink vending machines, tea or coffee making facilities, water dispensers or other amenities (not being facilities for drinking or dining) for the use of employees of an employer shall be taken to be principally used directly in connection with business operations of the employer.

(5) Where—

(a) a residual benefit consisting of the subsistence, during a year of tax, of a lease or licence in respect of a unit of accommodation is provided to an employee of an employer in respect of his or her employment;

(b) the unit of accommodation is for the accommodation of eligible family members and is provided solely by reason that the employee is required to live away from his or her usual place of residence in order to perform the duties of his or her employment;

(c) if the recipient had, at the time when the lease or licence was granted, incurred expenditure in respect of the provision of the benefit and had not been reimbursed in respect of any part of that expenditure, paragraph 52 (1) (b) would not apply to that expenditure; and

(d) the employee gives to the employer, before the declaration date, a declaration, in a form approved by the Commissioner, purporting to set out—

(i) the employee’s usual place of residence; and

(ii) the place at which the employee actually resided while living away from his or her usual place of residence,

the benefit is an exempt benefit in relation to the year of tax.

(6) Where—

(a) a residual benefit consisting of the provision or use of a motor vehicle is provided in a year of tax in respect of the employment of a current employee; and

(b) either of the following conditions is satisfied:

(i) the motor vehicle was not applied to a private use at any time during the year of tax when the benefit was provided;

(ii) all private use of the motor vehicle during the year of tax and at a time when the benefit was provided consisted of work-related travel of the employee,

the benefit is an exempt benefit in relation to the year of tax.

(7) Where, during a period of employment with an employer—

(a) an employee’s usual place of employment is—

(i) on an oil rig, or other installation, at sea; or

(ii) at a location in a State or internal Territory but not in, or adjacent to, an eligible urban area;

(b) the employee is provided with residential accommodation, at or near that usual place of employment, by—

(i) the employer;

(ii) an associate of the employer; or

(iii) a person (in this sub-paragraph referred to as the “arranger”) other than the employer or an associate of the employer under an arrangement between—

(a) the employer or an associate of the employer; and

(b) the arranger or another person;

(i) works for a number of days and has a number of days off; and

(ii) on completion of the working days, travels from that usual place of employment to his or her usual place of residence and, on completion of the days off, returns from his or her usual place of residence to that usual place of employment; and

(d) the employee is provided with transport on a regular basis in connection with the travel referred to in sub-paragraph (c) (ii) and that transport is provided by—

(i) the employer;

(ii) an associate of the employer; or

(iii) a person (in this sub-paragraph referred to as the “arranger”) other than the employer or an associate of the employer under an arrangement between—

(a) the employer or an associate of the employer; and

(b) the arranger or another person,

and, having regard to the location of that usual place of employment and the location of the employee’s usual place of residence, it would be unreasonable to expect the employee to travel between those places on work days on a daily basis, the residual benefit constituted by the provision of the transport referred to in paragraph (d) is an exempt benefit.

(8) Where—

(a) a residual benefit provided in respect of the employment of an employee arose out of priority of access, for a child or children of the employee, to a child care facility operated by an eligible organisation within the meaning of section 4 of the Child Care Act 1972;

(b) the employer of the employee, or an associate of the employer, made a contribution, under the scheme administered by the Commonwealth and known as the Children’s Services Program, to obtain that priority of access; and

(c) a grant has been made to the eligible organisation in respect of the child care facility under section 11 of the Child Care Act 1972,

the residual benefit is an exempt benefit.

Subdivision B—Taxable Value of Residual Fringe Benefits

Taxable value of in-house non-period residual fringe benefits

48. Subject to this Part, the taxable value of an in-house non-period residual fringe benefit in relation to an employer in relation to a year of tax is—

(a) where, at or about the comparison time, identical benefits were provided by the provider—

(i) in the ordinary course of business to members of the public under an arm’s length transaction or arm’s length transactions; and

(ii) in similar circumstances and subject to identical terms and conditions (other than as to price) as those that applied in relation to the provision of the recipients benefit to the recipient,

an amount equal to 75% of the lowest price at which an identical benefit was so sold to a member of the public; or

(b) in any other case—an amount equal to 75% of the notional value of the benefit at the comparison time,

reduced by the amount of the recipients contribution.

Taxable value of in-house period residual fringe benefits

49. Subject to this Part, the taxable value of an in-house period residual fringe benefit in relation to a year of tax is—

(a) where, at or about the comparison time, identical overall benefits were provided by the provider—

(i) in the ordinary course of business to members of the public under an arm’s length transaction or arm’s length transactions; and

(ii) in similar circumstances and subject to identical terms and conditions (other than as to price) as those that applied in relation to the provision of the recipients overall benefit,

an amount equal to 75% of the lowest amount paid or payable by any such member of the public in respect of the current identical benefit in relation to an identical overall benefit so provided; or

(b) in any other case—an amount equal to 75% of the notional value of the recipients current benefit, reduced by the amount of the recipients contribution insofar as it relates to the recipients current benefit.

Taxable value of external non-period residual fringe benefits

50. Subject to this Part, the taxable value of an external non-period residual fringe benefit in relation to an employer in relation to a year of tax is—

(a) where the provider was the employer or an associate of the employer and the benefit was purchased by the provider under an arm’s length transaction—the amount paid or payable by the provider for the benefit;

reduced by the amount of the recipients contribution.

Taxable value of external period residual fringe benefits

51. Subject to this Part, the taxable value of an external period residual fringe benefit in relation to an employer in relation to a year of tax is—

(a) where the provider was the employer or an associate of the employer and the recipients overall benefit was purchased by the provider under an arm’s length transaction—the amount paid or payable by the provider in respect of the recipients current benefit;

reduced by the amount of the recipients contribution insofar as it relates to the recipients current benefit.

Reduction of taxable value

52. (1) Where—

(a) the recipient of a residual fringe benefit in relation to an employer in relation to a year of tax is an employee of the employer;

(b) if the recipient had, at the comparison time, incurred and paid expenditure in respect of the provision of the recipients benefit and had not been reimbursed in respect of any part of that expenditure—

(i) a once-only deduction would, or would but for section 82a, and Subdivisions F and G of Division 3 of Part III, of the Income Tax Assessment Act 1936, have been allowable to the recipient under that Act in respect of a percentage (in this sub-section referred to as the “deductible percentage”) of the expenditure; and

(ii) the deduction would not be an eligible rental property deduction within the meaning of Subdivision G of Division 3 of Part III of that Act;

(i) an exclusive employee residual benefit;

(ii) an extended travel residual benefit; or

(iii) a car residual benefit,

the recipient gives to the employer, before the declaration date, a declaration, in a form approved by the Commissioner, in respect of the recipients benefit;

(d) where the fringe benefit is an extended travel residual benefit—the recipient gives to the employer, before the declaration date, a travel diary in relation to the travel undertaken by the recipient to which the fringe benefit relates; and

(e) where the fringe benefit is a car residual benefit in respect of a car owned by, or leased to, the recipient during a period (in this section referred to as the “holding period”) in the year of tax—the recipient gives to the employer, before the declaration date—

(i) a declaration, in a form approved by the Commissioner, that purports to set out—

(a) the holding period;

(b) the number of whole business kilometres travelled by the car during the holding period; and

(ii) where the average number of business kilometres per week travelled by the car during the holding period exceeded 96—

(a) a declaration referred to in sub-paragraph (i); or

the taxable value, but for Division 13, of the residual fringe benefit in relation to the year of tax is the amount calculated in accordance with the formula , where—

A is the amount that, but for this sub-section and Division 13, would be the taxable value of the residual fringe benefit in relation to the year of tax; and