ATO Interpretative Decision
ATO ID 2003/894
Fringe Benefits Tax
FBT- Exempt Benefits: mobile phonesFOI status: may be released
This version is no longer current. Please follow this link to view the current version. |
-
This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Can a mobile phone that has many additional features, and would otherwise be considered for exemption under paragraph 58X(2)(a) of the Fringe Benefits Tax Assessment Act (1986) (FBTAA), instead be considered for exemption under either paragraph 58X(2)(g) or (h) of the FBTAA?
Decision
No. A mobile phone should only be considered for exemption from FBT as 'a mobile phone or a car phone' under paragraph 58X(2)(a) of the FBTAA.
Facts
An employer provides an employee with the latest model mobile phone, which as well as being used for voice communication, is able to:
- •
- send and receive email
- •
- take photographs and video clips
- •
- access the internet.
The item is marketed to the public as a mobile phone.
Reasons for Decision
Subsection 58X(1) of the FBTAA exempts from FBT certain work related items. Subsection 58X(2) provides a list of 'eligible work related items', including at paragraph (a) 'a mobile phone or a car phone'; paragraph (g) 'an electronic diary or similar item'; and paragraph (h) 'a notebook computer, a laptop computer or a similar portable computer.' There are no definitions of these terms in the FBTAA, therefore they take on their ordinary meanings.
It is considered that the best way of determining the classification of any particular item is to identify its primary function. The primary function of a mobile phone is that it can be used for voice communication whilst the user is away from any fixed line phone service.
As distinct from a mobile phone, the primary function of an electronic diary or similar item is that they are used to record appointments, establish 'to do' lists, and store contact information. Furthermore, the primary function of a 'notebook computer, a laptop computer or a similar portable computer' differs to that of a mobile phone. Even though a mobile phone, with the features described above, may also be able to perform some of the functions of these other items, they are considered ancillary to its primary function.
In order to differentiate between items that may fall for consideration as exempt under different paragraphs of subsection 58X(2) of the FBTAA, it may be useful to consider the way particular items are marketed to the public. Where an item is marketed as a 'mobile phone' (albeit with many advanced features), it is unlikely that the item in question is 'an electronic diary or similar item, or 'a similar portable computer'.
Accordingly, it is considered that the item provided to the employee is a mobile phone and should be considered for exemption from FBT under paragraph 58X(2)(a) of the FBTAA.
Note: Subsection 58X(3) requires that a mobile phone is primarily for use in the employee's employment for the exemption from FBT to apply. This requirement does not apply to the other items listed in subsection 58X(2) of the FBTAA.
Date of decision: 19 September 2003Year of income: Year ending 31 March 2004
Legislative References:
Fringe Benefits Tax Assessment Act 1986
section 58X
subsection 58X(1)
subsection 58X(2)
paragraph 58X(2)(a)
paragraph 58X(2)(g)
paragraph 58X(2)(h)
subsection 58X(3)
Keywords
Exempt benefits
Fringe benefits
ISSN: 1445-2782
| Date: | Version: | |
| You are here | 19 September 2003 | Original statement |
| 3 October 2008 | Archived |
Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).
