Private ruling: Fringe benefits tax
Date of advice: 24 October 2016
Published: February 2017
Ruling period: 20xx
Date scheme commenced: 20xx

Ruling: Q1: Is a laptop computer, tablet or smart phone a portable electronic device for the purposes of subsection 58X(2) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)? | A1: Yes | Q2: Where you provide employees with portable electronic devices (e.g., laptop computer, tablet or smart phone) under a salary sacrifice arrangement, are the devices primarily for use in the employee's employment as required by subsection 58X(2) of the FBTAA? | A2: Yes | Q3: Where you provide employees with portable electronic devices (e.g., laptop computer, tablet or smart phone) under a salary sacrifice arrangement that is primarily for use in the employee's employment, are the items exempt from fringe benefits tax (FBT) by virtue of section 58X of the FBTAA? | A3: Yes

Relevant facts and circumstances: Your workplace has wireless technology throughout the site. This has transformed the way your employees work, which in turn has led to changes in the tools employees use to work. Employees can pick up their portable electronic devices (including laptop computer, tablet or smart phone) from their desks and work anywhere within the site and still retain access to the documents and files stored on the cloud and shared drives. You are also implementing a number of policies and systems which increase the need for employees to use portable electronic devices such as laptop computers, tablets and smartphones. You have recognised the need for all employees to be equipped with portable electronic devices but are not prepared to fund the provision of portable electronic devices to all your employees. Instead you are considering a program whereby employees would fund their own portable electronic devices by way of a salary sacrifice arrangement (SSA) and bring that device to work. Under the SSA you will only provide an employee with one laptop computer, tablet or smartphone per FBT year.

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

Reasons for decision: Summary: A laptop computer, tablet or smart phone is a portable electronic device for the purposes of subsection 58X(2) of the FBTAA. | Detailed Reasoning - Detailed reasoning: The term portable electronic device is not defined in the FBTAA. ATO Interpretative Decision ATOID 2008/ 133 Fringe Benefits Tax Exempt Benefits: work related items - a portable electronic device provides guidance on what a portable electronic device is for the purposes of paragraph 58X(2)(a) of the FBTAA in the context of considering whether a GPS navigation system is a portable electronic device. … the primary characteristics of a 'portable electronic device' for the purposes of this provision would be that the device 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. If a device has these characteristics it would be 'a portable electronic device' for the purposes of paragraph 58X(2)(a) of the FBTAA. Laptop computers, tablets and smartphones have all of these characteristics, therefore they are portable electronic devices for the purposes of paragraph 58X(2)(a) of the FBTAA. | Summary: Where you provide employees with the portable electronic devices under a salary sacrifice arrangement, the devices will be primarily for use in the employee's employment as required by subsection 58X(2) of the FBTAA. | Detailed Reasoning - Detailed reasoning: In accordance with subsection 58X(2) of the FBTAA a portable electronic device will meet the definition of an eligible work related item if it is 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 the employee. You do not have to look at the 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 determining whether the device you provide to your employee is chiefly or principally to enable the employee to undertake employment duties. Alternatively, where there may be private use of an item, the following factors may be used to determine whether the item is primarily for use in the employee's employment: ● the reason or reasons the item is provided to the employee ● the type of work to be performed by the employee ● 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. Changes to your workplace along with the various policies and initiatives that you are implementing have been prompted and aided by changing technology. As a result you consider that the use of laptop computers, tablets and smartphones will assist your employees to: ● undertake their duties when away from their desks which has become commonplace in an all-wireless workplace ● participate in flexible work arrangements ● use newly introduced systems. It is on this basis that you propose to allow your employees to fund their own laptop computer, tablet or smartphone by way of salary sacrifice. As you will be providing the portable electronic devices to your employees on this basis, they will be provided primarily for use in the employee's employment as required by subsection 58X(2) of the FBTAA. | Summary: Where you provide employees with portable electronic devices (e.g. laptop computer, tablet or smart phone) under a SSA that is primarily for use in the employee's employment, the items are exempt from FBT by virtue of section 58X 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 FBT 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, tablet or smartphone is a portable electronic device and they will be provided to your employees primarily for use in their employment. This means that a laptop computer, tablet or smartphones that you provide to your employees are eligible work related items and, as you will only provide an employee with one laptop computer, tablet or smartphone per FBT year under the SSA, the benefits that arise from the provision of the portable electronic device will be exempt benefits under section 58X of the FBTAA.