On 18 November 2010, the Assistant Treasurer announced that the Federal Government would introduce amendments to the Fringe Benefits Tax Assessment Act to extend the current exemption for "fly in fly out" arrangements to Australian tax residents working overseas in remote areas.

It will be interesting to see how the term 'remote locations" overseas will be interpreted. The exemption was originally applied to domestic arrangements but will now be expanded to include workers in similar situations involving international work. It will apply retrospectively from 1 July 2009 and should remove the potential for double taxation in respect of these fly in fly out arrangements.

The Assistant Treasurer also advised that the Government has asked Treasury to develop a discussion paper regarding the income tax treatment of non-cash benefits shortly due to the concerns in relation to the changes in foreign employment income tax.

Many of these concerns were raised in our submission to Treasury in May 2009. It is somewhat disappointing that it has taken nearly 18 months for the Government and the Treasury to recognise that there are a number of unresolved issues relating to the treatment of non cash benefits in respect of Australian resident taxpayers working overseas.

We hope that the Treasury discussion paper addresses such issues as:

  • The mismatch under the Foreign Income Tax Offset rules in respect of non cash benefits and the avoidance of double taxation in respect of these benefits;
  • Provision of private health insurance;
  • Living away from home allowance as the existing reasonable food component guidelines only apply to expatriates coming to Australia; and
  • Provision of motor vehicle

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