FBT - VOUCHERS TO EMPLOYEES - EXEMPT?
18 May 2005
In ID 2005/109, the ATO sets out its view that an exemption under section 41 of the FBT Act is not available where vouchers are provided to employees. Although the specific facts of this case may not be mirrored by any of our readers, the principles involved can be widely applied.
In this particular case,an employer provides an employee with a voucher that entitles the employee to receive massage services during a working day on the employer's business premises. The Commissioner was asked whether or not this is an exempt benefit under section 41 of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?
The Commissioner found that section 41 had no application here and provided the following reasons:
"The general effect of section 41 of the FBTAA is to exempt a property benefit where the property is provided to, and consumed by, an employee on a working day on the employer's business premises.
There is no definition of 'consume' in the FBTAA and as such it takes on its ordinary meaning. The Macquarie Dictionary, [Multimedia], version 5.0.0, 1/10/01. defines 'consume' as:
1.
to destroy or expend by use; use up.
2.
to eat or drink up; devour.
The explanatory memorandum to the Fringe Benefits Tax Assessment Bill 1986 in relation to section 41 explained that,
Goods supplied on a working day and consumed on the employer's premises, e.g., a daily ration of beer consumed at work by brewery workers, will not attract tax.
Given the context and the policy intent, it is considered that the meaning of 'consumed' in section 41 of the FBTAA is limited to that which can be eaten, drunk or otherwise devoured.
The act of redeeming a voucher does not fall within this definition of consume. Consequently the voucher is not capable of being consumed for the purposes of section 41 of the FBTAA.
Accordingly, section 41 of the FBTAA does not apply to exempt the property benefit as the benefit provided is not consumed by the employee."