Rural and remote area skill shortages? Attracting and retaining workers in remote areas has long been a challenge for the mining, food and beverage industries. Things have become worse since the start of the pandemic, with housing shortages and rental affordability compounding the problem. As an employer, have you considered attracting workers with free or subsidised accommodation? Remote area housing concessions can eliminate or significantly reduce an employer's Fringe Benefits Tax bill arising from the provision of these non-salary benefits. Example: Mary is a chef in Port Hedland with no usual residence. Her employer can pay her an allowance, reimburse the cost of rent or provide accommodation. The weekly rent of a modest home in Port Hedland is $2,000 per week. Mary is on the highest marginal Tax rate. Option 1: Mary's employer pays her an additional allowance to meet the cost of rent. The Tax liability is calculated as:
  • $2,000 rent x 52 weeks = $104,000
  • Cost to employer to achieve $104,000 after Tax = $196,226
  • Total employment cost of this strategy (excl on-costs) = $196,226
Option 2: Mary's employer reimburses the cost of rent. Port Hedland qualifies as a remote area under s58ZC FBTAA 1986. The criteria for the 50% reduction in Taxable value of the benefit under s60(2) FBTAA 1986 are satisfied. The FBT liability is calculated as:
  • $2,000 rent x 52 weeks = $104,000
  • FBT payable by Employer = $46,113
  • Total employment cost of this strategy (excl on-costs) = $150,113
Option 3: Mary's employer provides her with accommodation. Port Hedland qualifies as a remote area under s58ZC FBTAA 1986. The criteria to treat the housing benefit provided as an exempt remote area benefit under s142(2E) FBTAA 1986 are satisfied.
  • $2,000 rent x 52 weeks = $104,000
  • FBT payable by Employer = Nil
  • Total employment cost of this strategy (excl on-costs) = $104,000
Summary With prior Planning it was possible to reduce the employer's total employment cost from $196,226 to $104,000 representing a $92,226 saving. To take full advantage of the remote area housing concessions, advice should be sought before the provision of the housing benefit to ensure the legislative requirements for eligibility to the concessions are met. We are passionate about helping business owners achieve their goals. If you would like to find out more, please contact David Briggs, or your Hall Chadwick advisor.