EXPLANATORY STATEMENT
Select Legislative Instrument 2005 No. 44
Issued by authority of the Minister for Revenue
and Assistant Treasurer
Fringe Benefits Tax Assessment Act 1986
Fringe Benefits Tax Amendment Regulations 2005 (No. 1)
Section 135 of the Fringe Benefits Tax Assessment Act 1986 (the Act) provides, in part, that the Governor-General may make regulations prescribing all matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.
The purpose of the amending Regulations is to provide fringe benefits reporting exclusions for:
• private travel between home and work in unmarked police cars used by police officers employed by the Australian Crime Commission (ACC);
• housing benefits provided to police officers residing in housing attached or on the same or adjacent block to a working police station, whether or not the police officer is in a remote area;
• rental subsidies provided to police officers situated in ‘regional’ areas (i.e. at least 100 kms from a town with a 1981 census population of 130,000 or more); and
• costs incidental to the purchase of a new dwelling by a police officer, where the police officer purchases the new dwelling within four years of being transferred by the police force, whether or not they owned a dwelling in the previous locality.
The fringe benefits reporting requirement requires employers to report the grossed-up taxable value of an employee’s fringe benefits on payment summaries where the value of fringe benefits exceeds $1,000. An excluded fringe benefit is a fringe benefit that is excluded from the fringe benefits reporting requirement by subsection 5E(3) of the Act.
The fringe benefits reporting exclusions outlined above result in police officers not having the grossed-up taxable value of such fringe benefits reported on their payment summaries, which may increase their access to certain Government benefits and reduce their liability to income-related surcharges and obligations.
These amendments implement the Government’s commitment announced in the 2004-05 Budget, by redrafting all the provisions in the Fringe Benefits Tax Regulations 1992 (the Principal Regulations) that deal specifically with police.
Fringe benefits reporting exclusion for private travel between home and work in unmarked police cars used by the ACC
Subregulation 3B(4A) of the Principal Regulations provides a reporting exclusion for the application of a car by certain employees for travel between the employee’s place of residence and a place where the employee is required to carry out the employee’s duties. The reporting exclusion applies if:
• the employee is a member of the police service;
• the car is used by that police service;
• the car is used for responding to events of crime or possible threats to public safety;
• the car is fitted with a police radio, warning lights, and sirens; and
• the application of the car for private use is taken to constitute a benefit.
Police officers working for the ACC were previously unable to access the exemption under subregulation 3B(4A), as the ACC is not a police service for the purposes of the Act. Additionally, the requirement that the car be fitted with a police radio was not satisfied.
This amendment ensures that members of a police force or of a police service (which includes the ACC) who use an operational car for private home-to-work travel to respond to crime or threats to public safety do not have this benefit reported on their payment summaries.
Fringe benefits reporting exclusion for housing benefits provided to police officers residing in housing attached or on the same or adjacent block to a working police station in non-remote areas
Housing fringe benefits provided to employees in remote areas and housing fringe benefits provided to employees by police, charities and not-for-profit hospitals in ‘regional’ areas are exempt from fringe benefits tax and are not reported on employee payment summaries.
This amendment to the Principal Regulations extends the fringe benefits reporting exclusion, so that housing fringe benefits provided to police officers residing in housing attached or adjacent to a working police station (regardless of where the officer is located) is excluded from the fringe benefits reporting requirement.
Fringe benefits reporting exclusion for rental subsidies provided to police officers situated in ‘regional’ areas
Rental subsidies are considered to be housing assistance. Housing assistance provided in remote areas is excluded from the fringe benefits reporting requirement. Housing assistance provided in ‘regional’ areas is generally not excluded from the fringe benefits reporting requirement.
This amendment to the Principal Regulations excludes an expense payment fringe benefit that is housing rent connected with a unit of accommodation from the fringe benefits reporting requirement if provided to a member of a police service who is situated in a regional area (i.e. at least 100 kms from a town with a 1981 census population of 130,000 or more).
Fringe benefits reporting exclusion for costs incidental to the purchase of a new dwelling, where the police officer did not own a dwelling in the previous locality
Section 58C of the Act allows a fringe benefits tax exemption for costs incidental to the sale or acquisition of a dwelling as a result of relocation for employment purposes, as long as the employee sells their dwelling at the previous locality within two years, and purchases a dwelling at the new locality within four years, of the commencement date of the new employment position.
This amendment to the Principal Regulations allows police officers who purchase a dwelling in a new locality without having owned a dwelling in the previous locality to access a fringe benefits reporting exclusion for the costs incidental to the purchase of the new dwelling, provided the purchase of the new dwelling still occurs within four years of the new employment commencement date.
The Regulations commenced on 1 April 2005, but have effect from the commencement of the 2004-05 fringe benefits tax year, 1 April 2004. Subsection 12(2) of the Legislative Instruments Act 2003 (LIA 2003) prohibits the retrospective operation of regulations, or a provision of regulations, which adversely affect the rights of, or impose liabilities on, a person other than the Commonwealth in respect of anything done or omitted to be done before the date of notification. The Australian Government Solicitor has advised that the Regulations do not contravene subsection 12(2) of the LIA 2003.