BQKD and Commissioner of Taxation (Taxation)

The Administrative Appeals Tribunal considered an appeal by BQKD against a decision of the Commissioner of Taxation concerning fringe benefits tax. The Commissioner had alleged that certain benefits provided by BQKD were made in connection with an employment arrangement, thereby attracting fringe benefits tax. BQKD contended that it was not in an employment relationship with its directors, who were the recipients of these benefits.

The Tribunal was required to determine two primary legal issues. Firstly, whether an employment relationship existed between BQKD and its three directors. Secondly, if such a relationship did exist, whether the benefits provided were made available to those individuals in connection with their employment in the relevant sense for the purposes of the Fringe Benefits Tax Assessment Act 1986 (Cth).

The Tribunal reasoned that the directors' motivation for claiming the benefits was based on a genuine belief that they were entitled to them as beneficiaries of the trust, rather than as a reward for their work as directors or employees. This reasoning drew an analogy to the principles in *Knowles*. Consequently, the Tribunal concluded that BQKD was not in an employment relationship with the three directors. Furthermore, even if an employment relationship were found to exist, the Tribunal was not satisfied that the benefits were made available to the individuals in connection with their employment in the requisite sense.

Accordingly, the Tribunal set aside the objection decision and substituted a decision that the objection should be allowed. Separate orders were to be made for the redaction of the reasons to protect the applicant's anonymity.