Private ruling: Fringe benefits tax: Exempt benefits - work related items
Published: May 2013
Ruling period: 1 April 2012 to 31 March 2013 | 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 2012

Ruling: Q1: Is a laptop computer or tablet device a 'portable electronic device' for the purposes of subsection 58X(2) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)? | A1: Yes | Q2: Where the employer provides an employee with a portable electronic device under a salary sacrifice arrangement, is that portable electronic device 'primarily for use in the employee's employment' as required by subsection 58X(2) of the FBTAA? | A2: Yes | Q3: Where the employer provides an employee with a portable electronic device under a salary sacrifice arrangement that is primarily for use in the employee's employment, is the portable electronic device an exempt benefit by virtue of section 58X of the FBTAA? | A3: Yes

Relevant facts and circumstances: The employer will provide laptop computers or tablet devices to some of its employees under effective salary sacrifice arrangements (SSA) on the basis that the employees require a laptop for work purposes. The employer has an arrangement with certain retailers whereby employees may only salary sacrifice laptop computers or tablet devices from their participating stores. An employee is limited to the provision of one laptop or tablet device per fringe benefits tax (FBT) year. The employer's salary sacrifice policy provides an outline of this arrangement including eligibility, procedure, conditions and responsibilities of both employee and employer. The employees require access to a laptop computer or tablet device for operational and administrative purposes of the employer. The use these electronic devices will be provided to enable the employees to carry out their tasks remotely.

Relevant legislative provisions: Fringe Benefits Tax Assessment Act 1986 section 58X.

Reasons for decision: 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 . A portable electronic device is a device that: · is easily transportable and designed for use away from an office environment · is small and light · can operate without an external power supply, and · is designed as a complete unit. Examples of devices that satisfy this description include mobile phones, calculators, personal digital assistants, laptop computers, portable printers and global positioning system (GPS) navigation receivers. A tablet is a one piece mobile computer and has similar functions to a laptop computer. Therefore, both devices are portable electronic devices for the purposes of subsection 58X(2) of the FBTAA. | 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 that 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: 1. in the first place; chiefly; principally In Chapter 20 of the publication Fringe benefits tax: a guide for employers there is an explanation of how to determine whether an item is primarily for use in the employee's employment. The decision 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 can be used as a basis for concluding that an item is being 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. The employer will provide employees with a laptop computer or a tablet device that is intended to be used in their employment for operational and administration matters. The nature of the employees' employment requires them to have access to a laptop computer and any personal use of the laptop computer will be incidental to business use. Accordingly, a laptop computer or tablet device provided to an employee under an SSA will be primarily for use in the employee's employment as required by subsection 58X(2) of the FBTAA. | Detailed Reasoning - Detailed reasoning: The exemption under section 58X of the FBTAA applies to an 'eligible work related item' and is limited by subsection 58X(3) of the FBTAA to one item per fringe benefits tax year, unless the item is a replacement item as allowed by subsection 58X(4) of the FBTAA. A 'portable electronic device' is an eligible work related item under subsection 58X(2) of the FBTAA if it is primarily for use in the employee's employment. As explained in the reasons for the answers to Questions 1 and 2, a laptop computer or tablet device is a 'portable electronic device' and the laptop computers or tablet devices that will be provided to the employees will be primarily for use in their employment. This means that the laptop computers or tablet devices to be provided to the employees are 'eligible work related items' and, as the employer will only provide an employee with one laptop computer or tablet device per FBT year under the SSA, the benefits that arise from the provision of the laptop computers or tablet devices will be exempt benefits under section 58X of the FBTAA.

Reasons for decision: These reasons for decision accompany the Notice of private ruling for the employer. | While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.