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Tax Laws Amendment (2012 Measures No. 4) Bill 2012

Schedule 1 Reform of living away from home allowance and benefit rules

Part 1 Main amendment

Income Tax Assessment Act 1997

1  At the end of Division 25

Add:

25-115   Living away from home

When you can deduct expenses for living away from home

             (1)  You can deduct an amount for an accommodation, food or drink expense you incur if:

                     (a)  you incur the expense because your employer requires you to live away from your usual place of residence for the purposes of your employment; and

                     (b)  that residence:

                              (i)  is a * dwelling in Australia in which you or your * spouse have an * ownership interest; and

                             (ii)  continues to be available for your immediate use and enjoyment during the period you are required to live away from it; and

                     (c)  it is reasonable to expect that you will resume living in that residence when that period ends; and

                     (d)  the expense is for accommodation, food or drink for you, or for your spouse or * children when your spouse or children are living with you away from that residence; and

                     (e)  any of the following subparagraphs applies:

                              (i)  the expense relates to all or part of the first 12 months that you live away from that residence as required by your employer;

                             (ii)  you are provided with a transport benefit as described in subsection 47(7) of the Fringe Benefits Tax Assessment Act 1986 during all of the period you are required to live away from that residence;

                            (iii)  you would be provided with such a transport benefit during all of that period if paragraph 47(7)(a) of that Act were ignored.

How much you can deduct

             (2)  The amount you can deduct for an accommodation expense is so much of the expense as is reasonable.

             (3)  The amount you can deduct for the food or drink expenses you incur in relation to all or part of a 7-day period is so much of the total of those expenses as:

                     (a)  is reasonable; and

                     (b)  exceeds your ordinary weekly food and drink expenses, which for a 7-day period is the total of $42 and the following amounts:

 

Your ordinary weekly food and drink expenses

Item

If, during the 7-day period, this individual is living with you away from your usual place of residence:

count this amount:

1

your * spouse

$42

2

your * child aged 12 or over

$42

3

your * child aged under 12

$21

Working out if expense relates to first 12 months away from home

             (4)  For the purposes of subparagraph (1)(e)(i) and this subsection:

                     (a)  if, and while, you temporarily resume living in your usual place of residence during that 12-month period:

                              (i)  pause that 12-month period; and

                             (ii)  subparagraph (1)(e)(i) continues to apply to accommodation expenses, but does not apply to food or drink expenses that relate to all or part of the period that you live in your usual place of residence; and

                     (b)  start a separate 12-month period if:

                              (i)  your employer later requires you to live at another location for the purposes of your employment; and

                             (ii)  you could not reasonably be expected to commute to that other location from an earlier location for which you incurred an expense that you can deduct under this section in relation to that employer; and

                     (c)  other changes in the nature of your employment are irrelevant; and

                     (d)  treat as one employer any of your earlier employers that is or has been a * connected entity of your current employer.

Includes expenses for future employment

             (5)  This section applies in relation to your future employment with an employer in a corresponding way to the way it applies in relation to your current employment with an employer.



 

Part 2 Other amendments

Fringe Benefits Tax Assessment Act 1986

2  Subparagraph 17(4)(e)(i)

Repeal the subparagraph, substitute:

                              (i)  the employee can deduct under section 25-115 of the Income Tax Assessment Act 1997 expenses, or could so deduct if he or she had incurred expenses, in respect of that accommodation;

3  Section 21

Repeal the section.

4  Subparagraph 24(1)(e)(i)

After “benefit”, insert “(other than a benefit relating to expenditure the recipient can deduct under section 25-115 of the Income Tax Assessment Act 1997 )”.

5  Division 7 of Part III

Repeal the Division, substitute:

Division 7 Living-away-from-home allowance food and drink fringe benefits

Subdivision A Living-away-from-home allowance food and drink benefits

30   Living-away-from-home allowance food and drink benefits

             (1)  If:

                     (a)  at a particular time, in respect of the employment of an employee of an employer, the employer pays an allowance to the employee; and

                     (b)  it would be concluded that the allowance is wholly or partly in the nature of compensation to the employee for food or drink expenses the employee incurred:

                              (i)  for all or part of a 7-day period; and

                             (ii)  for which paragraphs 25-115(1)(a) to (e) of the Income Tax Assessment Act 1997 are satisfied; and

                     (c)  a declaration in force under section 30A applies to the food or drink expenses;

the payment of so much of the allowance (to the extent that it is covered by paragraph (b)) as does not exceed the employee’s ordinary weekly food and drink expenses for that 7-day period constitutes a benefit provided by the employer to the employee at that time.

             (2)  For the purposes of subsection (1), work out the employee’s ordinary weekly food and drink expenses under paragraph 25-115(3)(b) of the Income Tax Assessment Act 1997 .

30A   Declaration about future food and drink expenses

             (1)  An employee may give his or her employer a declaration, in a form approved by the Commissioner, that the employee will incur food or drink expenses that will be expenses for which paragraphs 25-115(1)(a) to (e) of the Income Tax Assessment Act 1997 are satisfied.

             (2)  The declaration ceases to be in force if the employee gives the employer a notice under subsection (3).

             (3)  The employee must notify the employer, in writing, if the employee becomes aware that paragraph 25-115(1)(b), (c) or (e) of the Income Tax Assessment Act 1997 ceases to be satisfied for the employee’s usual place of residence.

             (4)  The notice must be given within 7 days after the employee becomes so aware.

Note:          Failing to comply with subsection (4) may be an offence against section 8C of the Taxation Administration Act 1953 .

Subdivision B Taxable value of living-away-from-home allowance food and drink fringe benefits

31   Taxable value of living-away-from-home allowance food and drink fringe benefits

                   Subject to this Part, the taxable value of a living-away-from-home allowance food and drink fringe benefit in a year of tax is the amount of the fringe benefit, reduced by the amount of the recipient’s contribution.

6  Subparagraph 44(1)(c)(i)

After “benefit”, insert “(other than a benefit relating to expenditure the recipient can deduct under section 25-115 of the Income Tax Assessment Act 1997 )”.

7  Subsection 47(5)

Repeal the subsection.

8  Subparagraph 52(1)(c)(i)

After “benefit”, insert “(other than a benefit relating to expenditure the recipient can deduct under section 25-115 of the Income Tax Assessment Act 1997 )”.

9  Paragraph 58E(d)

Repeal the paragraph, substitute:

                     (d)  the employee can deduct under section 25-115 of the Income Tax Assessment Act 1997 expenses, or could so deduct if he or she had incurred expenses, in respect of that accommodation;

10  Section 63

Repeal the section.

11  Subsection 136(1) (definition of eligible family member )

Repeal the definition.

12  Subsection 136(1) (definition of exempt accommodation component )

Repeal the definition.

13  Subsection 136(1) (definition of exempt food component )

Repeal the definition.

14  Subsection 136(1) (definition of food component )

Repeal the definition.

15  Subsection 136(1) (definition of living-away-from-home allowance benefit )

Repeal the definition.

16  Subsection 136(1)

Insert:

living-away-from-home allowance food and drink fringe benefit means a fringe benefit that is a benefit referred to in section 30.

17  Subsection 136(1) (definition of living-away-from-home allowance fringe benefit )

Repeal the definition.

18  Subsection 136(1) (definition of living-away-from-home food fringe benefit )

Repeal the definition.

19  Subsection 136(1) (definition of recipients allowance )

Repeal the definition.

20  Subsection 136(1) (definition of recipients allowance period )

Repeal the definition.

21  Subsection 136(1) (paragraph (a) of the definition of recipients contribution )

After “a residual fringe benefit”, insert “, a living-away-from-home allowance food and drink fringe benefit”.

22  Subsection 136(1) (paragraph (a) of the definition of recipients contribution )

After “the recipients benefit”, insert “, the recipients food and drink”.

23  Subsection 136(1) (definition of statutory food amount )

Repeal the definition.

Income Tax Assessment Act 1997

24  Section 12-5 (after table item headed “limited recourse debt”)

Insert:

living away from home

 

expenses for accommodation, food or drink..

25-115

25  Subsection 20-30(1) (after table item 1.8A)

Insert:

1.8AA

25-115

living away from home expenses

26  Section 900-10 (at the end of the table)

Add:

4.

Living away from home expenses

Subdivision 900-DA

27  After Subdivision 900-D

Insert:

Subdivision 900-DA Substantiating living away from home expenses

Table of sections

900-97     Getting written evidence

900-98     Retaining the written evidence

900-97   Getting written evidence

             (1)  To deduct an expense under section 25-115 (about living away from home), you need to substantiate it to the extent that:

                     (a)  it is for accommodation; or

                     (b)  it is for food or drink specified in a determination under subsection (2), if it exceeds the corresponding amount specified in that determination.

You substantiate it by getting written evidence in accordance with Subdivision 900-E.

             (2)  The Commissioner may, by legislative instrument, prescribe an amount for expenses for prescribed food or drink.

Note:          Food or drink can be prescribed by class (see subsection 13(3) of the Legislative Instruments Act 2003 ).

900-98   Retaining the written evidence

             (1)  Once you have the material required by section 900-97, you must retain it for 5 years. There is no need to lodge it with your * income tax return. The Commissioner may require you to produce it: see Subdivision 900-G. The period for which you must retain it is called the retention period .

             (2)   The 5 years start on the due day for lodging your * income tax return for the income year. If you lodge your return later, the 5 years start on the day you lodge it.

             (3)   However, the * retention period is extended if, when the 5 years end, you are involved in a dispute with the Commissioner that relates to the expense. See section 900-170.

             (4)   If you do not retain the material for the * retention period, you cannot deduct the expense. If you have already deducted it, your assessment may be amended to disallow the deduction.

             (5)   If you lose any of the material, there are rules that might help you in section 900-205.

Taxation Administration Act 1953

28  Subsection 12-1(2) in Schedule 1

Repeal the subsection.



 

Part 3 Application and transitional provisions

29  Application of amendments

The amendments made by this Schedule apply in relation to living away from your usual place of residence on or after 1 October 2012.

30  Transitional—existing employment arrangements

(1)       During the transitional period, you can disregard paragraphs 25-115(1)(b) and (e) of the Income Tax Assessment Act 1997 if:

                     (a)  you are neither a temporary resident nor a foreign resident; and

                     (b)  during the entire period:

                              (i)  starting at the Budget time; and

                             (ii)  ending on 30 September 2012;

                            your employment was covered by an eligible employment arrangement that was not varied or renewed.

(2)       During the transitional period, you can disregard paragraph 25-115(1)(e) of the Income Tax Assessment Act 1997 if:

                     (a)  you are a temporary resident or a foreign resident; and

                     (b)  during the entire period:

                              (i)  starting at the Budget time; and

                             (ii)  ending on 30 September 2012;

                            your employment was covered by an eligible employment arrangement that was not varied or renewed.

(3)       In this item:

Budget time means 7.30 pm, by legal time in the Australian Capital Territory, on 8 May 2012.

eligible employment arrangement means an arrangement under which:

                     (a)  your employer; or

                     (b)  a connected entity of your employer;

commits to provide you with an allowance or benefit for your accommodation, food or drink while you are required to live away from your usual place of residence for the purposes of that employment.

transitional period means the period:

                     (a)  starting on 1 October 2012; and

                     (b)  ending at the earliest of:

                              (i)  30 June 2014; and

                             (ii)  the time your eligible employment arrangement referred to in paragraph (1)(b) or (2)(b) ends; and

                            (iii)  the first time that eligible employment arrangement is varied or renewed.

31  Transitional—first 12 months for existing arrangements

(1)       This item applies if, on 1 October 2012:

                     (a)  you are living away from your usual place of residence for the purposes of your employment as required by your employer; or

                     (b)  you are living in your usual place of residence on a temporary basis, and you expect to resume living away from that residence for the purposes of your employment as required by your employer.

(2)       Treat the 12-month period referred to in subparagraph 25-115(1)(e)(i) of the Income Tax Assessment Act 1997 (as inserted by this Schedule) as if it were the first 12 months on or after 1 October 2012 that you live away from that residence as required by your employer.

(3)       This item applies in relation to future employment with an employer in a corresponding way to the way it applies in relation to current employment with an employer.