New Zealand temporary visa holder – TD 2012/18
The ATO have issued Taxation Determination TD 2012/18 entitled “Income tax: does a New Zealand citizen who was present in Australia as the holder of a temporary visa granted under section 32 of the Migration Act 1958 (a Special Category Visa) that ceased to be in effect when they departed Australia, still hold a temporary visa for the purposes of paragraph (a) in the ‘temporary resident’ definition in s 995-1(1) of the Income Tax Assessment Act 1997?”
If a New Zealand citizen who was present in Australia as the holder of a Special Category Visa departs Australia, they will still ‘hold a temporary visa’ for the purposes of paragraph (a) in the ‘temporary resident’ definition in subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997).
Although a Special Category Visa is a visa to remain in, but not re-enter, Australia, and therefore ceases to be in effect if the holder leaves Australia, a New Zealand citizen with a New Zealand passport has an ongoing right to re-enter Australia on another Special Category Visa. As such, the New Zealand citizen will be treated as holding a temporary visa granted under the Migration Act 1958 (the Migration Act) for the purposes of paragraph (a) of the ‘temporary resident’ definition in subsection 995-1(1) of the ITAA 1997, provided that they continue to be entitled to re-enter Australia on presentation of their New Zealand passport.
From the ATO Website,a good summary of the recent history on the LAFHA changes, with relevant links.
On 29 November 2011, the government announced reforms to the living-away-from-home allowances and benefits. Further extensions to these reforms were announced in the 2012-13 Budget, and upon introducing the legislation into parliament on 28 June 2012.
Under the proposed changes a living-away-from-home allowance will generally be treated as assessable income of the employee rather than as a fringe benefit, with effect from 1 October 2012.
Access to the tax concessions for living-away-from-home allowances and benefits will be limited to:
- employees who maintain a home in Australia for their personal use and enjoyment that they are required to live away from for work (regardless of whether they are permanent or temporary residents)
- actual substantiated expenditure on accommodation, and food and drink beyond a specified amount
- a maximum period of 12 months in respect of an individual employee for any particular work location.
Transitional rules apply to permanent residents who have employment arrangements for living-away-from-home allowances and benefits in place prior to 7.30pm (AEST) on 8 May 2012.
Transitional rules also apply to temporary residents (maintaining a home in Australia for their personal use and enjoyment that they live away from for work) who have employment arrangements for living-away-from-home allowances and benefits in place prior to 7.30pm (AEST) on 8 May 2012.
From 1 October 2012, living-away-from-home benefits (that is, the direct provision of accommodation, food or expense payments) provided to employees who would not be eligible to claim an income tax deduction had they incurred the expenses directly, will be subject to FBT.
- media release no. 055, Tax changes to living-away-from-home allowances and benefits introduced into Parliament, issued by the Assistant Treasurer on 28 June 2012
- media release no. 029, Reform of living-away-from-home allowances and benefits – draft legislation released for consultation, issued by the Assistant Treasurer on 15 May 2012
- media release no. 148, Tax measures in mid-year economic and fiscal outlook, issued by the Treasurer on 29 November 2011.
Legislation and supporting material
Tax Laws Amendment (2012 Measures No. 4) Bill 2012 and the Explanatory Memorandum, tabled in parliament on 28 June 2012.
Whilst today’s announcement by the Government to defer the start date of the LAFH reforms to 1 October 2012 is recognition that employers and there employees require more time, the timing could not have been worse for those employers who have implemented the changes in anticipation of a 1 July 2012 start date.
Employees who lost there LAFHA entitlement will now be seeking reinstatement – employers will have to unravel all the work done and then revisit again in September ahead of the new 1 October start date.
There again, some employers may not be willing to change back arrangements, to then change them again in a few months.
At this time of the year there is enough going on without all this additional work.
The Government has introduced today into Parliament the bill in relation to the new rules for Living Away From Home (LAFH) concessions.
The main changes to the previously released draft legislation include:
1. a new start date of 1 October 2012 (rather than 1 July 2012);
2. a change to the ‘ordinary weekly food and drink’ or statutory amounts, back to $42 per adult per week and $21 per child per week under 12;
3. further guidance on when an employment contract may be considered to be ‘varied’ for those employees who fall within the transitional provisions. Specifically in relation to contract extensions, pay rises, promotions and a change in working hours; and
4. clarification on the start date of the 12 month capped period for claiming LAFH benefits for employees who are living away from home on 1 October 2012 and qualify for LAFH concessions under the new rules.
Here are some benefits we have uncovered in our FBT return review work:
- Long service awards – it’s not just the excess over the threshold that’s taxable, it’s the lot
- 2011 Rugby World Cup costs (and keep an eye on costs for the 2012 Olympics) – accommodation, airfares, taxis, meals, match tickets, sightseeing tours etc
- Permanent residency application costs
- Permanent residency consulting fees
- University fees
- Waiving of employee termination recoveries (Relocation costs, PR application costs, Study costs)
- Car parking – not identifying all benefits
- Car parking – not performing a survey www.fbtme.com.au
And remember, it’s not what’s in the FBT return that’s the issue, it’s what’s not in the FBT return that is the issue