Fringe Benefits Tax

FBT exemption for relocation transport costs

As we approach FBT return time, what is often not fully appreciated is that the FBT provisions provide for a range of exemptions and reductions in taxable value which may apply when an employee:

changes his or her usual place of residence
temporarily lives away from his or her usual place of residence or
travels back to his or her usual place of residence.

In particular, the prevailing FBT legislation provides an exemption in the context of a benefit comprising relocation transport when a car is provided to a relocating employee or a family member or the fare for the relocation is paid or reimbursed by the employer.
As noted the exemption is premised on whether or not the benefit is specifically in respect of 'relocation transport'.
However the benefit must not be payment of a cents-per-kilometre motor vehicle allowance (in such a case a reduction of taxable rather than a full exemption would apply).

'Relocation transport' means the provision of a car benefit, expense payment benefit, property benefit or residual benefit in respect of transport, meals and/or accommodation where the transport is required solely because the employee or family member is required to:

live away from his or her usual place of residence or
return to his or her usual place of residence after living elsewhere or
change his or her usual place of residence

and the transport is required to enable a family member to take up residence at the new location.

The expression "taking up residence at the new location" is wide enough to cover more than just transport in the act of moving from the old residence to the new residence.
It would include travel to seek accommodation at the new place of residence, prior to the actual move.
However, it would not include travel by an employee and his or her spouse to see the city to see if it is to their liking.

If returning to a former location after a term transfer, taking up residence might include travel to the former city to arrange accommodation, remove tenants or arrange repairs to the house, but not merely to renew friendships.

EXAMPLE

Albert is transferred from Melbourne to Sydney by his employer for a period of two years. His employer pays for him to travel to Sydney for three days to find accommodation two weeks before he actually moves to Sydney. Albert spends the three days locating a suitable rental home in Sydney. Two weeks later the company pays for Albert to fly to Sydney and Albert moves into his rental home and commences work the next day.

Issue

Are the benefits exempt as relocation transport?

Answer

Both flights are required to enable Albert to take up residence in Sydney as finding suitable accommodation is part of taking up residence. Both benefits are exempt.

TIP

It is not necessary for the family member(s) to travel with the employee. If they travel separately the relocation transport for both is exempt. Note that associated accommodation and meals are also included in this exemption.