March 21, 2011 – RSM Bird Cameron urges businesses to assess The Exposure Draft – Tax Laws Amendment (2011 Measures No. 2) Bill 2011: FBT Exemption for fly-in/fly-out.
urges businesses to assess The Exposure Draft – Tax Laws Amendment (2011 Measures No. 2) Bill 2011: FBT Exemption for fly-in/fly-out.
Rami Brass, director, Taxation at RSM Bird Cameron said, “While the Government has recognised the need to extend the FBT exemption for fly-in fly-out assignments to remote overseas locations, certain issues have not been addressed and new issues have arisen as a result.
“Most importantly, the definition of remote cannot be easily applied overseas and isn’t objective enough to be applied consistently and fairly.”
The administrative burden on companies who need to employ staff to work overseas on a fly-in fly-out basis, due to the difficultly they have in convincing employees to relocate is already high. This situation also forces employees to travel considerably and work longer shifts due to locations, making overseas assignments challenging and undesirable.
“Understanding the hardships of these assignments makes it difficult to see how providing the transport required for these shifts could be perceived as an employee benefit – particularly when they are being forced to be away from their families,” said Brass.
Brass argues these costs are a necessary part of business, and are provided only to ensure employment duties are carried out.
Brass urges the Government to include overseas under the definition of ‘remote’ instead of being subjectively defined as proposed.
In addition, Brass argues that inflicting FBT on these transactions would encourage Australian businesses to employ non-Australian residents to conduct this work. “If businesses are forced to pay FBT on these already expensive travel costs and the administrative burden of these activities increases, it’s only natural that Australian businesses will seek employees from overseas in order to relieve the strain of these additional costs, disadvantaging Australian workers, and the Australian economy.”
Brass said that businesses only undertake the fly-in fly-out arrangement when local conditions are not conducive to establishing a usual place of residence for employees. “For companies in these situations the administrative burden is already excessive. In particular the complexities of negotiating with companies and overseas governments to promote our interests overseas and sending Australian staff to challenging locations to deal with difficult situations – the additional difficultly of having to negotiate a subjective definition in order to qualify for an FBT exception seems unfairly harsh,” said Brass.
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RSM Bird Cameron is the largest mid-tier accounting firm in Australia and offer a full range of specialist advisory services, including business consulting and advisory, assurance and advisory, taxation consulting, corporate consulting and turnaround and insolvency. RSM Bird Cameron is a core member firm of RSM International, the sixth largest network of independent accounting and consulting firms in the world.