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Edited version of private ruling

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Ruling

Subject: Fringe benefits tax; exempt benefits; work related items

Question 1

Is a laptop computer a 'portable electronic device' for the purposes of subsection 58X(2) of the Fringe Benefits Tax Assessment Act 1986?

Answer

Yes

Question 2

Where the employer provides an employee with a laptop computer under a salary sacrifice arrangement, is that laptop computer 'primarily for use in the employee's employment' as required by subsection 58X(2) of the Fringe Benefits Tax Assessment Act 1986?

Answer

Yes

Question 3

Where the employer provides an employee with a laptop computer under a salary sacrifice arrangement that is primarily for use in the employee's employment, will the laptop computer be an exempt benefit by virtue of section 58X of the Fringe Benefits Tax Assessment Act 1986?

Answer

Yes

This ruling applies for the following periods:

Year ending 31 March 2012

Year ending 31 March 2013

Year ending 31 March 2014

Year ending 31 March 2015

Relevant facts and circumstances

Employees will be able to enter into a salary sacrifice arrangement (SSA) to acquire laptop computers and relevant accessories as part of their remuneration package where these items are primarily used for work purposes.

The employer has an arrangement with certain retailers whereby employees may only salary sacrifice laptops and accompanying accessories from participating stores. An employee is limited to the provision of one laptop 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 computer for operational and administrative purposes of the employer.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 section 58X.

Reasons for decision

Question 1

Summary

A laptop computer is a 'portable electronic device' for the purposes of subsection 58X(2) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA).

Detailed reasoning

Question 1

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:

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:

Examples of devices that satisfy this description include mobile phones, calculators, personal digital assistants, laptops, portable printers and global positioning system (GPS) navigation receivers.

A laptop computer is a portable electronic device for the purposes of subsection 58X(2) of the FBTAA.

Question 2

Summary

A laptop computer provided by the employer to an employee under the SSA will be primarily for use in the employee's employment as required by subsection 58X(2) of the FBTAA.

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 don't 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 employer will provide employees with a laptop computer that is intended to be used in their employment for operational matters and administration.

The nature of their employment requires employees to have ready access to a laptop computer and any personal use of the laptop computer is considered to be incidental to business use.

Question 3

Summary

The benefit that will arise from the provision of a laptop computer by the employer to an employee under the SSA will be an exempt benefit under section 58X of the FBTAA.

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 is a 'portable electronic device' and the laptop computers that will be provided by the employer to employees will be primarily for use in the employee's employment.

This means that the laptop computers that will be provided to employees will be 'eligible work related items' and, as the employer will only provide employees with one laptop computer per FBT year under the SSA, the benefits that arise from the provision of the laptop computers will be exempt benefits under section 58X of the FBTAA.

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