In what is expected to become a landmark decision in relation to travel costs, the Full Federal Court of Australia has held that costs incurred by an employer to transport fly-in-fly-out (FIFO) employees from their point of hire to their project location and back were “otherwise deductible” and therefore not subject to Fringe Benefits Tax (FBT).
In a unanimous decision handed down this morning, the three Justices in John Holland Group Pty Ltd v Commissioner of Taxation  FCAFC 82 (John Holland Decision) determined that the flights provided were not subject to FBT on the basis that the employees were on paid duty under the control and direction of their employer from their arrival at Perth Airport and during their flights to and from Geraldton. As such, the travel costs were considered to be incurred in the course of their employment rather than being private and domestic in nature.
This decision will have a significant impact on companies who engage FIFO workers. As an advocate for John Holland in this case, we share our insights on the judgement and outline below how this decision may be relevant for your organisation.
Exposure draft legislation to remove 50% CGT discount for foreign and temporary residents released for public consultation – 13 March 2013
On 8 March 2013, the Assistant Treasurer released an Exposure Draft of legislation for public consultation proposing to remove the 50% CGT discount concession for foreign and temporary residents who dispose of assets after 8 May 2012. The Exposure Draft extends the proposed changes to certain Australian tax residents who change their residence to or from Australia while holding certain assets.
This announcement is important for not only individuals but also for employers with globally mobile populations in and out of Australia.
The proposed changes do not affect the CGT exemption for an individual's main residence (home).
Affected individuals should seek advice and consider the following actions:
Employers with globally mobile populations should consider the potential impact of these proposed changes on their:
For detailed information on the proposed changes including how the gains are allocated between the periods where the 50% CGT discount concession is available and the period when it is not, please refer to our Global Watch.
Taxation Determination (TD) 2013/4 issued on 27 February 2013 sets out the Commissioner's determination of reasonable amounts for food and drink expenses incurred by employees in receipt of a Living Away From Home Allowance (LAFHA) for 1 April 2013 to 31 March 2014.
The key points of this Final Determination are as follows:
Given the reduction in this reasonable food and drink allowance amount, the Final Determination includes a transitional measure. The transitional measure applies where an employee and employer had an existing employment agreement in force as at 27 February 2013 that specified the food and drinks allowance at a rate in Taxation Determination TD 2012/5 and that employment agreement is not varied in a material way or renewed. Where the transitional measure applies, the rates in TD 2012/5 will continue to be accepted by the Commissioner as reasonable amounts for 1 April 2013 to 31 March 2014.
For a full copy of the Final Determination, please find a link to TD 2013/4 which details the reasonable amounts for food and drink.
If you have any queries or concerns, please don't hesitate to contact your PwC general contact or Tony Halcrow on +61 2 8266 7279.
Today, the Senate have passed Tax Laws Amendment (2012 Measures No. 4) Bill 2012('the Bill') which includes the new rules on the tax treatment of Living-Away-From-Home ('LAFH') concessions.
As expected, the Senate have not made any amendments to the new rules and it is expected that the Bill will shortly receive Royal Assent.
The new rules will apply from 1 October 2012.