Fly-in-fly-out work is a necessary part of the employment landscape in Australia.
A recent case about the tax treatment of travel expenses of fly-in-fly-out work has highlighted the need to review fly-in-fly-out working arrangements.
Important Background
The long-standing position is that home-to-work travel is private travel for tax purposes, and if the employer bears those expenses then fringe benefits tax can apply.
The Facts
Bechtel supplied FIFO workers to Curtis Island in Gladstone, paid for their costs of travel from Brisbane airport to Curtis Island, but did not specifically pay an hourly rate for travel time.
The Dispute
The dispute was whether fringe benefits tax should be paid on the travel costs.
The Main Issue
The legal question was whether the expenses would have been deductible if incurred by the employee.
The court found that the expenses would not have been deductible, for reasons including that:
- the work shifts started and finished at Curtis Island, and
- the workers were not paid an hourly rate for their travel time to and from Curtis Island.
The Decision
The Full Federal Court found that fringe benefits tax should be paid, resulting in a substantial tax liability to Bechtel.
Implications
Employers are recommended to carefully review their travel arrangements for fly-in-fly-out workers, including employment contracts and travel policies.
At WorkLegal our experienced team can answer your questions and put you on the right track. A range of fixed-price Initial Consultations will suit most people’s needs in quickly learning what their options are.
Some more information is available here or you can book online for an initial no-obligation chat about reviewing an employment contract or contractor agreement.
Bechtel Australia Pty Ltd v Commissioner of Taxation [2023] FCA 676