What a housing fringe benefit is
If you provide accommodation for your employee rent-free or at a reduced rent, and it is their usual place of residence, it is generally a housing fringe benefit.
If accommodation is provided to an employee who is:
- living in an identified remote area
- living away from their usual place of residence to carry out their duties
- travelling to carry out their duties
it is not a housing fringe benefit.
Meaning of accommodation
For the purposes of fringe benefits tax (FBT), accommodation includes exclusive or shared accommodation in a:
- house, flat or home unit
- hotel, motel, guesthouse or bunkhouse or other living quarters
- caravan or mobile home
- ship or other floating structure.
Remote areas accommodation is exempt
You don't need to pay FBT if you provide housing to employees in a remote area and all of the following apply.
- For the whole of the tenancy period, the accommodation is occupied by a person who is your current employee and the usual place of their employment is in the remote area.
- It's reasonable for you to provide accommodation for employees because either
- the nature of your business is such that employees have to move frequently from one residential location to another
- there is insufficient suitable residential accommodation otherwise available at or near the place where the employees are employed
- it is customary for employers in your industry to provide free or subsidised accommodation for employees.
- You don't give the benefit to the employee under either
- a non-arm's length arrangement
- an arrangement that was entered into just to make the housing exempt.
What you need to do
If the housing is exempt
If the housing is exempt from FBT, you don't need to take any action.
If the housing is not exempt
If the housing benefit is not exempt, you need to:
- work out the taxable value of the housing fringe benefit
- keep the appropriate records
- calculate how much FBT to pay
- lodge your FBT return
- pay the FBT amount
- Check if you should report the fringe benefit through Single Touch Payroll (or on your employee’s payment summary).
Taxable value of a housing fringe benefit
When you calculate your FBT, you need to know the taxable value of the housing you supply. This is:
- the market rental value of the accommodation
- minus any contribution your employee makes, such as rental payments.
Reductions and concessions
You can reduce the taxable value of a housing fringe benefit (or eliminate it entirely) if the benefit is eligible for an exemption or concession, such as temporary accommodation provided to an employee who has to change their usual place of residence to start or continue employment with you (subject to certain records you need to keep).
This concession applies for:
- up to 21 days for temporary accommodation at the former location, if the temporary accommodation is necessary because the employee's former home is unavailable or unsuitable for occupancy
- up to 4 months for temporary accommodation at the new location, provided the employee is making a reasonable effort to acquire suitable long-term accommodation. This concession can be extended to up to 12 months in certain circumstances.
Records you need to keep
With record keeping for FBT, you must keep records that:
- show how you calculated the taxable value of the housing fringe benefit
- support any exemption or concession you used.
Reduction for temporary accommodation when an employee relocates
If you use the reductions in taxable value for temporary accommodation when an employee relocates, your employee will need to give you an employee declaration (Temporary accommodation relating to relocation declaration).
Or, you can choose to rely on existing records as stated in the LI 2024/6 legislative instrument and LI 2024/6 explanatory statement.