Private ruling: Fringe benefits tax - exempt benefits
Published: December 2013
Ruling period: 1 April 2013 to 31 March 2014 | 1 April 2014 to 31 March 2015 | 1 April 2015 to 31 March 2016 | 1 April 2016 to 31 March 2017
Date scheme commenced: 1 April 2013

Ruling: Q1: In respect of an employee who enters into a salary sacrifice arrangement ("SSA") with you under the Tablets Program are you considered to be providing a benefit in respect of the employee's employment? | A1: Yes | Q2: If the answer to question 1 is yes, is the benefit an expense payment benefit? | A2: Yes | Q3: If the answer to question 2 is yes, will the Tablets be a 'portable electronic device' for the purposes of paragraph 58X(2)(a) of the Fringe Benefits Tax Assessment Act 1986 ? | A3: Yes | Q4: If the answer to Question 3 is yes, will the Tablets acquired by eligible employees under the Tablets Program satisfy the requirement of being 'primarily for use in the employee's employment' pursuant to subsection 58X(2) of the Fringe Benefits Tax Assessment Act 1986 ? | A4: Yes | Q5: If the answer to Question 4 is yes, will the provision of benefits under the Tablets Program be exempt benefits for FBT purposes, subject to the application of subsection 58X(3) of the Fringe Benefits Tax Assessment Act 1986 , which limits each employee to one Tablet under the Tablets Program per FBT year (unless the relevant Tablet is being replaced due to damager or loss)? | A5: Yes

Relevant facts and circumstances: You are introducing a Tablets Program under which employees can enter into a salary sacrifice arrangement to acquire one of a number of Tablets. You are implementing this program as part of your policy to provide a more flexible work environment for eligible employees. You will reimburse the employee for the cost of the Tablet. You will only reimburse an eligible employee for one Tablet per fringe benefits tax year, unless the Tablet is a replacement due to loss or damage. Eligible employees will provide a declaration stating that the Tablet is to be used primarily in their employment.

Relevant legislative provisions: Fringe Benefits Tax Assessment Act 1986 20 and | Fringe Benefits Tax Assessment Act 1986 58X.

Reasons for decision: Summary: Under the Tablets Program the benefits that you provide to your employees will be provided in respect of their employment as there is a sufficient connection between the provision of the Tablet and the employee's employment. | Detailed Reasoning - Detailed reasoning: Under the Tablets Program you and your employee enter into a valid SSA. You are participating in the program so that your employees can acquire a Tablet to be used primarily in their employment. As part of the arrangement your employee will provide a declaration to you stating that the Tablet is to be used primarily in his or her employment. This is considered sufficient connection between your employee's employment and the provision of the benefit. Therefore you will be providing the benefit to your employee in respect of his or her employment. | Summary: When you reimburse the expenditure incurred by an employee purchasing a Tablet under the Tablets Program, you are providing an expense payment benefit. | Detailed Reasoning - Detailed reasoning: Section 20 of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) provides: Where a person (in this section referred to as the 'provider' ): (a) makes a payment in discharge in whole or in part of an obligation of another person (in this section referred to as the 'recipient' ) to pay an amount to a third person in respect of expenditure incurred by the recipient; or (b) reimburses another person (in this section also referred to as the 'recipient' ) in whole or in part, in respect of an amount of expenditure incurred by the recipient; the making of the payment referred to in paragraph (a), or the reimbursement referred to in paragraph (b), shall be taken to constitute the provision of a benefit by the provider to the recipient. Under the Tablets Program your employees select their preferred Tablet and purchase the Tablet from the vendor. You will then reimburse that expenditure. The reimbursement of the expenditure incurred by your employee is taken to constitute the provision of an expense payment benefit provided by you to your employee under section 20 of the FBTAA. | Summary: The Tablets available for your employees under the Tablets Program will be portable electronic devices for the purposes of paragraph 58X(2)(a) of the FBTAA . | Detailed Reasoning - Detailed reasoning: Certain work related items that are provided by an employer to an employee in respect of the employee's employment may be exempt benefits under section 58X of the FBTAA. The exemption applies for work related items listed in subsection 58X(2) of the FBTAA as follows: · a portable electronic device · an item of computer software · an item of protective clothing · a briefcase, and · a tool of trade. The ATO has considered the meaning of 'a portable electronic device' and provided an explanation of the phrase in Chapter 20 of the publication Fringe benefits tax: a guide for employers (the Employers Guide) . A portable electronic device is a device that: · is easily transportable and designed for use away from the office environment · is small and light · can operate without an external power supply, and · is designed as a complete unit. The Employers Guide gives the following examples of devices that satisfy this description: mobile phones, calculators, personal digital assistants, laptop computers, tablets, portable printers and global positioning system (GPS) navigation receivers. The core functionalities of eligible Tablets that your employees may obtain under the Tablets Program are: · no mobile voice capability · portable and lightweight · operate without external power · touch screen enabled · no 'snap in keyboard' packaged with device, and · no hybrid capabilities. Therefore the Tablets are considered to be portable electronic devices for the purposes of paragraph 58X(2)(a) of the FBTAA. | Summary: The Tablets acquired by your employees under the Tablets Program will satisfy the requirement of being 'primarily for use in the employee's employment' pursuant to subsection 58X(2) of the FBTAA as your employees will be using the Tablets to assist them to perform the duties of their employment. | Detailed Reasoning - Detailed reasoning: The exemption under section 58X of the FBTAA applies for work related items listed in subsection 58X(2) of the FBTAA which are primarily for use in the employee's employment. The word 'primarily' is not defined in the FBTAA, therefore it takes on its ordinary meaning. The Macquarie Dictionary, [Multimedia], version 5.0.0.1/10/01 defines 'primarily' as 'In the first place; chiefly, principally'. The decision about whether an item is primarily for use in the employee's employment is based on the employee's intended use at the time the benefit is provided to them. You do not have to look at the employee's actual usage over the FBT year to determine whether the item is used primarily in the employee's employment. The employee's job description, duty statement or employment contract it can be used as a basis for concluding that the Tablet is to be provided chiefly or principally to enable the employee to undertake their employment duties. Alternatively, where there may be private use of an item, factors such as those listed below can be used to determine whether the item is primarily for use in the employee's employment: · The reason or reasons the item was provided to the employee · The type of work the employee performs · How the use of the item relates to the employee's employment duties · The employer's policy and any conditions relating to the use of the item. You will be providing Tablets to eligible employees under the Tablets Program with the intention that the use of the Tablets will assist your employees to perform their employment duties in a fully flexible work environment. The intended use of a Tablet under the Tablet Program will have regard to the following requirements of the employee's role: · offsite versus onsite working requirements (i.e. how mobile the employee is); · whether specific work related Apps are required to be accessed to fulfil employment duties; · what cloud based services the employee requires to fulfil employment duties; and · other job specific requirements. Any private use of the Tablet will be incidental to their use in your employee's employment. Accordingly, the Tablet provided to employees under the Tablets Program will satisfy the requirement that they are primarily for use in the employee's employment as required by subsection 58X(2) of the FBTAA. | Summary: The provision of benefits under the Tablets Program will be exempt benefits for FBT purposes, as all of the conditions of section 58X of the FBTAA will be satisfied. This includes subsection 58X(3) of the FBTAA as only one Tablet will be provided to each employee per FBT year under the Tablets Program (unless the relevant Tablet is being replaced due to damager or loss). | Detailed Reasoning - Detailed reasoning: As explained in the reasons for decision to your previous questions: · you will be providing expense payment benefits to your employees in respect of their employment · the expenditure incurred by the employee will be in respect of a portable electronic device, being the Tablets available under the Tablets Program, and · the Tablets are primarily for use in the employee's employment. Under subsection 58X(3) of the FBTAA if you provide another expense payment or property benefit in respect of an item that has substantially identical functions to the Tablet during the FBT year, it will not be an eligible work related item. Subsection 58X(4) of the FBTAA provides that the rule in subsection (3) will not apply if the additional item is a replacement for the other item. The Tablets Program limits each employee to one Tablet per FBT year (unless the relevant Tablet is being replaced due to damage or loss). Therefore the Tablets that your employees receive under the Tablets Program will be eligible work related items and the expense payment benefits will be exempt benefits under section 58X of the FBTAA.

While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.