Any skilled workers that the company could not source from the Gladstone area were flown to the island from across Australia and the world and were housed in temporary camp accommodation during roster periods known as “swings”.Such fly-in fly out arrangements are common for mining and energy projects, especially in remote areas.
The Australian Taxation Office assessed Bechtel’s Fifo travel expenses between March 2012 and March 2019 as residual fringe benefits under the Fringe BenefitsBechtel accepted this assessment but argued the taxable value thereof should be reduced to nil, because those expenses satisfied the “otherwise deductible” test.The commissioner of taxation did not accept this argument, leading to a dispute over a $13,014,296 potential tax bill.
A key argument in the appeal was whether the employees could have claimed the travel expenses as their own tax deductions had they paid the expenses themselves. Bechtel pointed to a previous ruling in favour of another construction company, John Holland Group, which was able to deduct the cost of flying workers from a major city airport to a remote work site.