FBT on electronic devices 2017

FBT on portable electronic devices in 2017

The FBT exemption for small business employers providing work-related portable electronic devices to employees has been expanded in the 2017 FBT year (that is, from 1 April 2016).

Under the old rules, FBT exemption does not apply to multiple portable electronic devices provided to an employee in the same FBT year, where those multiple items have “substantially identical functions”. This “one device” limit still applies to employers that are not small businesses.

However, small business employers (that is businesses with an aggregated annual turnover of less than $2 million) can now access the exemption for more than one work-related portable electronic device, even where the devices do have “substantially identical functions” (such as the functions of a tablet and a laptop).

The ATO defines a portable electronic device as a device that:

  • is easily portable and designed for use away from an office environment
  • is small and light
  • can operate without an external power supply
  • is designed as a complete unit.

The ATO also provides the below examples of portable electronic devices:

  • mobile phones
  • calculators
  • personal digital assistants (PDAs)
  • laptop computers
  • portable printers
  • portable global positioning system (GPS) navigation receivers

Many small businesses rely on employees using a variety of devices to increase overall productivity and work efficiency. With so many tech gadgets and devices now available, and technology upgrades constantly hitting the market, there will inevitably be growing overlaps between the functions of various devices, even while each device serves it’s own singular purpose.

It is increasingly common, for example, for an employee to use a laptop when he or she needs superior processing or display capabilities, but reach for a tablet when portability and instant-on are a priority. However, the laptop and tablet have substantially identical functions. The changes to this FBT law are a sensible solution to removing confusion where such overlaps exists.

Small business employers should consider the improved flexibility on this issue when undertaking management planning and budgeting in relation to staff benefits. We welcome you to speak to one of our taxation and business management advisers for advice specific to your business needs.