Issue
Is a hard lying allowance paid to the taxpayer, an offshore oil and gas rig worker, assessable income under section 15-2 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Decision
Yes. A hard lying allowance paid to the taxpayer, an offshore oil and gas rig worker, is assessable income under section 15-2 of the ITAA 1997.
Facts
The taxpayer is employed as an offshore oil and gas rig worker on a self-propelled rig.
Under a workplace agreement the taxpayer is paid a hard lying allowance.
The hard lying allowance is paid by the employer having regard to the accommodation and recreation facilities and all other conditions associated with living on board a self-propelled drilling vessel.
On the taxpayer's fortnightly payslip, the payment of the hard lying allowance is shown as 'hard lying' or 'hard lying allowance'.
The allowance is not expressed to be paid as a living-away-from-home allowance (LAFHA).
Reasons for Decision
Subsection 15-2(1) of the ITAA 1997 provides that the assessable income of a taxpayer includes the value of allowances paid in respect of employment. However the value of an allowance will not be included in the assessable income of a taxpayer if the allowance is a fringe benefit within the meaning of the Fringe Benefits Tax Assessment Act 1986 (FBTAA).
If the hard lying allowance paid is properly characterised as a living-away-from-home allowance, the hard lying allowance will be a fringe benefit within the meaning of subsection 30(1) of the FBTAA. Fringe benefits are non-assessable non-exempt income in the hands of the taxpayer under subsection 23L(1) of the Income Tax Assessment Act 1936 (ITAA 1936).
Subsection 30(1) of the FBTAA requires that a whole or part of the allowance be in the nature of compensation for additional expenses, refer Atwood Oceanics Australia Pty Ltd v. Federal Commissioner of Taxation 89 ATC 4808; (1989) 20 ATR 742. The hard lying allowance is not of this nature and subsection 30(1) of the FBTAA is not satisfied.
Paragraph 30(2)(d) of the FBTAA requires that 'the allowance is expressed to be paid as a living-away-from-home allowance'.
The Macquarie Dictionary , [Multimedia], version 5.0.0, 1/10/01. defines 'express' as: 8. clearly indicated; distinctly stated (rather than implied); definite; explicit; plain.
Under the workplace agreement and on the payslip, the allowance is shown as 'hard lying allowance' or 'hard lying'.
Accordingly, the allowance is not expressed to be paid as a LAFHA for the purposes of paragraph 30(2)(d) and that condition in subsection 30(2) of the FBTAA is not satisfied. The hard lying allowance is not a fringe benefit for the purposes of the FBTAA and is not non-assessable non-exempt income under subsection 23L(1) of the ITAA 1936.
Therefore, the hard lying allowance paid to the taxpayer, an offshore oil and gas rig worker, is assessable income of the taxpayer under section 15-2 of the ITAA 1997. Note: in Best v. Federal Commissioner of Taxation [2005] AATA 560; 2005 ATC 2184; (2005) 59 ATR 1151 and Crane v. Federal Commissioner of Taxation [2005] AATA 872; 2005 ATC 2312; (2005) 60 ATR 1170, it was held, by differently constituted Administrative Appeals Tribunals, that a hard lying allowance paid to a taxpayer was not a LAFHA benefit under section 30 of the FBTAA and was not income derived by the taxpayer by way of the provision of a fringe benefit.
Amendment History
Date of amendment Part Comment 12 September 2014 All Updated. 20 June 2014 Reasons for Decision Updated formatting and reference to FBTAA in the second paragraph. Legislative references Insert references to FBT. 13 June 2014 Issue and Decision Updated legislative references. Reasons for Decision Updated and included additional legislative references and included additional explanation to improve clarity. Legislative references Updated references to remove repealed provision and substitute current provisions. Case references and Other references Updated to correct error; Inserted reference to the Macquarie Dictionary.
Date of amendment | Part | Comment
12 September 2014 | All | Updated.
20 June 2014 | Reasons for Decision | Updated formatting and reference to FBTAA in the second paragraph.
Legislative references | Insert references to FBT.
13 June 2014 | Issue and Decision | Updated legislative references.
Reasons for Decision | Updated and included additional legislative references and included additional explanation to improve clarity.
Legislative references | Updated references to remove repealed provision and substitute current provisions.
Case references and Other references | Updated to correct error; Inserted reference to the Macquarie Dictionary.