Consultation
Fringe Benefits Tax (FBT) Reform living-away-from-home benefits
Name
Mr John McCoy
Organisation
Email
jwmccoy@hotmail.co.uk
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No
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Submission text
Hello 

Please could you tell me whether the Australian Treasury is proposing LAFHA reforms that will break international tax treaties? 

I offer this quote from the Convention between the Government of Australia and the Government of United Kingdom of Great Britain and Northern Ireland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and on Capital Gains: 

Article 25 states: ?Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected?. 

In direct contrast, I offer this quote from the EXPLANATORY MATERIALS on LAFHA reforms, published yesterday by the Treasury: 

?Transitional rules apply to permanent residents who have employment arrangements for LAFH allowances and benefits in place prior to 7.30 pm (AEST) on 8 May 2012. These employees will not be required to maintain a home in Australia and the concession will not be limited to a maximum of 12 months until the earlier of 1 July 2014 or the date a new employment contract is entered into. 

Transitional rules also apply to temporary residents who are maintaining a home in Australia and have employment arrangements for living-away-from-home allowances and benefits in place prior to 7.30 pm (AEST) on 8 May 2012.? 

Can I ask how this cannot be considered as ?more burdensome? for British nationals than it is for Australian nationals? From 1st July 2012 a temporary resident needs to show they maintain a primary home in Australia which they are required to live away from. Australian nationals have until 1st July 2014 to do the same. 

Also, the wording of the exposure draft actually makes a distinction between permanent and temporary residents: 

30 Transitional?existing employment arrangements 
(1) During the transitional period, you can disregard paragraphs 
25-115(1)(b) and (e) of the Income Tax Assessment Act 1997 if: 
(a) you are neither a ***temporary resident nor a foreign resident***; 
and 
(b) during the entire period: 
(i) starting at the Budget time; and 
(ii) ending on 30 June 2012; 
your employment was covered by an eligible employment 
arrangement that was not varied or renewed. 

Can I ask how this cannot be considered as discrimination based upon nationality and/or immigration status? The wording of the legislation clearly makes such a distinction ? in black and white. If you are Australian (or a permanent resident of Australia) there are parts of the legislation you are permitted to disregard. This is an exemption based upon nationality and immigration status. 

Please advise. 

Regards 

John