Taxpayer and Commissioner of Taxation [2013] AATA 566 (2 August 2013)

Last Updated: 15 August 2013

[2013] AATA 566

Division	TAXATION APPEALS DIVISION
File Number(s)	2012/5001-5003
Re	Taxpayer
	APPLICANT
And	Commissioner of Taxation
	RESPONDENT

DECISION

Tribunal	Senior Member C R Walsh
Date	2 August 2013
Place	Perth

Decision Summary

The Tribunal affirms the Commissioner’s objection decision dated 15 October 2012.

....(Sgd) C R Walsh....................
Senior Member C R Walsh

Catchwords

Private rulings – whether private ruling binding on Commissioner - fringe benefits tax – housing fringe benefit – “scheme” implemented differently than “scheme” described in private ruling and private ruling application – “business use” areas less than described in “scheme” in private ruling and private ruling application – Commissioner’s objection decision affirmed

Legislation

Taxation Administration Act 1953 (Cth) – Div 359 of Sch 1 - s 14ZZ(b)(i) – s 357-55 - s 357-60(1) – s 395-5(1)

Fringe Benefits Tax Assessment Act 1986 (Cth) – s 136(1)

Income Tax Assessment Act 1997 (Cth) – s 8-1 – s 995-1

Cases

ANZ Savings Bank Ltd v Federal Commissioner of Taxation 94 ATC 4844

Federal Commissioner of Taxation v Dalco (1990) 168 CLR 164

Gauci & Ors v Federal Commissioner of Taxation [1975] HCA 54; (1975) 135 CLR 81

Macmine Pty Ltd v Federal Commissioner of Taxation 79 ATC 4133

McCormack v Federal Commissioner of Taxation 79 ATC 4111; 80 ATC 4179

Minister for Immigration and Ethnic Affairs v Pochi [1980] FCA 85; (1980) 4 ALD 139

Mount Pritchard & District Community Club v Federal Commissioner of Taxation 2011 ATC 20-288

Re Kirby and Collector of Customs (1989) 20 ALD 369

Vadesz v Commissioner of Taxation [2006] AATA 682

Secondary Materials

Explanatory Memorandum to the Tax Laws Amendment (Improvement to Self Assessment) (No. 2) Bill 2005 (Cth)

REASONS FOR DECISION

Senior Member C R Walsh

2 August 2013

INTRODUCTION

1. Central to this application is whether the Commissioner is bound, pursuant to s 357-60(1) of the Taxation Administration Act 1953 (Cth) (TAA), by the private ruling he issued to the Taxpayer (on 11 February 2009) with the consequence that he was not authorised to issue the Taxpayer with fringe benefits tax (FBT) assessments for the FBT years ended 31 March 2007, 2008 and 2009.
2. In particular, the Taxpayer seeks a review of the Commissioner’s objection decision (dated 15 October 2012) which disallowed the taxpayer’s objection (dated 19 April 2012) to FBT assessments (issued to the Taxpayer on 22 March 2012) for the FBT years ended 31 March 2007, 2008 and 2009.

EVIDENCE

3. The Taxpayer’s evidence in this application comprised:

(i) a bundle of documents (totalling 153 pages), being documents which were “provided to the ATO throughout its formal review of [the Taxpayer’s] businesses under the promoter penalty law regime between April and August 2010”, received by the Tribunal on 24 April 2013 and tendered at the hearing as “Exhibit A1”;

(ii) the “Applicant’s Response to the Respondent’s T Documents”, received by the Tribunal on 19 December 2012 and tendered at the hearing as “Exhibit A2” (Exhibit A2);

(iii) a private ruling issued by the Commissioner to the Taxpayer on 14 January 2013 in response to the Taxpayer’s private ruling application (dated 5 September 2012); tendered at the hearing as “Exhibit A3”;

(iv) Commissioner’s objection decision (dated 30 April 2013) on the Taxpayer’s objection (dated 23 January 2013) to a private ruling (issued to the Taxpayer on 14 January 2013) in respect of the tax periods ended 30 June 2013, 2014 and 2015, received by the Tribunal on 8 May 2013 and tendered at the hearing as “Exhibit A4”; and

(v) the oral evidence of Mr X (who is currently the sole director and shareholder of the Taxpayer).

4. The Commissioner’s evidence in this application comprised:

(i) a “Sub-section 37(1AB) Statement in Lieu - Reasons for Decision and Relevant Documents”, which was received by the Tribunal on 13 December 2012 and tendered at the hearing as “Exhibit R1”; and

(ii) a “Sub-section 37(1AB) Statement in Lieu – Supplementary Documents”, which was received by the Tribunal on 8 May 2013 and tendered at the hearing as “Exhibit R2” (T Documents).

5. A number of additional documents relevant to this application were also filed with or handed up to the Tribunal, including:

(i) the “Applicant’s Statement of Facts, Issues and Contentions”, dated 8 March 2013;

(ii) the Taxpayer’s “Supplement to Statement of Facts, Issues and Contentions”, dated 22 April 2013;

(iii) the “Respondent’s Statement of Facts, Issues and Contentions”, received on 7 March 2013; and

(iv) the “Respondent’s Submissions”, handed up on 21 May 2013.

RELEVANT FACTS & EVIDENCE

6. The Taxpayer, a proprietary limited company, was incorporated on 24 June 1996.
7. Mr X has been the sole shareholder of the Taxpayer since its incorporation.
8. Mr X has been a director of the Taxpayer since its incorporation and is currently the sole director of the Taxpayer.
9. Mrs X (Mr X’s wife) was a director of the Taxpayer from 6 December 1996 until 19 May 2009.
10. The respective income tax returns for Mr and Mrs X show that they both received salary or wages (i.e. directors’ fees) from the Taxpayer in previous income years.
11. On 27 August 2006 the Taxpayer and Mr and Mrs X purchased a residence in Western Australia as tenants in common (Property) - the Taxpayer acquired a 50% interest in the Property and Mr and Mrs X each acquired a 25% interest in the Property.
12. Prior to purchasing the Property, on 24 August 2006 the Taxpayer and Mr and Mrs X (as directors of the Taxpayer) and Mr X (as the sole shareholder of the Taxpayer) executed a “Joint Property Sharing Agreement” (JPSA) concerning the “use” of the home on the Property (i.e. as the home on the Property was to be used by the Taxpayer, as its business premises, as well as by Mr and Mrs X (and family) as their residence: T34 at pp 158 to 161.
13. The JSPA provided, among other things, that 49.33% of the floor space of the home on the Property “shall be set aside for the exclusive or almost exclusive use of the [Taxpayer]”: T34 at p 159.
14. Paragraph [7] of the JSPA (at T34 at 158) identified those areas of the home on the Property that were to be set aside for the exclusive or almost exclusive use of the Taxpayer (i.e. for “business use”).
15. The JSPA also identified (at paragraphs [8] and [9]) the areas of the home on the Property (totalling 139 m²) that were for the “exclusive personal use” of Mr X, his wife and family and a “common area” (totalling 25.75 m²) that had no “business use” allocation: T34 at p 159. The sum of 163.3 m² for “business use”, 139 m² for “personal use” and 25.75 m² of “common area”, totalled 328.05 m²: T34 at pp 158 to 159. The Tribunal notes that that total is different to the total size of the home on the Property given at paragraph [1] of the JSPA, where the total size of the home is stated as being 331 m²: T34 at p158.
16. On 12 December 2006 Mr and Mrs X (and family) moved into the home on the Property, with that home on the Property thereafter being used as both the private residence of the Mr and Mrs X (and family) and the business premises of the Taxpayer.
17. On 14 January 2009 the Taxpayer lodged a “Private ruling application form” (dated 12 January 2009) in respect of the year ended 30 June 2009, asking taxation law questions concerning the mixed “use” of the home on the Property as both the business premises of the Taxpayer and the residential premises of Mr and Mrs X (Private Ruling Application): T34 at pp 133 to 161. A copy of the JSPA was attached to the Private Ruling Application: at T34 at pp 168 to 161.
18. Relevant to this application are the following questions which were asked by the Taxpayer in the Private Ruling Application (at T34 at p141):

9.5 Will provisions of the Fringe Benefits Tax Assessment Act 1986 (FBTAA1986) apply to Us in respect of a housing benefit or indeed of any other benefit/s?

..............

9.6 Can the Company use the Floor Area Method and include Business Use Areas in so doing, to determine the Business Use Percentage of The Property for Income tax deductions for occupancy and running expenses, depreciation expenses and other capital costs?

19. A “Description of the Scheme” was provided in Section C[8] of the Private Ruling Application (titled “Facts describing the scheme or circumstances”) : T34 at pp 135 to 139 and pp 148 to 152. The salient features of the “scheme” described in the Private Ruling Application are as follows:
    • before the Property was purchased, areas of the home on the Property that Mr and Mrs X “deemed superfluous to their family’s needs were set aside as Business Use Areas via specific description in the [JSPA]”;
    • “the Business Use Areas [were] set aside exclusively or almost exclusively for producing assessable income for [the Taxpayer] with any private use absolutely incidental to their main allocated uses”;
    • the Taxpayer “used these Business Use Areas to calculate the floor area percentage to be determined for tax deductibility purposes......”;
    • the “Business Use Areas all exhibit defining characteristics of a place of business and are not merely private studies as say a matter of convenience”; and
    • the Taxpayer calculated the total “business use area” of the home on the Property as 50%.
20. On 11 February 2009 the Commissioner issued the Taxpayer with a “Notice of private ruling” on the Private Ruling Application (Private Ruling): T35 at pp 162 to 175. Relevant to this application is that in the Private Ruling the Commissioner found:
    5. Is there a housing fringe benefit under the FBTAA 1986?

No.

6. Can you apply the floor area of the property in determining the business use percentage of the property for income tax deduction purposes under section 8-1 of the ITAA 1997?

Yes.

21. In the last paragraph of the Private Ruling (at T35 at p 169), the Commissioner stated:

This ruling is given on the basis of the facts stated in the description of the scheme as set out above. Any material variation from these facts (including any matters not stated in the description above and any departure from these facts) will mean that the ruling will have no effect. No entity will then be able to rely on this ruling as the Commissioner will consider that the scheme has been implemented in a way that is materially different from the scheme described.

22. “The scheme that is the subject of the ruling”, as set out in the Private Ruling (at T35 at pp 166 to 169) is in almost identical terms to the “Description of the Scheme” provided by the Taxpayer in the Private Ruling Application (at T34 at pp 135 to 139 and pp 148 to 152) except that some words used by the Taxpayer in the Private Ruling Application have been substituted (for example, the word “we” has been substituted on occasion with the word “you” or the words “the rulee”).
23. Following being issued with the Private Ruling, the Taxpayer was audited by the Commissioner in relation to various income tax and FBT issues associated with the Property. As part of that audit, on 13 January 2012 a position paper was sent to the Taxpayer by the Commissioner (Audit Position Paper).
24. The Audit Position Paper stated (at T2 at pp 3 to 4):

The findings from the audit show that there is departure from the arrangement described in the PBR [i.e. Private Binding Ruling] and the departure impacts on the tax outcome of the [Taxpayer]. In particular the amount of floor space as provided by the [Taxpayer] in the PBR was more than what was actually utilised exclusively or almost exclusively for purposes of the business. Therefore, the [Taxpayer] has implemented the housing arrangement in a materially different way and can not rely on the PBR for the period stated in the PBR. In other words, the PBR is not binding on the Commissioner. [Emphasis added]

25. The Audit Position Paper also advised the Taxpayer that the “business use” of the house on the Property was 34% (i.e. not 50% as stated by the Taxpayer in the Private Ruling Application) and that this reduction in “business use”, and corresponding increase in “personal use”, of the home on the Property resulted in a FBT liability for the Taxpayer (i.e. as Mr and Mrs X and family had “personal use” of the remaining 16% of the house on the Property that the Taxpayer owned 50% of, as a tenant in common with Mr and Mrs X): T2 at p 4.
26. The Audit Position Paper further explained (at T2 at p 4):

Where the [Taxpayer] is entitled to claim the occupancy expenses as deductions for income tax purposes, it is liable to pay fringe benefits tax on its housing arrangement. The amounts of FBT liability in relation to the housing fringe benefits are $920.23, $3,274.06 and $3,594.19 for the 2007, 2008 and 2009 FBT years.

27. The Audit Position Paper also advised the Taxpayer (at T2 at p 4) of an alternative position in relation to the occupancy expenses claimed by it, as follows:

Alternatively, the [Taxpayer] is not entitled to claim the occupancy expenses as deduction[s] to the extent that the areas of the property are not used exclusively or almost exclusively for income producing purposes. The disallowed amounts of the occupancy expenses in relation to the housing arrangement are $15,301, $19,643 and $25,554 for the 2007, 2008 and 2009 income years.

28. On 23 January 2012 Mr X responded to the Commissioner’s position paper by sending him a document which included 23 photographs of various rooms in the home on the Property. Further, during the audit the Taxpayer provided the Commissioner with copies of its accounts, showing its income and expenditure for the 2007, 2008 and 2009 financial years: T2 at pp 16 to 17.
29. On 22 March 2012 the Commissioner issued the Taxpayer with “Notices of assessment of fringe benefits tax” for tax periods ended 31 March 2007, 31 March 2008 and 31 March 2009 (FBT Assessments): T7 to T9 at pp 42 to 47.
30. The Commissioner was unable to amend the Taxpayer’s income tax assessments for the years ended 30 June 2007 and 30 June 2008 as the periods of review, for those years, had expired. The Taxpayer was, however, issued with an income tax assessment for the year ended 30 June 2009 (on 18 April 2012). However, as the Taxpayer remained at a net loss (after being disallowed interest deductions (totalling $16,135) and “other expenses” (of $830)), there was no assessment of income tax payable by the Taxpayer for the 2009 year: T2 at p 4.
31. On 19 April 2012 the Taxpayer objected to the FBT Assessments (Objection). The Objection included 5 photographs of the bedroom/archive room in the house at the Property: T11 at pp 52 to 61.
32. On 15 October 2012 the Commissioner disallowed the Objection (Objection Decision): T22 at p 91. In the “Reasons for decision” attached to the Objection Decision (at T2 at pp 3 to 18), the Commissioner concluded:

What we have decided:

We have made the following decision on your objection:

Question 1:

1. Is the Commissioner bound by the private ruling?

Answer:
No

Question 2:

2. If not bound by the private ruling, is there an assessable housing fringe benefit?

Answer:
Yes

Question 3:

3. If not bound by the private ruling, are income tax deductions allowable in relation to the property/house?

Answer:
Yes – on an adjusted percentage basis

33. As regards whether the Private Ruling is binding on the Commissioner, the Private Ruling stated (at T2 at pp 9 and 10):

The private ruling issued to you was based in part on the ‘fact’ that the [home on the Property] was used 50% for business. It was not demonstrated during the audit and neither has it been demonstrated during this objection that the house was used 50% for business. With regard to the part of the [home on the Property] purportedly used in carrying on your business, and that any benefits obtained by the occupants nor being as a consequence of employment, it is considered that the arrangement carried out by you was not implemented in the way described in the private ruling. Subsection 357-60(1) of Schedule 1 to the TAA therefore provides that the private ruling issued to you on 11 February 2009 does not apply to you and is not binding on the Commissioner.

34. The Commissioner subsequently reviewed the Objection Decision (including the attached “Reasons for decision”). In doing so, the Commissioner decided that the “business use” of the home on the Property was in fact only 20% (i.e.and not 34%, as previously allowed). Accordingly, the Commissioner found that a housing fringe benefit was provided by the Taxpayer to Mr X (and family) in respect of 30% of the home on the Property (i.e. since the Taxpayer owned 50% of the Property as a tenant in common with Mr and Mrs X).
35. As a result, on 23 October 2012 the Commissioner issued the Taxpayer with amended FBT tax assessments for the years ended 31 March 2007, 2008 and 2009: T29 to T31 at pp 117 to 122.
36. On 5 November 2012 Mr X applied to the Tribunal, on the Taxpayer’s behalf, for a review of the Objection Decision.

ISSUES & BURDEN OF PROOF

37. A stated in the “Introduction”, the central issue for consideration by the Tribunal in this application is whether the Commissioner is bound by the Private Ruling such that he was not authorised to issue the FBT Assessments to the Taxpayer.
38. If, the Commissioner is not bound by the Private Ruling, such that he was authorised to issue the FBT Assessments to the Taxpayer, then, pursuant to s 14ZZK(b)(i) of the TAA, the Taxpayer bears the burden of proving that the FBT Assessments are excessive as well as what the correct assessments ought to be: Federal Commissioner of Taxation v Dalco (1990) 168 CLR 164 and ANZ Savings Bank Ltd v Federal Commissioner of Taxation 94 ATC 4844. The standard of proof is on the balance of probabilities: Minister for Immigration and Ethnic Affairs v Pochi [1980] FCA 85; (1980) 4 ALD 139 and Re Kirby and Collector of Customs (1989) 20 ALD 369.
39. The burden is not necessarily discharged, for example, by showing an error by the Commissioner in forming a judgement as to the amount of the assessment: Dalco [1990] HCA 3; (1990) 168 CLR 614 at 621 and Vadesz v Commissioner of Taxation [2006] AATA 682 at [31].
40. There is no onus on the Commissioner to show that the FBT Assessments are reasonable or supported by evidence: Gauci & Ors v Federal Commissioner of Taxation [1975] HCA 54; (1975) 135 CLR 81 at 89 per Mason J. If the Taxpayer is unable to establish that the FBT Assessments are excessive, then those assessments must stand, irrespective of whether there are any facts or circumstances which would, on the face of it, support them: McCormack v Federal Commissioner of Taxation 79 ATC 4111; 80 ATC 4179 and Macmine Pty Ltd v Federal Commissioner of Taxation 79 ATC 4133.

RELEVANT LAW & ANALYSIS

When private rulings are binding on the Commissioner

41. Division 359 of Schedule 1 to the TAA contains the rules on “private rulings”.
42. A “private ruling” is defined in s 395-5(1) of Schedule 1 to the TAA as a written expression of the Commissioner’s opinion on the way in which a “relevant provision” applies, or would apply, to a taxpayer who has sought an opinion in relation to a specified “scheme” (as defined in s 995-1 of the Income Tax Assessment Act 1997 (Cth)).
43. The “relevant provisions” of the tax law in relation to which private rulings may be obtained are listed in s 357-55 of Schedule 1 to the TAA and include income tax and FBT.
44. Section 357-60(1) of Schedule 1 to the TAA explains when rulings, including “private rulings”, are binding on the Commissioner, as follows:

357-60(1) Subject to subsection (5), a ruling binds the Commissioner in relation to you (whether or not you are aware of the ruling) if:

(a) the ruling applies to you; and

(b) you rely on the ruling by acting (or omitting to act) in accordance with the ruling.

45. According to the Explanatory Memorandum which accompanied the Tax Laws Amendment (Improvements to Self Assessment) (No. 2) Bill 2005 (Cth) (EM), which Bill resulted in the introduction of s 357-60(1) into the TAA, if a “scheme” is not implemented in the way set out in the private ruling, or material facts were omitted from the private ruling application, or misleadingly or inaccurately stated, the private ruling does not bind the Commissioner: see paragraph 3.26 of the EM.
46. In Mount Pritchard & District Community Club v Federal Commissioner of Taxation 2011 ATC 20-288 Full Federal Court (Edmonds, Middleton and Jagot JJ) held (at [60]):
    60. .....under......s 357-60 of Sch 1 to the TAA, a private ruling can only bind the Commissioner in respect of the arrangement ruled upon, or where the taxpayer relies upon the ruling by acting in accordance with it. If, in a subsequent period after the private ruling the taxpayer enters into different arrangements, or does not act in accordance with the ruling because of changed circumstances, then the ruling does not bind the Commissioner. The taxpayer still obtains the protection afforded by the private ruling regime, but only to the extent the taxpayer implements the scheme or arrangements the subject of the ruling. This is not only consistent with the text of the legislation, but also with the Explanatory Memorandum which accompanied the Tax Laws Amendment (Improvements to Self Assessment) (No 2) Bill 2005. In the Explanatory Memorandum, it was explained that if the scheme was not implemented in the way set out in the ruling, such ruling would not bind the Commissioner.
47. Thus, for present purposes, the Private Ruling will be binding on the Commissioner if the scheme was implemented by the Taxpayer in the way set out in the Private Ruling (and Private Ruling Application).
48. Based on the totality of facts and evidence before it, the Tribunal considers that the Taxpayer implemented the scheme differently than the scheme which was described in the Private Ruling (and in the Private ruling Application). As such, the Commissioner is not bound by the Private Ruling and was authorised to issue the FBT Assessments to the Taxpayer: Mount Pritchard applied.
49. Specifically, based on all of the facts and evidence before it, the Tribunal considers that less than 50% of the home on the Property had a “business use”, not all of the identified “business use areas” were used exclusively or almost exclusively by the Taxpayer to carry on its business and produce assessable income and not all of the identified “business use areas” exhibited the defining characteristics of a place of business.
50. The evidence provided by the Taxpayer in Exhibit A2 (and, in particular, the photographs of various rooms in the home at the Property) does not establish that the rooms/areas identified by the Taxpayer as “business use” rooms/areas were used exclusively or almost exclusively by the Taxpayer to carry on its business and produce assessable income. As stated by the Commissioner in the Objection Decision (at T2 at pp 8 to 9):

Each of the rooms has equipment and furniture that could easily be moved and no room has been significantly altered to change the inherent character from that of a bedroom, games room etc in a family house.

..............

From the photographs and descriptions of use provided by the [Taxpayer], the [Property] has the appearance of a private residence, and it has not been demonstrated that 50% of the house was given over to full time use in carrying out [the Taxpayer’s] business......

The fact that the [home on the Property] was not used exclusively or almost exclusively 50% for business use is therefore at variance with the arrangement described in your ruling application [and in the Private Ruling].

51. The Tribunal agrees with the Commissioner’s submission that the identification by the Taxpayer of particular rooms/areas as “business use areas” (prior to the Taxpayer and Mr and Mrs X purchasing the Property) was not based on the Taxpayer’s need to run its business from those rooms/areas, but, rather, was based on the fact that those rooms/areas were "superfluous to their family's needs": see T34 at p 137 and p 150). Based on the facts and evidence before the Tribunal, the rooms which were identified in the Private Ruling (and Private Ruling Application) as having “business uses” are not clearly identifiable as being solely or exclusively places of business and they could very easily be converted back into their original state as simply rooms in a private residence. Most of the rooms identified in the Private Ruling (and Private ruling Application) as having an exclusive or almost exclusive “business use” in fact had only a minor “business use”.
52. Further, as stated above, during the course of being audited, the Taxpayer provided the Commissioner with copies of its accounts (showing income and expenditure) for the 2007, 2008 and 2009 financial years. The Private Ruling (and Private Ruling Application) stated that all identified “business use areas” are set aside exclusively or almost exclusively for the Taxpayer to produce assessable income. However, based on the accounts provided by the Taxpayer, the only area that appears to have any genuine connection with the production of assessable income by the Taxpayer is Studio B, which was used by the Taxpayer for live music rehearsals. Consequently, the scheme has been implemented differently to the scheme described in the Private Ruling (and in the Private ruling Application).
53. Whilst it is accepted, based on the facts and evidence before the Tribunal, that the home on the Property was used by the Taxpayer to some limited extent to carry on its business to produce assessable income, that use was clearly less than the 50% “business use” described in the Private Ruling (and the Private Ruling Application).
54. It follows that the scheme implemented by the Taxpayer is different to the scheme described in the Private Ruling (and the Private Ruling Application) such that the Commissioner is not bound by the Private Ruling and was authorised to issue the Taxpayer with the FBT Assessments: Mount Pritchard.

Housing fringe benefits

55. Having found that the Commissioner is not bound by the Private Ruling, the next issue for consideration by the Tribunal is whether the Taxpayer is liable to FBT for the FBT years ended 31 March 2007, 2008 and 2009 as it provided Mr and Mrs X with a housing fringe benefit in those years.
56. Very broadly, FBT is a tax payable by “employers” on the value of certain benefits, called “fringe benefits” (as defined in s 136(1) of the Fringe Benefits Tax Assessment Act 1986 (Cth) (FBTAA)), that have been provided to their “employees” (or to “associates” of those employees) in respect of their employment. “Employee” is defined in s 136(1) of the FBTAA as a current employee, future employee or a former employee.
57. As stated above, Mr X has been a director of the Taxpayer since 24 June 1996 and Mrs X was a director of the Taxpayer from 6 December 1996 until 19 May 2009. Based on the evidence, Mr and Mrs X were paid salary or wages (i.e. directors’ fees) by the Taxpayer in past income years. As such, Mr and Mrs X are considered “former employees” of the Taxpayer and, it follows, “employees” of the Taxpayer for the purposes of the FBTAA.
58. Again, very broadly, a housing fringe benefit arises where an “employee” (in this case, Mr and Mrs X) is granted a right to occupy, as a usual place of residence, a unit of accommodation provided by the “employer” (in this case, the Taxpayer). For accommodation within Australia (as is the case here), the taxable value is the “statutory annual value” of the accommodation less the amount of any consideration paid by the “employee”. To determine the “statutory annual value”, the market value of the right to occupy the relevant accommodation is obtained in the year when the accommodation is first used to provide a housing fringe benefit. In subsequent years, the employer may use the actual market value for that year or the original market value indexed annually based on relevant “inflationary” movements in the Consumer Price Index (CPI).
59. In this instance, the FBT assessments were calculated by the Commissioner using a weekly (market) rental of $430 for the year ended 30 June 2007, which figure was subsequently adjusted for inflation (i.e. based on the CPI) for the years ended 30 June 2008 and 2009.
60. Based on a weekly rental of $430 for the year ended 30 June 2007, and allowing for a 20% “business use” of the house, the Commissioner calculated the FBT payable by the Taxpayer in respect of the FBT years ended 31 March 2007, 2008 and 2009, as follows:

Year ended 31 March 2007	$1,724.22
Year ended 31 March 2008	$6,138.93
Year ended 31 March 2009	$6,734.13

See the Objection Decision at T2 at p 12.

61. Based on the facts and evidence before it, the Tribunal considers that the Taxpayer has not proved, on the balance of probabilities, that the FBT Assessments are excessive (i.e. that the FBT Assessments are wrong and what the correct assessments ought to be): Dalco, ANZ Savings Bank, Pochi and Re Kirby.

DECISION

62. For the above reasons, the Tribunal affirms the Objection Decision.

I certify that the preceding 62 (sixty two) paragraphs are a true copy of the reasons for the decision herein of Senior Member C R Walsh

...(Sgd) T Freeman........
Associate

Dated 2 August 2013

Date of hearing	21 May 2013
Representative for the Applicant	Mr X
Representative for the Respondent	Mr F Maloney Australian Taxation Office