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MINING SITE WORKERS EMPLOYEES

TAX DEDUCTIONS

30 JUNE 2017

Download the ATO private ruling application

FLY IN FLY OUT - FIFO

Expenses incurred to fly in fly out or drive in drive out to mining sites are

usually not a tax deduction.

 

Some exceptions are:

 

1. Two places of work

Most mining workers employees do not have two place of work.

They fly in and out of the same mining site and do not change their

location (swings vary but are often 21 days on and 7 days off).

In this situation there are no tax deductions for overnight

travel expenses unless they do one of the following:

 

(i)   Attend meetings at the company's place of business (other than at the

      mining site and not at your home office making phone calls or sending

      emails to mining workers employees).

 

(ii)   Attend mining company training days or other relevant self education

       away from your mining site.

 

(iii)  Carry on your own small business using your own ABN e.g. concrete

        layers, welders, carpenters, fitness instructor, etc.

 

          Payne's case:

       Is a recent High Court decision that has elimated certain travelling

         expenses. The taxpayer had two sources of income. He received a

         salary for being a QANTAS pilot and he had a deer farm business at his

        residence. Payne would work three days for QANTAS and four days on

       his farm. He claimed travel between his farm and Mascot airport. The

        High Court determined that travel between unrelated places of

         employment or business is generally not deductible.

 

      This is in contrast to the ATO Ruling TR 95/19 "A deduction is allowable

        for the cost of travelling between two places of employment or between

        a place of employment and a place of business."

 

       Payne's case is an example of where the ATO has agrued against it's

       own rulings. There seems to be an issue where one of the places

          of employment / business is the home of the taxpayer.

 

         You should apply for your own Private Ruling with reference to ATO

         Ruling TR 95/19 Paras 148 to 153, TD 96/42, Taxation Ruling IT 2199

         Paras 4 to 11, MT 2017 Paras 23 to 36, IT 112 Paras 13 to 17.

      

        In Garrett's case the taxpayer lived at his residence where he conducted

       both a medical practice and a farm. He also conducted medical practices

       in other centres from which he derived significant amounts of income.

      The Court found that travel between the various centres was part of the

      operations by which the taxpayer produced his assessable income and

      its cost was an allowable deduction.

 

       Download the ATO private ruling application.

        

        Most of my mining clients are too exhausted to work their

        own small business, however some manage.

 

(iv)  Have a second job when you arrive home e.g. uber driver, security

       guard, handy man, gardener, etc with references to the ATO

          rulings and determinations above. Again many are too exhausted.

      

       You should apply for your own Private Ruling.

       Download the ATO private ruling application.

 

If you satisfy the above conditions you may be eligible to claim overnight

travel expenses e.g. meals, travel to and from the airport or mining site by

taxis or motor vehicle work kms using an appropriate method.

 

Ask the ATO for a private ruling.

 

Download the ATO private ruling application

 

 

 

2. Mobile mining workers employees

 

Mobile mining workers employees may satisfy the above conditions.

 

Mobile mining workers employees may change mining sites, towns or

international mining or training locations frequently (within 21 days).

 

These mobile mining workers employees may often be construction, drilling

or maintenance crews working on different projects in various locations

rotating through several towns.

 

They must satisfy the below 4 conditions.

 

If you start at home then fly to different locations for overnight work or

training which does not exceed 21 days then you may be eligible overnight

travel expenses.

 

 

This differs from tax cases where causal teachers travelling to

different schools in the same day and city were not allowed travel expenses

to and from work.

 

These overnight mobile mining workers employees circumstances are

more similar to overnight travelling sales representatives.

 

Ask the ATO for a private ruling.

Download the ATO private ruling application

 

3. Carrying bulky equipment with no secure lockup at work.

 

 

Bulkiness of equipment is determined by size & weight.  For mining

 

worker employees it could mean a carrying minimum of a 40 kg tool box

 

plus other items e.g. nail guns, drills, drop saws, materials, etc. Bulkiness

 

also determined by size e.g. Ladders, bench horses, large oil drums,

 

spare tyres, etc.

 

 

A few mining workers employees will satisfy the above conditions on their

 

first and last trip to and from their mining site. It usually involves checking

 

in oversize luggage at the airport which is usually a hassle.

 

 

They may then claim travel to and from the airport or mining site by taxis or

 

motor vehicle work kms using an appropriate method.

 

 

Ask the ATO for a private ruling.

 

Download the ATO private ruling application

 

 

PLEASE SUMMARIZE THE FOLLOWING EXPENSES:

 

Air fares

Taxis or car hire

Accommodation

Meals

Water

Alcohol - e.g. wine & beer

Snacks

Toiletries

Reading materials - e.g. newspapers, magazines, books, etc.

Movies - e.g. DVDs, in-house, cinema, etc.

 

EMPLOYERS

Most employers usually pay for only accommodation and meals for their

employees but there are many other incidental expenses that are not

reimbursed, these are usually a tax deduction. e.g. alcohol, snacks,

toiletries, movies, etc.

 

 

OVERNIGHT TRAVEL EXPENSES WITH NO TRAVEL ALLOWANCE PAID

CONDITIONS

1. You must be away from your ordinary residence and usual place of work. You must sleep away from your home.

2. You must have two places of work or have a campsite or town that changes at least every 21 days.

3. You must not stay in one town for more than 21 consecutive days (Roads and Traffic Authority of NSW case; MT 2030).

4. You must keep a diary and written evidence. Try photographing these with your mobile.

 

ATO Practice Statement LA 2005/7

In some circumstances BPAY and internet banking statements may include sufficient details to support the correctness of your claims. Suppliers may not issue a receipt containing all the information required by the substantiation legislation. However you may use a combination of other documents to support your claims.

In some cases if a credit card statement has the date of the transaction, the name of the supplier and the amount paid and you make a note on the credit card statement detailing the items purchased with their respective prices, the Tax Office may accept this as sufficient evidence. See examples below.

The above does not apply for EFTPOS transactions because bank statements do not show cash withdrawals separately.

Practice Statement LA 2005/7

Example 2 - use of a bank or credit card statement combined with other evidence

22. Kylie, having just started her first full time job as a clerical worker, purchased a pen for use at work costing $50 from a jeweller's shop. She also bought a pair of earrings for $100 and paid for both items on her credit card. Having never completed a tax return before, she was not aware that the pen would be a deductible expense. She did not request or receive a receipt.

23. When it was time to prepare her return, Kylie realised that she could claim her pen as a work expense. She had also incurred union fees of $478, which were recorded on her payment summary.

24. Kylie checked her credit card statement and found that it showed an amount of $150 and the name of the jeweller's shop. Initially, she decided it would be safest not to claim for the pen because she had no specific receipt and she was not sure of the exact amount. However, she had kept the box the pen had been packaged in, and upon checking the box for further information noted the $50 price sticker on the outside. Before lodging her income tax return, Kylie made a note on the credit card statement detailing the two items and their respective prices and kept the pen packaging along with her bank statement.

25. By keeping the pen packaging and the credit card statement including her notation, Kylie has ensured she has sufficient information to substantiate her expense. The ATO will accept the combination of the pen packaging and the credit card statement as sufficient evidence to substantiate her claim.

26. Had Kylie not kept the box that her pen came in with the price sticker on it, but was able to obtain from the jewellery store a written breakdown of how much she spent on each of the items, she would also have been able to make a note on her credit card statement detailing the two items and their respective prices, and would have had sufficient evidence to substantiate her claim. The ATO would accept the combination of the credit card statement containing Kylie's notation and the written price breakdown from the jewellery store as sufficient substantiation.

 

REASONABLE OVERNIGHT TRAVEL ALLOWANCE

CONDITIONS - OVERNIGHT TRAVEL ALLOWANCE

1. You must be paid an bona fide travel allowance -

A 'bona fide travel allowance' is an amount that could reasonably be expected to cover accommodation, or meals or expenses incidental to travel. This does not require that the amount paid by the employer must equate dollar for dollar to the employee's actual expenditure. However there must be relativity between the quantum of the travel allowance and the purpose for which it is said to be paid. A token amount, or a general payment, is not a bona fide travel allowance. In this context the words 'cover' and 'covered' refer to the nature of the expenses for which the allowance is provided, that is the subject matter to be dealt with by the allowance paid, namely accommodation and applicable meal expenses. (See Re McIntosh and F.C. of T. [2001] AATA 702; 47 ATR 1242).

For accommodation, meal and incidental expenses to be considered under the exception from substantiation, the travel allowance must be a bona fide travel allowance (refer to TR 2004/6) paid or payable under a law of the Commonwealth or of a State or Territory, or an award, order, determination or industrial agreement in force under such a law (section 900-60 of the ITAA 1997).

 

2. You must be an employee (not a sole trader or partnership).

3. You must be away from your ordinary residence. You must sleep away from your home.

4. You must not stay in one town for more than 21 consecutive days (Roads and Traffic Authority of NSW case; MT 2030).

5. You must be able to explain to the ATO how you spent your accommodation, meal & incidentals allowances by using a diary to establish a regular pattern of expenditure plus any receipts.

6. Your claims have to be consistent with the employees occupation and type of expense.

 

You must be able to explain to the ATO how you spent your meal & incidentals allowances. Try to keep diary notes and receipts to show a regular pattern of expenditure over a 28 day period. Try to photograph any receipts with your phone then email them to your laptop.

E.G. 

Breakfast - hot breakfast $15, coffee $4 = $19

Lunch - counter lunch $15, coffee $4 = $19

Dinner - steak $25, schooners $15 = $40

Snacks - chips & bars $10, red bulls $18, water $5 = $15

Incidentals - toiletries $6, newspaper $2, magazines $8, in-house DVD $6, paperback book $20 = $42

Total = $135

 

ATO reasonable overnight travel allowances for meals & incidentals

As per Tax Determination 2014/19 for the year ended 30 June 2015.

 

Salaries                            < $115,450                  < $205,300

 

Australia                          $123.45 or $114.15        $150.80 or $130.80

                                           

Truck Drivers                   $  95.40                           $ 95.40

 

International

 

Cost Group 1                   $ 85.00                            $100.00

Iraq, Nauru

 

Cost Group 2                   $125.00                            $145.00

Fiji

 

Cost Group 3                   $155.00                             $190.00

Thailand, Indonesia

 

Cost Group 4                   $175.00                             $215.00

USA, New Zealand,

Papua New Guinea, Manus Island

 

Cost Group 5                   $230.00                             $290.00

Singapore, Japan, UK, Hong Kong, China,

UAE

 

NEW ATO GUIDELINES CONSULTAION PROCESS UNDER WAY

[201529] Domestic travel allowance expenses – reasonable rates and safe harbours for meals, incidentals and accommodation

David,

Thanks for your email.

The ATO is aware of the current dilemma that many taxpayers are confronted with when claiming for meals and incidentals associated with travelling on work.

A person can only claim what they incurred. But they don’t need to keep receipts if not claiming more than the Commissioner’s published rate. So how do they work out what they incurred? And how do they satisfy the Commissioner that they have only claimed what they incurred?

My advice to people in this situation is to summarise a daily or weekly meal cost and use that as a guide. They may be able to use bank account withdrawals or credit card statements to refresh the memory. It would be rare for the amount to come anywhere near the Commissioner’s rate unless such travel is infrequent and they live it up when they travel.

The ATO has publicly noted that it is consulting on the issue and I am the contact. I am awaiting an internal report based on data analysis before I actually have any external conversations. I have been advised that the report is almost ready.

What we are hoping to achieve through the consultation is a safe harbour amount that requires no records and some rules for records to keep when substantiation is not required and you are claiming between the safe harbour amount and the Commissioner’s rate.

Please call me if you wish to discuss.

Michael Majoor 
Director, New Measures & Priority Issues, Small Business/Individual Taxpayers

Australian Taxation Office
Phone: 02 9354 3158 | Facsimile: 02 9685 8666

I am very interested in Michael Majoor's reference to safe harbour amounts where no receipts are required. You will notice that Michael thinks that this amount will be less than the Commissioner's rate. He hopes to have these amounts by 30 June 2016.

Download the ATO private ruling application

ZONE TAX OFFSET

From 1 July 2015 the zone tax offset is to exclude "fly in fly out" and "drive in drive out" workers where their normal residence is not within a "zone".

30 June 2017

SPECIAL ZONE A OR B - $1,173 + 50% of the rebates or notional rebates to which a taxpayer is entitled.

ORDINARY ZONE A - $338 + 50% of the rebates or notional rebates to which a taxpayer is entitled.

ORDINARY ZONE B  - $57 + 20% of the rebates or notional rebates to which a taxpayer is entitled.

OVERSEAS DEFENCE FORCE REBATE - $338 + 50% of the rebates or notional rebates to which a taxpayer is entitled.

REBATES OR NOTIONAL REBATES

Dependants who are unable to work $2,535 x percentage of days maintained by only you and ATI < $10,422.

Sole Parent $1,607 x percentage of days maintained by only you.

Child or Student $376 + $282 after the 1st x percentage of days maintained by only you and ATI < $1,786

·         To qualify for the zone tax offset, you must have lived or worked in a remote area (not necessarily continuously) for:

o    183 days or more during the current income year; or

o    183 days or more in total during the current and previous income years - but less than 183 days in the current year and less than 183 days in the previous income year - and you did not claim a zone tax offset in your previous year's tax return.

If you lived in a zone for less than 183 days in the current income year, you may still be able to claim a tax offset as long as you lived in a zone for a continuous period of less than five years and:

o    you were unable to claim in the first year because you lived there less than 183 days; and

o    the total of the days you lived there in the first year and in the current year is 183 or more.

Remote zones

Remote areas are classed as either zone A or zone B. There are also special areas within these zones.

Australian zone list (XLS, 1.5MB)

End of find out more  

Example

Gary lived in a remote area from 1 March 2008 to 30 September 2012 - a continuous period of less than five years. He couldn't claim a zone tax offset for the first year because he lived there for only 121 days. However, he could carry forward these unused days to 2012-13.

He now adds the number of days from 1 March 2008 to 30 June 2008 (121 days) and the number of days from 1 July 2012 to 30 September 2012 (91 days). As the total (212 days) is '183 or more days' over the two income years, Gary can claim the tax offset on his 2013 tax return.

 

·         Zone or overseas forces tax offset calculator

You may be able to claim the tax offset if you have:

o     lived or worked in a remote or isolated area of Australia, not including an offshore oil or gas rig (a remote area), or

o     serverd overseas as a member of the Australian Defence Force (declared non-warlike service) or a United Nations armed force and the income relating to that service is not specifically exempt from tax.

If you qualify for both a zone tax offset and an overseas forces tax offset, you can claim only one of them. Claim the one that gives you the higher tax offset.

You may also be eligible to claim additional dependant tax offsets at this item for:

o    your or your spouse's parent

o    your or your spouse's invalid child, brother or sister

o    your child-housekeeper

o    your housekeeper.

 

Work related uniforms, protective clothing and laundry

Laundry

Laundry: You may claim up to $150 without receipts or less or you may use a reasonable basis to calculate the amount e.g. $1 per load for work related clothing.

Dry cleaning without receipts may fall under items that cost less than $10 up to $200. Sometimes if you use a regular dry cleaner they may be able to give you an annual tax receipts based on their records.

 

Protective clothing

Protective clothing are generally tax deductible if it is designed to protect:

Steel capped boots, high visibility shirts, fluro trousers, fire proof clothing, non-slip safety shoes, aprons, etc.

 

Conventional clothing

Conventional clothing is not deductible e.g. King Gee drill pants, jeans, etc unless they have a logo or a fluro strip sewn on for safety.

 

Strictly enforced uniforms

Strictly enforced uniforms are usually deductible as well as accessories such as stockings, footwear, socks and jumpers unless it is conventional clothing.

 

Non compulsory uniforms

Non compulsory uniforms are usually not tax deductible unless they are registered with AusIndustry or they have a logo.

 

TOOLS

Tools are usually 100% deductible except for the following:

For employees if a tool costs > $300 you must depreciate it usually at 20% per year. e.g. nail guns, drills, etc.

For ABN businesses the 'General Small Business Pool' may depreciate tools < $6,500 at 100% per year.

From 1 January 2014 tools < $1,000 may depreciate at 100%.

You do not need receipts for up to $200 of items that cost less than $10. The $200 is the maximum for the whole tax return.

 

SUN PROTECTION AND SUN GLASSES

Includes sun glasses, sun screens and hats.

You do not need receipts for up to $200 of items that cost less than $10. The $200 is a total for the whole tax return.

 

TOLLS & PARKING

You do not need receipts for up to $200 of items that cost less than $10. The $200 is a total for the whole tax return.

 

LICENCES

The licence or renewal expense must relate to your current income producing activity not income that will be made in the future.

The initial cost of some licenses may not be a tax deduction. e.g. the initial cost of obtaining a truck, earth moving or heavy machinery license as the expense has occurred at a point too soon.

 

COURSES

Courses include fees (but not HECS), books, laptops, internet, stationery, home office expenses, some travel to a place of education.

You do not need receipts for up to $200 of items that cost less than $10. The $200 is a total for the whole tax return.

The course must relate to your current income producing activity, not income that will be made in the future. e.g. Medical School expenses are not a tax deduction for a doctors income in the future.

If your course is run by a university, TAFE or college you must reduce your expenses by the first $250.

 

SECURITY/CRIMINAL CHECKS ATO TR 98/6 PARA 177

Security checks are usually not deductible as the expense happens at a point too soon before the income is earned.

Renewal of criminal checks may be deductible as you are currently earning income e. g school teacher's blue cards.

The ATO allows the preparation of resumes and travel to attend an interview as a tax deduction against Centrelink income.

 

HOME OFFICE

This is usually claimed by mining workers employees who have to stay in contact with the mining company or staff whether at home or at the mining site.

Method 1

You may claim home office electricity based on floor area e.g. 5%. x $400 (electricity bill per quarter) x 4 = $80. This area must be for the sole purpose of home office. It cannot be for multi-use e.g. dining room table.

Furniture, desks, fax machines, filing cabinets, book shelves, pictures, carpets, blinds, etc may be depreciated at usually 20%.

Depreciable Items < $300 may be 100% depreciated.

E.g. desk $250 x 100%, chair $120 x 100%, carpet $1,000 x 20%, blinds $600 x 20% = $690

Method 2

You may use the ATO 45c per hour rate to claim electricity, gas and depreciation of furniture. You must keep a 4 week diary.

E.g. 45c x 20 hours per week x 52 weeks = $468.00.

 

WORK EXPENSES

iPhone, mobiles & home phone

Computers - iPads, Macs, laptops & desktops

Computer supplies

Stationery - Cartridges, diaries, pens & office sundry

Internet

Self education, conferences and courses.

PRIVATE USE APPORTIONMENT

If there is private use (other than incidental use) a 28 day diary is required once every 5 years or where the work % changes by more than 10%.

A diary can be a simple A4 pad with a line in the middle with work & private on opposite sides.

 

RECORDS

You may claim $200 worth of items costing < $10 without receipts

 

 

EMPLOYER FRINGE BENEFITS TAX

Fringe Benefits Tax is paid by the employer for non-cash benefits which are not exempt.

The Fringe Benefit Tax Period is 1 April 2015 to 31 March 2016.

LIVING AWAY FROM HOME ALLOWANCE (LAFHA)

These are non-cash fringe benefit reimbursements received for accommodation, food and drinks by fly in fly out or drive in drive out employees and their families and are usually subject to Fringe Benefits Tax and paid by the employer and is part of your salary package.

However there are some exceptions if you satify all of the ATO conditions.

You must live away from your usual place of residence.

You must be required to live away from home.

You must have maintained a home in Australia at which you usually reside and is available for your immediate use and enjoyment during that period that your duties of employment require you to live away from home. It must be reasonable to expect that the employee will resume living at that place when the period ends.

The Fringe benefit relates only to all or part of the first 12 months that the duties of that employment require the employee to live away from thr employee's usual place of residence. However, the 12 month rule can be paused by the employer.

You can substatiate all expenses incurred on accommodation.

You can substantiate all expenses incurred on food or drink unless you are using the ATO rates.

You provide a declartion about living away from home and, where required, a declaration on substatiation to your employer.

The payment must be for a LAFHA as per your Enterprise Bargaining Agreement definitions.

If you satify these ATO conditions you must satisfy ATO substatiation record keeping requirements.

For accommodation, food and drink requirements you must keep of receipts for 12 months from 1 April 2015 to 31 March 2016.

There are some exceptions where you may use the ATO Food and Drink Rates but you still must show a regular pattern of expenditure for at least 28 days. Try and keep all your receipts for the full 12 months. Use your mobile to take photos of these records and email them to your laptop, iPad, computer, etc.

EMPLOYER EXEMPT FRINGE BENEFITS DECLARATIONS

E.G.

Your employer pays you $590 per week for LAFHA for accommodation, food and drinks for you and your family.

You have been asked to sign an Exempt Fringe Benefits Declartion stating that you have incurred accommodation, food and drinks expenses of at least $590 per week from 1 April 2015 to 31 March 2016 and that you have kept all receipts or at least proof of a 28 days regular pattern of expenditure for food and drinks using the ATO rates to reduce substatition requirements for food and drink receipts and diaries from 12 months to 1 month.

Your accommodation expense per week is $300 which you must have 12 months of receipts so your food receipts must be at least $290 per week to be fully exempt under the Fringe Benefits Act.

If you do not make $590 pay the diffence back to the employer as salary packaging with contributions so as as to avoid your employer having to pay 49% FBT on the difference.

Record keeping is tricky as the methods used must be crystal clear to the ATO. McDonalds, KFC and other cafes & restaurants date, descriptions and amounts on credit card statements for food and drinks may be acceptable but purchases from Coles, Woolsworths, Foodland, IGA, etc. will not be acceptable without an itemised receipt.

If you satisfy all these requirement then you may sign your employer's LAFHA Exempt Fringe Benefits Declaration. ATO Reasonable

ATO Fringe benefits tax: reasonable amounts for food and drinks incurred

 by employees receiving a living-away-from-home-allowance fringe benefit.

As per Tax Determination 2015/7 for the year ended 31 March 2016.

One Adult                                       $241

Two Adults                                     $362

Three Adults                                  $483

One Adult and one child               $302

Two Adults and one child             $423

Two Adults and two children        $484

Two Adults and three children     $545

Three Adults and one child          $544

Three Adults and two children     $605

Four Adults                                     $604

$121 for each additional adult

$61 for each additional child

An adult is a person who has turned 12 before 1 April 2015 child 4

 

UNSETTLED LAW - ATO INTERPRETIVE DECISION 2001/120

 

TRAVEL EXPENSES INCURRED BY EMPLOYEES FOR MEALS WHILE WORKING AND LIVING

 

AT ONLY ONE MINING SITE

 

Does the otherwise deductive rule apply to employees working and living at only one mining

site?

 

If it does then additional expenses for meals may be a tax deduction.

 

Michael Majoor from the ATO has informed me that there are discussions occuring with employees working on Manus and Nauru Islands and Gladstone in regards to these issues.

 

ATO INTERPRETIVE DECISION 2001/120

 

Fringe Benefits Tax - Otherwise Deductible Rule

Fringe benefits tax 'otherwise deductible' rule
FOI status: may be released
Status of this decision: Decision Current
 

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATO ID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

 

Issue

Whether the 'otherwise deductible' rule (ODR) contained in sections 37 and 52 of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) applies to reduce to nil the taxable value of the following fringe benefits provided by the employer to certain employees working at remote work sites:

(1)
residual (accommodation) fringe benefits; and
(2)
certain board (meal) fringe benefits.

Decision

1. There is no fringe benefits tax (FBT) liability in respect of the provision of accommodation, as the benefit is, depending on whether the employee is travelling in the course of performing the duties of that employment, either specifically made an exempt benefit under subsection 47(5) of the FBTAA or the taxable value of the benefit may be reduced to nil under the ODR in section 52 of the FBTAA.

2. In respect of the provision of meals to the employees, the taxable value of the board benefit is reduced to nil under the ODR in section 37 of the FBTAA.

Facts

1. During the FBT years the employer conducted operations at various remote locations throughout Australia. Activities at these locations included open cut mining, site preparation, civil earthworks projects, road construction and maintenance, ore cartage and plant hire.

2. Many of these locations were a substantial distance from cities and townships where employees, if they so chose, could have been accommodated and could have commuted to work daily.

3. Employees working at these remote locations therefore necessarily had to be provided with accommodation at or near these sites until the projects they were working on were completed or until their contracts of employment with the employer otherwise concluded.

4. The usual practice for the employer was to arrange transport to and from the nearest capital city to the remote work site.

5. Employees working at remote locations were entitled to be provided with three meals on each day while at the site.

6. The employees provided the employer with a Usual Place of Residence declaration stating that during the period they worked at a remote work site they also maintained a usual place of residence.

The relevant conditions of employment include:

they are required to live away from their usual place of residence at various remote locations in the course of their employment;
they are required to live at or near actual remote work sites;
the taxpayer provides meals and accommodation at or near these remote work sites until the respective projects on which they are contracted to work, which may have a life of several years, are completed;
they do not make a contribution towards the cost of their meals or accommodation;
because of the remoteness of the sites and the conditions of their employment, the employees cannot choose accommodation or meals other than what is provided by the employer;
they are neither able to bring their families to live with them at the camp sites nor, generally, to have visitors;
they work rosters, often comprising 12 hour shifts on 13 successive days followed by 1 day off, of 7 or 14 weeks at the site followed by a week off;
they are generally employed on a 'fly-in-fly-out' basis and are generally required to leave the camp during their rostered-off period;
where they are required to leave the camp at the end of a roster then, depending on the remoteness of the camp, they may either drive out of the camp or be flown out, usually to the nearest state capital;
while the projects may last a number of years, the employees do not spend inordinate amounts of time at the work site, very rarely spending more than 1 year, being the aggregate of a number of 7 or 14 week rosters worked, at the same work site; and
typical facilities at the sites consist of demountable modules which provide single quarters accommodation for employees, a common dining area and shared laundry and bathroom facilities.

Reasons For Decision

1. In relation to employees who work at remote construction sites, paragraph 2 of Taxation Determination TD 96/7 provides that the provision of accommodation at the remote work site will not give rise to an FBT liability where the accommodation is not the usual place of residence of the relevant employees. Depending on whether the employee is travelling in the course of their employment, either the taxable value of the benefit is reduced to nil under the 'otherwise deductible' rule in section 52 of the FBTAA or the benefit is specifically exempted by subsection 47(5) of the FBTAA.

Section 31E of the FBTAA provides for employees who work on a fly-in-fly-out or drive-in-drive-out basis, allowing concessions to not be limited to 12 months as per section 31D of the FBTAA, if an employee lived away from his or her usual place of residence on or after 1 October 2012.

In this case, the employer has satisfied the Commissioner that the accommodation provided at the remote work site is not the usual place of residence of the relevant employees and the employees work on a fly-in-fly-out or drive-in-drive-out basis, so therefore the changes in section 31D do not apply.

2. The meals provided to the employees are board fringe benefits that have a taxable value of $2.00 each under paragraph 36(a) of the FBTAA. The 'otherwise deductible' rule in section 37 of the FBTAA may apply to reduce the taxable value of the board fringe benefit to nil depending on the particular facts of the case.

Accordingly, it is necessary to establish that the relevant employees would have been entitled to a deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) (former subsection 51(1) of the Income Tax Assessment Act 1936 (ITAA 1936)) had they incurred and paid unreimbursed expenditure on the meals.

The decision of Hill J in Roads and Traffic Authority of NSW v. FC of T (1993) 43 FCR 223 considered the circumstances in which various allowances paid to road construction and repair crews, who were required to camp away from home, could be considered to be paid to compensate for outgoings, which if incurred by the employee would have been deductible expenses. In the process of determining that the hypothetical expenditure on meals by the employees would have been deductible expenses according to the definition in subsection 136(1) of the FBTAA, that is they would have been deductible in terms of subsection 51(1) of the ITAA 1936, Hill J set down a general rule by which deductibility of such expenditure is to be determined (at 240):    


'Where a taxpayer is required by his employer, and for the purposes of his employer, to reside, for periods of time, away from home and at the work site, and that employee incurs expenditure for the cost of sustenance, or indeed other necessary expenditure which, if the taxpayer had been living at home, would clearly be private expenditure, the circumstance in which the expenditure is incurred, that is to say, the occasion of the outgoing operates to stamp that outgoing as having a business or employment related character.'

His Honour (at 240) noted the following features of the RTA employees' working conditions that supported claims for deductibility of expenditure on sustenance and other necessary items:    


'...they are required, as an incident of their employment, by their employer and for the purposes of their employer to live close by their work site for relatively short periods of time. No question arises of their choosing to live in these places. Each of the persons in question has a permanent house in which he lives when not in camp. None of the employees spend inordinate periods of time in the camps so that the camp becomes their home. Their house is retained and the employees in question travel home at weekends. They do not remain in the camps.'

However, Hill J did observe that where an employee has no private home and is employed indefinitely to work at a particular site, then that employee might be said to have chosen to live at the site so that the cost of the employee's accommodation there would be private.

The question of whether an employee has chosen to live at the site is one of fact and degree. In the present case, having regard to the relevant facts including:

remoteness of the sites;
living conditions at these sites;
a general requirement for employees to leave the sites whilst not on duty;
an inability to have family or friends visit the site;
working conditions involving 12 hour shifts for 7 days a week;
fixed period contracts of employment; and
the limited life of most mining sites,

it could not be said that the employees had chosen the accommodation provided by the employer at or near the mine site to be their home, such that their usual place of residence had ceased to be their home.

Accordingly, it is possible to conclude on the facts of the case that an income tax deduction would have been allowable to the recipient of the board fringe benefit if the recipient had incurred unreimbursed expenditure in respect of the acquisition of the benefit. On this basis, the ODR in section 37 of the FBTAA will apply and the taxable value of the board fringe benefits is reduced to nil."

 

Bechtel Employees at Curtis Island ATO Facts Sheet

You need to review your work-related expense claims in your 2015 and 2014 tax returns. The ATO is focussing attention on work-related expense claims so make sure you only claim expenses you are entitled to. This fact sheet guides you on what deductions you can and cannot claim. Read this material carefully to ensure your claims are correct, even if a tax agent prepared and lodged your tax return. You should correct any mistakes by 31 October 2015.


Claiming deductions:
Receiving an allowance does not automatically entitle you to a deduction. To be entitled to a deduction:
■■ you must have actually spent the money and not have been reimbursed, and
■■ the costs must relate to doing your job and must not be private expenses (such as travel from home to work), and

■■ in most cases, you must have records to prove your claims.


Can I claim a deduction for tools?
Bechtel pays some employees a tool allowance which is shown on their payment summary. All tools are provided by Bechtel on Curtis Island, so most employees cannot claim a deduction for tools, including any purchased with the allowance. In rare cases where you use your own tools in performing your
duties, you can claim a deduction. The ATO may confirm with your employer that you use your own tools.


Can I claim a deduction for travel to and from work?
Bechtel pays a ferry allowance to employees for the inconvenience of travelling to and from Curtis Island on the ferry. Employees also receive a travel allowance to cover travel to and from the project site. These allowances are income and are included on your payment summary. Bechtel pays the cost of the ferry and travel from the ferry terminal to the project site on Curtis Island. Employees cannot claim a deduction for these transport costs.


Bechtel pays all transport costs for fly-in fly-out (FIFO) employees. This includes airfares and transport to and from the ferry terminal. FIFO employees cannot claim a deduction for these transport costs. For FIFO employees, travel costs between their home and their local airport is a private expense and cannot be claimed as a deduction. Similarly, local (non-FIFO) employees cannot claim a deduction for the cost of travelling between home and the ferry terminal as this is a private expense.


Can I claim my meals?
You can only claim deductions for the cost of meals if you work overtime or travel to perform work duties that require you to sleep away from home overnight. Meals eaten during regular working hours are a private expense and you cannot claim a deduction for these costs. Bechtel provides all meals to FIFO employees. Therefore, FIFO employees do not pay for any meals and cannot claim deductions.


Overtime meals
Bechtel pays some local (non-FIFO) employees at Curtis Island a meal allowance if they work two or more hours of overtime. This allowance is included on your payment summary. You can claim a deduction for overtime meals for the amount you spent on meals on those breaks. This may include the cost of food you prepared yourself to eat during overtime.


Overnight meals
Local (non-FIFO) employees do not travel to perform work duties that require them to sleep away from home overnight and cannot claim a deduction for meal expenses, even if paid a travel allowance.


Can I claim my mobile phone calls?
Bechtel provide communication devices to employees to use during working hours and there is no requirement for employees to use their personal mobile. Unless you can demonstrate a need to use your personal mobile phone in performing your duties you cannot claim a deduction for any mobile phone expenses. The ATO may confirm with your employer that you use your phone for work purposes.


Can I claim any deductions for accommodation expenses?
Bechtel provides employees who are required to stay at construction camps on Curtis Island with an ‘island living allowance’. This allowance is included on their payment summary. Bechtel covers all accommodation costs for employees who are required to stay on the island and so employees receiving this allowance cannot claim any accommodation costs. Similarly, employees who stay at construction camps on the mainland do not pay for their accommodation and cannot claim a deduction for these costs.


Can I claim any deductions in relation to my Productivity Allowance/Payment?
Bechtel provides employees with a ‘productivity allowance’ for employees’ commitment to achieve optimum productivity, continuous work, complying with timekeeping requirements and performing duties. This allowance is included on the payment summary. As the allowance is not paid to cover any out of pocket expenses, no deductions can be claimed by employees for this allowance.


Can I claim for training courses?
Bechtel pay for all training courses and related expenses that are a requirement of your employment on Curtis Island. You cannot claim a deduction for the costs paid for or reimbursed by your employer.


What do I need to do?
Review your work-related expense claims for your 2015 and 2014 tax returns.
If you have incorrectly claimed a work-related expense, complete the form Request for amendment of work-related expenses provided with this fact sheet. Additional copies can beobtained from ato.gov.au/amendwre. Alternatively, you can get a registered tax agent to request an amendment for you. If you voluntarily request an amendment by 31 October 2015, the ATO will not impose a penalty. If you have made mistakes and you do not request an amendment, the ATO may apply a penalty if it reviews your return after this date. If you have not yet lodged your 2015 return, make sure you only claim deductions you are entitled to when you lodge it.


What if I need more information?

For general information about deductions, visit ato.gov.au/deductions.
If you wish to discuss your circumstances, call the ATO on 13 28 61

Fact sheet for Bechtel employees at Curtis Island
© Australian Taxation Office for the Commonwealth of Australia, 2015
You are free to copy, adapt, modify, transmit and distribute this material as
you wish (but not in any way that suggests the ATO or the Commonwealth
endorses you or any of your services or products).
Published by
Australian Taxation Office
Canberra
August 2015
JS 35301
Our commitment to you
We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations. If you feel that this publication does not fully cover your circumstances, or you are unsure how it applies to you, you can seek further assistance from us. We regularly revise our publications to take account of any changes to the law, so make sure that you have the latest information. If you are unsure, you can check for more recent information on our website at ato.gov.au or contact us. This publication was current at August 2015.

Download the ATO private ruling application

 

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The information provided in the above document is not intended to be, nor should it be construed as tax advice. Any specific recommendation for a client can only be done after their individual circumstances have been determined by David Douglas Accountants.

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