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FBT benefits curtailed

Changes announced by the Treasurer in the May budget that tighten the fringe benefits tax (FBT) exemption for certain work-related items (including laptop computers, personal digital assistants and tools of trade) have now become law.

The rules affecting laptop computers come under the FBT exemption for work-related items such as mobile phones, calculators, personal digital assistants and tools. Under the old rules, employees could have as many of these items as they wanted with no FBT to be paid by the employer as long as the items were used primarily for work.

Laptops were treated differently
Employees were limited to one a year and there was no work test. The new rules mean that the FBT exemption will be restricted to one work related item, that has “substantially identical function” in each FBT year.

Where two or more eligible items used by the employee are considered to have substantially the same function, one of those items will not be eligible for FBT exemption. This presents a potential risk for those using electronic devices that operate with multiple functions, such as a mobile phone and PDA.

Under the old rules, employees could use salary sacrifice to get these items exempt from FBT and have also been able to claim depreciation on them - providing a double benefit.

New rules will also deny employees depreciation deductions for eligible work related items that are exempt from FBT. For such items, employees will no longer be able to claim depreciation deductions.