Accommodation

Do the state residential tenancy laws apply to me?

Whether residential tenancy laws apply depends on the state and on whether rent is charged or accommodation is part of the employment package.

NSW, Tasmania, South Australia, Western Australia: Laws do not apply if the accommodation is not provided for value — i.e. no rent is charged and it is not included in a pay package.
Queensland: Laws apply regardless of whether rent is charged.
Victoria: Laws do not apply if the accommodation is part of an employment contract, and you should not enter into a tenancy agreement under those laws.

Bonds

If residential tenancy laws do not apply, you may still charge a bond. If the employee cannot pay it upfront, they can pay it in instalments each payday up to a reasonable amount. The bond must be returned at the end of the tenancy unless there is a valid reason to retain part or all of it, as outlined in the agreement.

You should NOT deduct the bond or any charges for damage to the property from the employee’s wages as this is not permitted by the Fair Work Act because it is not for the employee’s benefit. Instead, the employee should pay the money to you from their take home pay.

Rent and Utilities

You and the employee can agree to deduct payments for utilities (gas, electricity, water) or rent from wages, as these are for the employee’s benefit. Use an Authority to Deduct form to formalise the arrangement and keep a signed copy with employment records.

Accommodation Agreement templates

The Accommodation Agreement templates address common issues with on-farm accommodation. Because laws differ between states, there are separate templates for Victoria and for NSW, Tasmania, South Australia, and Western Australia.

Additional templates are available for shared accommodation in Victoria and in the other listed states, along with a Code of Conduct for shared housing.

There is no template for Queensland, as residential tenancy laws apply to all accommodation, regardless of whether rent is charged.

There may be Fringe Benefits Tax implications if you provide accommodation for no rental or for a reduced rental.

Further information below about FBT and accommodation.

Charging rent – NSW, Tasmania, South Australia or Western Australia

If you plan to charge rent in NSW, Tasmania, South Australia, or Western Australia, you must enter into a formal residential tenancy agreement in line with state laws. Many farmers use a local real estate agent to prepare the agreement, manage the property, and carry out inspections.

Each state’s residential tenancy authority website provides information and standard agreement templates.

Go to the following links for the residential tenancy authority in your state:

South Australia

Website

Go to page

New South Wales

Website

Go to page

Tasmania

Website

Go to page

Western Australia

Website

Go to page

Queensland

Website

Go to page

If the employee takes long service leave and you need the property for other staff you will have to pay the value of the accommodation to the employee.

Check the laws for your state.

Accommodation and Fringe Benefits Tax

This resource is for dairy farmers who provide accommodation for their employees either on farm or off farm. It provides information as to whether the accommodation provided attracts housing fringe benefits or housing assistance fringe benefits and whether an FBT exemption (“Exempt Benefit”) can apply to a salary packaging arrangement.

It does not extend to any other type of accommodation or location related fringe benefit such as living-away-from-home allowances, board fringe benefits, etc.

The ATO has a detailed document called Fringe Benefits Tax – A Guide for Employers.

The full document can be accessed by this link.

What are Exempt Benefits?

Exempt Benefits: are benefits that are not considered to be fringe benefits and therefore are not subject to FBT. Exempt benefits do not need to be included in an FBT Return. “Remote Area Housing Benefits” are “Exempt Benefits”. Both questions must be answered.

Remote Area Housing Benefits

There are two questions which determine whether the accommodation you are providing will be classified as a ‘Remote Area Housing Benefit’.

The first defines if you are deemed to be living in a “Remote Area” and the second determines if the accommodation is deemed to be “Necessary”.

1. Are you in a “Remote Area”?

The ATO definition of Remote Area” is a location-based test, using the “urban centres” identified by their population size in the 1981 Census. You are in a “Remote Area” if your property is located near one of these “urban centres”. A large number of farms in Australia would be classified as ‘remote’ by this definition. As this test is location based, if you have multiple farms at different locations, each farm will need to be assessed separately.

There are several ways to determine if your property is located in an area deemed to be in a “remote area” as follows:

(i) Are you on the list of “Remote Areas”?

If your location is on List 1 your property will be regarded as “remote” and you do not have to consider (ii) below. List 1 link.

(ii) If your location is not listed on List 1 your location may also be considered to be “remote” for income tax purposes if it is not located in or near an ‘eligible urban area’ as defined below:

A location that:

(a) Is situated in Zone A or B for income tax purposes (Zones A and B Link);

(b) AND is at least 40 km from an urban centre that had a census population in 1981 of 28,000 and less than 130,000, AND

A location that:

(a) Is not situated in Zone A or B for income tax purposes (Zones A and B Link).

(b) AND Is at least 40 Kms from an urban centre that had a census population in 1981 of 14,000 and less than 130,000; AND

If your location is defined in one of the above ways as a Remote Area” then the following question must also be answered to determine if the accommodation you are providing can be classified as a ‘Remote Area Housing Benefit”

2. Is the accommodation “necessary”?

A Housing benefit is deemed to be “necessary” where:

(i) For the whole of the tenancy period, the unit of accommodation is in a “remote area” (that is, it is not located in or adjacent to an eligible urban area see above).

(ii) For the whole of the tenancy period, the accommodation is occupied by a person who is your current employee, and the usual place of employment of the employee is in the remote area.

(iii) It would be concluded that it must be necessary for you to provide accommodation for employees or to arrange to provide such accommodation because:

– The nature of your business is such that employees are liable to move frequently from one residential location to another;

– There is insufficient suitable residential accommodation otherwise available at or near the place or places where the employees are employed; or

– It is customary in that industry to provide free or subsidised accommodation for employees.

(iv) The benefit was not provided to the employee under either:

– A non-arms length arrangement; or

– An arrangement that was entered into by any of the parties for the purpose of, or partial purpose, to obtain the concession.

As it is common industry practice in the dairy industry for an employer to provide accommodation to their employees, whether due to the remote location of the farm, or the type of duties undertaken by that employee, most farmers will pass the test of whether it is “necessary” to provide the accommodation. If you satisfy these two requirements, the housing benefit provided to your employee is exempt from FBT. This means that the accommodation provided doesn’t form part of the employee’s taxable wages and the employer is not liable for Fringe Benefits Tax.

For further information Housing Fringe Benefits are covered in Chapter 10 of the ATO’s Fringe Benefit Tax – A Guide for Employers.

Section 10.8 details “Exempt Housing Benefits”, specifically “Remote Area Housing Benefits”.

Expense Payment Fringe Benefit

If you are not eligible for a Remote Area Housing Benefit, you may still qualify for a 50% reduction in the taxable value of the housing benefit provided.

For example, Remote Area Rent Assistance—where the employer pays rent on accommodation they do not own—is treated as an Expense Payment Fringe Benefit. The 50% reduction applies to the employee’s relevant expenditure (gross rent), provided the Remote Area Rent Assistance conditions are met.

Fringe Benefits Tax still applies in this situation.

Further Information

Chapter 19 of the ATO’s Fringe Benefit Tax – A Guide for Employers details different fringe benefits which are eligible for reductions in taxable value.

Section 19.2 specifically details the reductions available for remote areas.

General useful information regarding FBT is contained in Chapter 1 of the ATO’s Fringe Benefits Tax – A Guide for Employers

Note

The above has only been provided for general informative purposes and does not constitute advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.