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Wednesday, 3 December 1986
Page: 3252

Senator REYNOLDS —Is the Minister representing the Treasurer aware that the Principal of Toowoomba Grammar School has called the fringe benefits tax on boarding schools `conscious spite and deliberate malice'? What steps has the Federal Government taken to assess fairly the housing requirements of boarding school staff so that FBT does not pose additional costs on country parents required to send their children to boarding schools?

Senator WALSH —Until a couple of seconds ago I was not aware of the extract from the Toowoomba Chronicle which I now have in front of me, but in respect of that and more generally to FBT and boarding schools, these points should be made: Boarding schools, like other employers, are subject to FBT on non-cash benefits provided to teachers and other employees, the most common benefits being housing and meals. Housing will be taxable where it is provided to an employee as a usual place of residence-that is, accommodation of permanent staff living on or near the school grounds. Accommodation provided to employees such as nursing staff on roster, temporary teaching staff or exchange teaching staff is not taxable. Those categories of employees are regarded as living away from their usual place of residence while being housed at schools.

Housing benefits of boarding school staff that are identical or similar to accommodation provided to students are treated as in-house benefits so that the taxable value is only 75 per cent of the market rental value of the housing less, of course, any rent paid by the employee. If two or three meals a day are provided to the school employee, they are taxable at the rate of $2 per meal where the employee is also provided with accommodation. There is no reason in principle why schools as employers should not pay FBT on non-cash benefits provided to employees in the same way as other exempt taxpayers. If tax exempt employers were excluded there would be an incentive for such bodies, many of whom compete commercially with taxable businesses, to expand the range of employee benefits, thereby minimising both their own costs and the employee's tax liability. In that context, I recommend that anybody in the Senate or outside it who has a serious interest in this subject read the excellent article published in the Sydney Morning Herald today under Ross Gittins's name but ultimately derived from an economist, I think, called Collins.