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Tuesday, 17 March 1987
Page: 988

(Question No. 4119)


Mr Andrew asked the Treasurer, upon notice, on 27 May 1986:

(1) What fringe benefits provided by farmers to their employees (a) will be, and (b) will not be, subject to the fringe benefits tax.

(2) What revenue is expected in 1986-87 and 1987-88 from the fringe benefits tax paid by farmers on behalf of their employees and what percentage of the estimated revenue can be attributed to the various categories of fringe benefits.


Mr Keating —The answer to the honourable member's question is as follows:

(1) (a) and (b) In general terms, most fringe benefits granted to employees will be subject to the fringe benefits tax. No special exemptions have been extended to farmers although, as indicated below, many fringe benefits provided by farmers will give rise to no, or minimal, fringe benefits tax liability.

The main types of employee fringe benefits provided by farmers appear to be residential accommodation and associated fuel and power, free or discounted goods and services and the use of motor vehicles.

In general, the taxable value of residential accommodation provided to an employee is the market rental value of that accommodation, less any contribution paid by the employee. Two factors may be relevant in lowering the tax liability of farmers. First, under guidelines issued by the Commissioner of Taxation, farm housing has been granted very generous valuations and, in remote areas, this value is discounted by 50 per cent. As an alternative to the market value, in remote areas, the employer may adopt a statutory value of $60 per week (or $15 per week for single persons' quarters) before deducting any employee contribution. However, in many cases the market rent for farm housing, after the 50 per cent discount, will be less than these amounts.

Similarly, the taxable value of the provision of fuel and power for an employee's accommodation is the cost to the employer (which is discounted by 50 per cent in remote areas), less any contribution by the employee. If, in remote areas, the employer chooses to adopt the cited statutory value applying to the accommodation benefit, no separate liability arises for fuel and power supplied by the employer for that accommodation.

In addition, where accommodation and meals are provided to temporary workers, employers will incur a fringe benefits tax liability for the provision of meals but not for the provision of the accommodation in cases where it is not the employee's usual place of residence. Meals will be valued for fringe benefits tax purposes at $2 per meal for an adult and $1 per meal for a person under 12 years of age, less any contribution paid by the employee. Accommodation and meals provided to employees, such as shearers, while travelling in the course of their employment or while so engaged are exempt from fringe benefits tax.

Although a taxable fringe benefit will arise if farm produce, such as milk or meat, is given to employees, there will be little or no tax liability because the first $500 per annum of farm produce (valued at wholesale prices) is exempt from fringe benefits tax.

Finally, all minor benefits and benefits provided in emergencies are exempt from fringe benefits tax and the tax will not apply in circumstances where a farmer allows an employee to use an unregistered vehicle (on the property) for private purposes.

In circumstances where the farm has been set up as a family company or trust, and benefits (such as accommodation or food) are provided to family members, these benefits would normally be regarded as given as a result of family relationships rather than in respect of employment and so no tax liability would arise. However, if a family member who is an employee is provided with a residence for which tax deductions are being claimed by the employer (or owner of the residence), that will indicate that the benefit is being provided in respect of employment and tax would be payable.

(2) The available data do not yet allow estimates for all industries or categories of employer to be derived when calculating the aggregate revenue estimates. Consequently, no estimate of the amount to be paid by farmers is currently available. On the basis of the valuation rules described above, however, the amount is expected to be relatively small.