Since the introduction of legislation following in the 2008
Federal Budget, the tightening of the FBT exemption to allow only
eligible work-related items – portable electronic devices
has caused confusion, particularly surrounding laptops and the
meaning of 'primarily for use' in employee's
employment. Some of the questions raised include:
Is there a specific minimum work-related percentage to be
satisfied, e.g. 50%?
Can there be periods where the laptop falls in and out of
meeting the 'primarily for work test (allowing an FBT pro-rata
based on time)?
How long does the laptop need to be primarily for work (until
the end of the current FBT year or income tax year)?
Can the laptop be salary sacrificed?
What are the employers' substantiation requirements to
support that the laptop is 'primarily for work' (e.g.
logbook, employee declaration)?
The NTLG FBT Subcommittee meeting minutes (14 August 2008)
provide some welcomed clarification on this matter. According to
the minutes, the basis for concluding that the laptop computer is
primarily for work can be based on 'intended' or
'anticipated' use at the time the benefit is provided to
the employee that is, why the laptop computer was provided to an
employee 'in the first place'. This means that the actual
future use of the laptop does not determine whether it will be
primarily for work purposes.
As discussed in the NTLG meeting, ATO ID 2008/127 was released
supporting the ATO's response in the meeting. It concludes that
a laptop provided by an employer to employee for use in main
employment duties (that is regularly visiting clients which
requires ready access to a laptop computer for producing and
updating work reports between client visits) is primarily for work.
ATO ID 2008/127 further clarifies that any personal use of the
laptop computer is considered to be incidental to business use.
The NTLG minutes confirmed that there is no obligation to keep
extra documentation beyond what is required by section 132 of the
Fringe Benefits Tax Assessment Act 1986 (FBTAA). Under this
section, employers are required to keep and preserve records to
enable their FBT liability to be assessed.
The ATO did note however, that a declaration completed by an
employee, in itself, would not be sufficient grounds to conclude
that a laptop had been provided primarily for work purposes.
An employer will generally know whether a laptop is being
provided 'chiefly' or 'principally' for the
fulfilment of an employee's work duties. For instance, the
employee's job description, the employment contract or duty
statement can provide grounds to show that the laptop was primarily
In some circumstances, particularly those where normal business
practices do not clearly support a position that the exemption is
available, an employer could document such factors as:
any policy or conditions relating to the use of the
reason the laptop was provided to the employee;
types of duties performed by the employee; and
how the use of the laptop relates to the employee's
in order to determine if the laptop is primarily for work
Salary sacrifice arrangements
According to the NTLG minutes, employees may continue to enter
into salary sacrifice arrangements under the new rules.
Furthermore, employees can, at a later time dispose of a salary
sacrificed laptop in any manner (e.g. pass it onto a family
member), if it had been in fact provided primarily for work.
The meaning of 'portable electronic device'
As the FBTAA does not define the meaning of 'portable
electronic device', ATO ID 2008/133 was released to shed some
light on the subject. According to the ATO ID, if a device has the
characteristics listed below, it would be 'a portable
small and light;
easily portable and designed for use away from an office
designed as a complete unit; and
can operate without an external power supply.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Long experience representing many of Australia's leading employers has taught us that in employment litigation the identity of an employee's representative is a major factor in how employee litigation runs.
Australian employees receive certain entitlements (such as annual leave and superannuation) where contractors do not.
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