Oct 2000 Volume 81 Number 10 "serving the protectors"
Fringe Benefits Tax Campaign
By Mark Burgess, Police Association of NSW President

Police officers across the country will by now be aware of the A New Tax System (Fringe Benefits Tax Reporting) Act 1998 and its impact on current police as well as those who left the service after April 1, 1999.

Last year, the PFA (Police Federation of Australia) put forward a submission on behalf of its 42 000 members seeking exemption for police from the FBT group certificate reporting requirements of specific items categorized as “reportable fringe benefits”. The federation argued that these “benefits” are provided to its members solely because of the nature of the duties required to be performed due to the conditions of service set by the respective State, Territory and Commonwealth police jurisdictions (and expected by the community), and not as a result of the usual agreement entered into between an employer and an employee commonly referred to as a “salary sacrifice arrangement”. In addition, because of these conditions of service, the federation formally requested that a review to determine whether such “benefits” should be subject to FBT at all.

The federation arguments were based on the fact that the benefits are provided as a “condition of service” imposed on members when they enlist in the service and, as such, should be accorded concessional treatment and therefore excluded from the reporting requirements of the act. The federation argued for the exclusion of:

Housing benefits (for accommodation provided to members who, because of their work location, are required to reside in or close to premises owned by the service, usually attached or adjacent to a police station or facility).

Car benefits (for cars required to be garaged overnight by members for the efficient performance of their duties, and not provided to them on the basis of unrestricted private use).

It was noted in the federation submission that other benefits, such as telephone rental, HECS payments and benefits under usual salary packaging arrangements should be appropriately included under the new reporting régime. It was not the purpose of the submission to argue that these types of benefits should be concessionally treated.

In essence, the submission focused only on those conditions of service that relate to the specific requirements set by the respective police services and which impact on police officers more so than other workers in the community. Such requirements being primarily a Government’s directive that an adequate police force (with quick tactical response time) be maintained for the proper enforcement of law and order. We made it clear to the Government that we did not believe these conditions of service fall (or were ever intended to fall) within the intent of the FBT taxing régime and would ultimately penalize the very nature of the operations conducted by police jurisdictions, which are ultimately directed by respective State or Territory Governments of the day.

The overall intent of the government’s new legislation was in fact supported by the federation. It sought to ensure that those people who had the ability to camouflage their real income and thus minimize their taxation exposure, and perhaps child support exposure, paid their fair share by making them declare their “grossed-up” amount, or “real” income. It would also ensure that they were not in a position to obtain other Government benefits of which other members of the community in their salary range would not be able to avail themselves. It was obvious that police officers across the country, as PAYE taxpayers, were not in a position to do either.

Prior to putting forward its submission, the federation’s national executive (State and Territory presidents) met in Canberra with a number of politicians and bureaucrats to put forward its concerns about the impact of the legislation on police. At a time when the hype about the implementation of the GST was at its greatest, it was going to be very difficult to get any exemption from the Government in respect of any taxation changes. That position was made very clear to the federation from the start.

To assist further in what was likely to be a difficult campaign, the federation engaged a firm of Canberra consultants to assist in the lobbying process. All State and Territory associations/unions had mastered the art of lobbying and influencing governments at a State and Territory level over the years, but this was the first time they had ventured into the national capital on an issue that was going to affect directly the “hip pockets” of police officers Australia wide.

The consultants’ assistance was invaluable. They assisted in opening doors that might otherwise have been shut to the federation. They gave an insight into how the Canberra bureaucracy worked, and good advice on how to develop the strategy needed to deliver an appropriate outcome for police officers.

The first issue to be addressed was informing politicians and bureaucrats what the federation was. There had, until then, been some confusion between the federation and the AFPA (Australian Federal Police Association), which represents ACT police and federal agents around the country.

To overcome this identity issue, the federation held a function at Parliament House, Canberra, to which politicians from both houses and all parties were invited. Federation president, Peter Alexander, gave a presentation to the many politicians who attended. He explained the federation’s formation, its role and the fact that it was the only body that legitimately spoke on national police issues on its 42,000 members’ behalf. That informal function set the scene for the next few months’ intense lobbying by the respective State and Territory associations/unions.

At that stage, the member for the southern Sydney seat of Hughes, Dana Vale, came on side as a great supporter. Vale had supported the defence forces in their campaign against this legislation and was now supporting the police. It is our understanding when this matter was first raised in the joint party room by Dana, she was overruled by the Treasurer, who allegedly made it clear to all members that there would be no change to the legislation for police.

During the first several months we had no response from the Treasurer’s office in respect to our submission. Not to be deterred by the comments of the Treasurer, we drew up a list of marginal Government seats throughout the country and each state/territory was tasked with visiting the politicians on the list in their jurisdiction. The majority of these seats fell in NSW and Queensland. More than 30 politicians were visited in their electorate offices throughout the country and a significant number more in their Parliament House offices in Canberra. Copies of our submission were presented to the politicians and it was explained what the legislation meant to their constituent police officers. We turned the issue into a local one.

When attending local politicians’ offices, local media were briefed to publicize the impact on the FBT reporting legislation on local police. The media were used to ensure the public recognized the personal financial cost to police officers maintaining a presence in the community and being available for quick response at short notice. Housing supplied by the employer in these locations is to ensure police live within short distances of urban and rural centres of population. And vehicles used by officers “on call” are supplied solely for the purpose of officers attending to emergencies at short notice. These conditions of service are a direct consequence of the service’s operational requirements, not a fringe benefit for police officers.

Use of the media was not confined to country and regional centres. Peter Alexander appeared on the John Laws programme on several occasions and Laws gave great support to the campaign.

With headway being made, Treasury began seeking details from all jurisdictions in respect to the number of police premises subject to FBT reporting as well as the number of marked and unmarked vehicles that would likewise be subject to FBT. Not only are amounts grossed-up on police officers’ group certificates, but the various police services are required to pay FBT on houses and vehicles as well. In essence, not only was the federation campaigning for some respite for its members, but any gains in this area would also flow onto police services.

During the period of negotiation with Treasury - and the Assistant Treasurer’s office - the federation kept lobbying, arrived in Canberra en mass on a number of occasions, met with government backbenchers and continued to apply pressure for an exemption. Something had to give - and it soon did.

At the eleventh hour, (late June just before the end of the financial year) the federation was summoned to the Assistant Treasurer’s office. Some may remember that there were two categories for officers being required to comply with the reporting legislation. The first entailed those officers who lived in subsidized police premises within 40kms of a town of 14,000 people (approximately 85 per cent of all premises). The second group was those who lived in subsidized police premises within 100kms of a town of 130,000.

We were advised that a regulation was to be passed exempting those officers and premises that were within 40kms of a town of 14,000. This meant the only premises that would be subject to the tax were those within 100kms of a town of 130,000. As this calculation was to be based on the 1981 census, a large number of premises would now be exempt.

Estimations are that this has saved both members and the police services of this country up to $10 million. The campaign cost the federation about $70,000, which excludes the costs borne by the various States and Territories when visiting their respective politicians in both their electorates and Canberra. This has been money well spent.

The matter is not yet closed. The federation still has many members subject to FBT on premises that are within the 100km radius.

The federation is now considering ways of reducing members’ exposure by applying more appropriate valuations to properties. Likewise, while the federation has now received news that marked cars will be exempt, unmarked cars are still subject to FBT grossing-up.

The federation has already put the Assistant Treasurer’s office on notice that it is coming back to ensure the unmarked car issue is settled in its favour. If this is achieved, it will not only be a substantial saving for police officers, but also the nation’s police services.

The FBT issue has been the first real test for the federation. The ability to pursue issues on the national stage has proved the organization’s worth. Hopefully, the FBT issue will soon be over, allowing the federation to focus on some more national matters, not the least of which is federal government legislation affecting superannuation.

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