Private ruling: The fringe benefits tax (FBT) treatment of a device
Date of advice: 8 March 2019
Published: May 2019
Ruling period: 1 April 2018 to 31 March 2020
Date scheme commenced: 1 April 2018

Ruling: Q1: Is a Device an exempt fringe benefit when it is provided by a school to its physical education teacher and it will be used primarily for work purposes? | A1: Yes

Relevant facts and circumstances: A school’s physical education teacher needs to be contactable at all times in order to field questions about sports activities and the whereabouts and wellbeing of students. However, the teacher finds it disruptive to have their mobile phone ringtone on during class – especially as they receive a large number of calls – and so often misses calls that they need to respond to. The Device would enable them to more efficiently and discreetly screen calls. The Device will also enable the teacher to be contactable while completing various other work tasks, such as while performing yard duty. The Device is a form of watch, powered by a battery, which has the capacity to make and receive calls. The Device must be paired with a relatable phone. Assumption The School has not provided the teacher with a similar benefit earlier in the relevant FBT year.

Relevant legislative provisions: Section 58X of the Fringe Benefits Tax Assessment Act 1986 (FBTAA 1986) | All legislative references are to the FBTAA 1986 unless otherwise stated

Reasons for decision: Summary: Portable electronic device is not defined in the FBTAA 1986. The ATO publication Fringe benefits tax – a guide for employers defines a portable electronic device as a device that is: ● easily portable and designed for use away from an office environment; ● small and light; ● can operate without an external power supply; and ● designed as a complete unit. The guide also provides the following examples of portable electronic devices: a mobile phone, calculator, personal digital assistant, laptop, portable printer, and portable global positioning system (GPS) navigation receiver. The key issue here is whether the Device is a complete unit given that it must be paired with a relatable phone. However, if a portable printer is a portable electronic device then we have accepted that it is a complete unit even though the main function of a printer is dependent on receiving data from another source. The same reasoning must apply to the Device, especially given that it can perform functions away from a relatable phone, and so the Device is designed as a complete unit. It is therefore a portable electronic device because it is also: ● easily portable and designed for use away from an office environment; ● small and light; and ● can operate without an external power supply. While the Device will have obvious uses outside of the physical education teacher’s employment, it is being purchased by the school for the teacher so that she can efficiently and discreetly make and receive calls while in the workplace. This is of particular use to a physical education teacher who spends much of their time outdoors and working in an active manner with students, and so is more difficult to contact than if they could just have their phone on at all times. As such, the Device is being provided by the School to the teacher primarily for use in their employment. Therefore, the school’s provision of the Device to the teacher is exempt from FBT.