Many of our staff are on the road or work outdoors and they often use their mobile phones as part of their duties. We supply them with mobile phones for this purpose. Some staff have asked if they can salary sacrifice the cost of Bluetooth ear pod type headsets for use with their phones while on work duties. Will FBT apply to these reimbursements?
The starting point is that the reimbursement will be an expense payment fringe benefit. We then need to see whether any specific FBT exemption or reduction is available.
Section 58X of the Fringe Benefits Tax Assessment Act 1986 (the FBT Act) provides an exemption for an ‘eligible work related item’. Eligible work related items are defined to include a ‘portable electronic device’. The ATO view of what is a ‘portable electronic device’ requires an item to be:
- 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.
We would consider the ear pods to be a ‘portable electronic’ device based on the ATO guidelines:
On this basis exemption as a work-related item would be possible under section 58X provided the ear pods are provided to the employees primarily for use in their employment.
A portable electronic device is ‘primarily for use in an employee’s employment’ if it is provided principally to enable the employee to do their job.
Based on the information you have provided there appears to be sufficient nexus with work duties to allow the exemption to be available.
If the cost of the ear pods is less than $300 then potentially the minor benefit exemption in section 58P of the FBT Act could also be considered. However, as it is intended that the employees will salary sacrifice the cost the ATO does not consider the minor benefit exemption is available (refer paragraph 16 of TR 2007/12 ‘Fringe benefits tax: minor benefits’).