How To Apply For a Private Ruling to Ensure FBT Exemption for your Corporate Health & Fitness Program

Gathered from information from accountants, here are some tips in order to potentially minimise FBT for your company wellness plan. These are simply suggestions that we recommend your company accountant look into further.

Background

The question being asked of the ATO is whether the payment for a health, fitness and stress management program which is provided to key employees in the nature of work related counseling, is exempt under Section 58M of the Fringe Benefits Tax Assessment Act 1986? To fall within the definition of "work-related counseling" and hence to comply with the FBT exemption, the employer needs to satisfy 4 criteria:

1. The employer or associate (accompanied by the employee) attends the counseling;
2. The counseling is to give effect to an objective, purpose, plan or policy devised, adopted or required to be followed, by the employer to improve or maintain the quality of the employee's performance of duties, or preparing the employees for retirement;
3. The counseling relates to either safety, health, fitness, stress management, personal relationships, retirement problems, drug or alcohol abuse, rehabilitation or prevention of work related trauma or of other disease or injury, first aid, or any similar matter; and
4. The benefit is not provided wholly or principally as a reward for services rendered or to be rendered, by the employee.

What To Do

1. The employer, in conjunction with Fitline, designs a program for their organisation. This may include:

o Detailing the objectives of the program.
o Determining the composition of the program, for example, an initial health assessment, an individual program per employee to address their particular needs, attendance, monitoring and measurement requirements.
o Identifying the team members that would benefit from the program.
o The employer must make it clear that the program is not a reward for services, but a condition of employment that the employees undertake this program.

2. The employer needs to apply for a private ruling. They should seek assistance from their accountant to do this.
 

Sample Application For Private Ruling - Part 3: Other Information Required

Item 7 – Question to be answered by the Commissioner
Is the employer payment for a health, fitness and stress management program which is provided to key employees in the nature of work related counseling, an exempt benefit under section 58 M of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?
Item 8 – Issues to be considered

1. A health, fitness and stress management program was designed for key employees with the desired outcome being fitter, less stressed employees who are able to improve or maintain the quality of the performance of their duties.
2. The Program is initiated by the employer, after a probationary period of employment, for key employees.
3. The employees are required to have full health and fitness evaluations performed at the commencement of their program, and a health and fitness program designed specifically for their personal requirements.
4. Employees must attend for a minimum of 1 hour per week, and the company will receive monthly printouts of attendance to monitor this.
5. Every 6-8 weeks each employee will be re-assessed by qualified fitness professionals to measure their health and fitness improvements as a result of the program. These results from the program facilitator will be analysed by the employer, along with the employers own analysis of the employees performance of their duties.

Item 9 – Full description of the facts and supporting documents

1. The employer is a XX that operates in the XX, XX area, and employs a team of XX.
2. The Key Team Members are required to work long hours to fulfill their set objectives, often not taking scheduled breaks. It is a high pressure environment that is driven by tight deadlines.
3. Over time, the employer noticed that key employees were looking stressed, and had begun to put on weight. They appeared to lack their previous enthusiasm to effectively perform their duties.
4. The management decided that it had to address this issue of risk losing key employees, and possibly clients.
5. Management put a Corporate Fitness Program in place for key employees designed to provide them with an outlet to improve their physical fitness, and reduce their stress levels. The outcome of this program was to be reduced sick days, improved productivity, reduced stress, and improved health of the employees.
6. An initial 12 month program was developed for key employees, with employees asked to sign an agreement indicating that they would attend the program at least once per week.
7. The employer made it quite clear that this program was not undertaken as a reward for services rendered, but was a condition of employment that the employees undertake this program. This was wholly for the benefit of the employer in the form of increased productivity, increased health of the employees, decreased stress and sick leave.

Item 10 – Opinion with reasons

It is our opinion that the following criteria that determine work related counseling as defined under section 58M(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) have been met:

1. That the counseling has been attended by the employee.
2. That the attendance is due to an objective and plan, devised and required to be followed, by the employer, to improve or maintain the quality of the performance of the employees duties.
3. That the counseling relates to the matters of health, fitness and stress management.
4. There is no benefit that:
a. Is provided in respect of employment of the employee
b. Consists of the provision of, or relates to, the counseling; and
c. Is provided wholly or principally as a reward for services rendered by the employee.
Therefore, the employer payment for health, fitness and stress management program which is provided to key employees in the nature of work related counseling is an exempt fringe benefit.

Item 11 – References

1. Fringe Benefits Tax Assessment Act 1986 – section 58M(1)
2. Fringe Benefits Tax Assessment Act 1986 – section 136(1) Definitions
3. Discussion provided by CCH Australia Limited under section 55-58 Work Related Counseling.
4. ATO ID 2001/543
5. TD 93/153

Supporting Documents:

• Attachment A – Sample letter to employee to undertake the program
• Attachment B – Sample member attendance record.
• Attachment C – Sample Corporate Fitness Program.

Sample Version of Notice of Private Ruling

NOTE: This ruling is a 'Private Ruling' for the purposes of Part IVAA of the Taxation Administration Act 195 and is just an example of correspondence.
YEAR(S) OF INCOME TO WHICH THIS RULING APPLIES:
Year ended 31 March 2001
Year ended 31 March 2002
Year ended 31 March 2003
 

TAX LAW:
Fringe benefits Tax Assessment Act 1986 section 20.
Fringe benefits Tax Assessment Act 1986 section 58M
Fringe Benefits Tax Assessment Act 1986 subsection 136(1)

WHAT THIS RULING IS ABOUT:
Is the employer payment for a health, fitness and stress management program which is provided to key employees in the nature of work related counseling and therefore exempt under Section 58M of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

THE SUBJECT OF THE RULING:
The employer is in an industry driven tight deadlines where key team members are required to work long hours to fulfill their set objectives, often not taking scheduled breaks. The employer noticed that working in such high pressure environment affected the performance of these employees.

The employer decided to put in place a Corporate Fitness Program for key employees which was designed to improve their physical fitness and reduce their stress levels. The outcome of this program was to be reduced sick days, improve productivity, reduced stress, and improved health of the employees.

An initial 12 month program was developed for key employees, with employees asked to sign an agreement indicating that they would attend the program at least one hour each week. Upon commencement of the program, the employees are required to have full health and fitness evaluations performed and a health and fitness program is then designed specifically for their personal needs. Every 6-8 weeks the employees will be reassessed by qualified professionals to measure their health and fitness improvements as a result of the program.

The employer made it clear to employees that this program was not undertaken as a reward for services rendered, rather that it was a condition of employment that the employees undertake this program. The employer monitors employee attendance of the Program and uses the employees' health and fitness assessments against their work performance.
 

COMMENCEMENT OF ARRANGEMENT:
01 April 2000
RULING:
Is the employer payment for a health, fitness and stress management program which is provided to key employees in the nature of work related counseling and therefore exempt under Section 58M of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?
Answer: Yes.

EXPLANATION: (This does not form part of the Notice of Private Ruling)
Under section 58M of the Fringe Benefits Tax Assessment Act 1986 (FBTAA), 'work-related counseling' provided to an employee as expense payment benefits, property benefits or residual benefits are exempt benefits.
It is considered that the payment for a Corporate Fitness Program for key employees by the company is potentially an expense payment fringe benefit under paragraph 20(a) of the FBTAA.
In order to fall within the definition of 'work-related counseling' under subsection 136(1) of the FBTAA, all of the following requirements must be satisfied:

1. the employee or associate (accompanied by the employee) attends the counseling;
2. the counseling is to give effect to an objective, purpose, plan or policy devised, adopted or required to be followed, by the employer to improve or maintain the quality of the employee's performance of duties, or prepare employees for retirement;
3. the counseling relates to either safety, health, fitness, stress management, personal relationships, retirement problems, drug or alcohol abuse, rehabilitation or prevention of work-related trauma or of other disease or injury, first aid or any similar matter; and
4. the benefit is not provided wholly or principally as a reward for services rendered or to be rendered by the employee.
The prerequisite to these requirements is that there is such 'counseling' taking place.
The word 'counseling' is defined in subsection 136(1) of FBTAA where it states that it includes the giving of advice or information at a seminar.

The Corporate Fitness Program the employer has initiated involves an initial assessment to determine an individual employee's health and fitness level and to design a specific program tailored to the employee's needs. The employee is then required to attend the Program a minimum of one hour each week. Every 6-8 weeks the employee will be reassessed by qualified fitness professionals to measure their health and fitness improvements as a result of the program.

It is accepted that 'counseling' is taking place in that there is advice provided and recommendations made for each employee to improve their health and fitness levels by a qualified professional. In terms of what the employer wants to achieve in respect of the employee's health and fitness levels, the recommended actions could also be considered 'counseling'.

Based on the information provided by the employer, the following conclusions were reached:
(1)- Does an employee or associate attend the counseling session?
After a probationary period, key employees of the company are required to attend an initial assessment and then every 6-8 weeks a follow-up assessment for 12 months. It is accepted that the employees will be attending counseling sessions during this 12-month period.
(2)- What was the purpose of the counseling?
The counseling sessions are part of a health, fitness and stress management program provided to key employees to keep them fitter and less stressed thereby improving or maintaining the quality of their performance at work.
(3)- Does the counseling fall under any of the headings listed above?
It is accepted that the counseling relates to health, fitness and stress management.
(4)- Is the benefit provided wholly or principally as a reward for employee services?
The employer stated that the provision of the Corporate Fitness Program services to its key personnel is a condition of employment that was wholly for the benefit of the employer in the form of increased productivity, increased health of the employees, decreased stress and sick leave. The provision of a health, fitness and stress management program in this case is therefore not a reward for services rendered or to be rendered by these employees.

Conclusion

The benefit provided to the employee is considered 'work-related counseling' as all 4 requirements have been met, therefore it would be exempt under paragraph 58M(a) of the FBTAA.
 

Disclaimer
The Register of Private Binding Advice is published as a public record of the binding advice issued by the ATO. Each piece of advice is based on a specific set of circumstances advised to the ATO and the law in force at the time of the advice, and is considered binding only in respect of the person/s or entity/ies on whose behalf the advice was sought. The Register is a historical record of advice provided, and is not updated to reflect changes in the law, withdrawal of advice or any other change in circumstance. Each piece of advice has been edited to avoid disclosing the identity of the person or entity on whose behalf advice was sought and published advice may therefore not disclose all the relevant facts or circumstances on which the advice was based. For these reasons, advice published in this Register cannot be relied upon as precedent for any other person or entity.