Commonwealth Numbered Regulations - Explanatory Statements

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FRINGE BENEFITS TAX AMENDMENT REGULATIONS 2000 (NO. 2) 2000 NO. 127

STATUTORY RULES 2000 No. 127

Issued by authority of the Assistant Treasurer

Fringe Benefits Tax Assessment Act 1986

Fringe Benefits Tax Amendment Regulations 2000 (No. 2)

Section 13 5 of the Fringe Benefits Tax Assessment Act 1986 (the Act) provides that the Governor-General may make regulations for giving effect to the Act.

The regulations amend the Fringe Benefits Tax Regulations 1992 (the Regulations) to exclude certain ' housing fringe benefits from having to be reported on an employee's group certificate.

All employers are now required to report fringe benefits on their employees' group certificates. The Act identifies certain fringe benefits which do not need to be reported. These benefits are referred to as 'excluded fringe benefits' and currently include benefits such as meal entertainment and car parking fringe benefits. Paragraph 5E(3)(i) of the Act provides for other fringe benefits to be excluded in the future by way of regulation. The Regulations currently exclude from fringe benefits tax (FBT) reporting certain overseas medical costs, Commonwealth overseas living allowances and certain benefits provided to members of the Australian Defence Force.

The need for the regulations follows from FBT changes contained in the A New Tax System (Fringe Benefits) Act 2000. This legislation extends the current remote area housing exemption available to primary producers, to all employers who provide housing benefits to their remote area employees. The legislation also introduces a broader remote area test to ensure that housing benefits provided to employees of certain employers who operate in regional areas, will also qualify for this new exemption. Broadly, where the employer is a charity, a police service, or a public or not-for-profit hospital, a housing benefit provided to their regional employees will be treated as remote where it is located at least 100 kilometres from a town of 130,000 or more people.

Although the remote area housing exemption did not take effect until 1 April 2000, paragraph 5E(3)(d) of the Act ensures that remote area housing benefits provided during the FBT year commencing 1 April 1999 will not have to be reported on group certificates issued for the 1999/2000 year of income. However, housing benefits provided to regional employees of a charity, a police service, or a public or not-for-profit hospital will not fall within this exclusion for remote area housing benefits, as the broader remote area test only applies from 1 April 2000. Therefore, Regulation 3C prescribes housing benefits that satisfy the broader remote area provisions contained in subsection 140(1A) of the Act to be excluded fringe benefits, when provided during the FBT year commencing on 1 April 1999.

The changes ensure that housing benefits provided to regional employees of a charity, a police service, or a public or not-for-profit hospital will not be reported on an employee's group certificate. Therefore, the amounts will not be taken into account when determining the individual's liability for certain tax surcharges or other obligations, or eligibility for certain government payments and concessions.

The regulations commenced on gazettal and only apply to group certificates issued for the year of income ended. 3 0 June 2000.