As reported on 13 April 2011 Fly in fly out arranged extended to remote overseas locations , fringe benefits tax (FBT) exemption has now been extended to employees working at overseas locations under a fly in fly out arrangement.
The exemption will apply to benefits provided on or after 1 July 2009.
By way of background the amendments were designed to ensure consistent FBT treatment would apply to Australian resident employees working in Australian remote areas as well as Australian resident employees working in remote areas overseas.
Different legislation, same issues
It should be noted that the new provisions were re-packaged under Tax Laws Amendment (2011 Measures No. 6) Act 2011 before passing through all stages without any amendments.
During the public consultation process, we have highlighted a number of inconsistencies in respect of the draft legislations but appeared to have fallen on deaf ears.
As a result we still believe that the application of these provisions will be problematic as the employer will be responsible for determining whether the location is remote. The Australian Taxation Office (ATO) with the benefit of hindsight in an audit can determine that the location is not remote.
This lack of certainty continues the ongoing compliance hurdles faced by employers as a result of the Federal Government's ill-considered amendments to section 23AG from 1 July 2009.
This can be contrasted to the domestic fly in fly out arrangements where a remote area is clearly defined.
Prior year FBT returns
If you have included the value of the benefits relating to overseas fly in fly out arrangements in your 2010 FBT return, you can amend the prior year return to exclude the amounts.
If the amount has been included in the reportable fringe benefits amount (RFBA), it may be necessary to amend the relevant Pay-As-You-Go (PAYG) Payment Summary for the year ended 30 June 2010. This in turn may impact positively on your employee's eligibility for Family Tax Benefits and other government benefits.
Questions
Please contact your Moore Stephens Relationship Partner
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