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Australia Improves Tax For Fly-In, Fly-Out Employees

by Mary Swire, Tax-News.com, Hong Kong

18 November 2010


It is hoped that fly-in/fly-out employees working overseas – and their employers – will have more certainty about their tax liabilities, after the Australian government introduces legislation to extend an exemption from fringe benefit tax (FBT) for travel between their home and work site.

The new exemption covers Australian residents working in remote overseas areas who are employed under 'fly-in/fly-out' arrangements, mainly miners working in remote areas of Asia and Africa. It will remove the possibility of there being double taxation of their fly-in/fly-out benefits, and also ensure Australian workers are taxed consistently, regardless of whether they are working in remote areas in Australia or overseas.

The Assistant Treasurer, Bill Shorten, said: "The operation of the current FBT exemption for fly-in/fly-out arrangements, which apply for work in Australia, will be extended and applied to Australian workers in similar situations overseas. This extension provides the certainty sought by industry regarding the FBT implications of changes to the taxation of Australian residents employed overseas."

The legislation is consistent with an announcement made by the former Assistant Treasurer, Nick Sherry, in April this year, stating that "the current FBT exemption for fly-in fly-out arrangements that apply for domestic arrangements will be maintained and applied to Australian workers in similar situations involving international work."

This exemption will be backdated to July 1, 2009, when the tax changes to foreign employment income commenced.

Following discussions with industry, the government has also asked the Treasury to develop a discussion paper to resolve long outstanding problems with the income tax treatment of non cash benefits that have been highlighted by the changes to foreign employment income.

"This will improve the consistency of treatment of all non cash benefits across the tax laws, and remove disincentives which prevent some taxpayers from receiving certain non-cash benefits, Shorten said. “These steps are an important way for the government to ensure the tax system is consistent and fair for everybody.”

TAGS: individuals | tax | mining | law | employees | Australia | offshore | legislation | tax breaks | individual income tax

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