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Is FBT subject to mobile phone plan used for both business and private purposes?

Newbie

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Our business provides mobile phones (including handset fees) under business account for some senior managements employees for business use primarily. As it’s not very common for some people nowadays to keep 2 mobile phones (one for business, one for private use), the company provided mobile phone is very likely to be used for personal use. We have a written company policy to inform employees to minimise personal uses, but this is not avoidable. Regardless whether the mobile plan is used for business or personal, the amount of the phone plan will be still be the same. Is this mobile phone plan subject to FBT?

We’re thinking of reimbursing the mobile plan up to a certain cap instead of providing phones under business names. Will this method give rises to FBT too?

Thanks!

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ATO Certified Response

Former Community Support

Replies 5

Hi @Taxquestion,

 

Welcome to our Community!

 

As per chapter 9.9 of the: Fringe Benefits Tax - A guide For Employers: If the mobile phone is primarily for use in the employee's employment, the benefit is an exempt benefit. 

 

Section 20.8 further explains, that an FBT exemption can apply to the provision of certain work related portable electronic devices that are all of the following:

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

The exemption is limited to:

  • items primarily for use in your employee's employment
  • one item per FBT year for items that have a substantially identical function, unless the item is a replacement item. (From 1 April 2016, small businesses with an aggregated turnover of less than the relevant small business turnover threshold can provide employees with more than one qualifying work-related portable electronic device, even where the items have substantially similar functions)

An item is generally considered to be primarily for use in the employee's employment if it is provided principally to enable the employee to do their job. You can find further information about Primarily for use in the employee's employment under section 20.8.  

 

The reimbursement of the phone plan will generally give rise to an expense payment fringe benefit. An expense payment fringe benefit may arise in either of two ways:

  1. you (the employer) reimburse an employee for expenses they incur
  2. you pay a third party in satisfaction of expenses incurred by an employee.

The taxable value of the fringe benefit can be reduced by applying the otherwise deductible rule.

 

Thanks, JodieH.

6 REPLIES 6

Most helpful response

ATO Certified Response

Former Community Support

Replies 5

Hi @Taxquestion,

 

Welcome to our Community!

 

As per chapter 9.9 of the: Fringe Benefits Tax - A guide For Employers: If the mobile phone is primarily for use in the employee's employment, the benefit is an exempt benefit. 

 

Section 20.8 further explains, that an FBT exemption can apply to the provision of certain work related portable electronic devices that are all of the following:

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

The exemption is limited to:

  • items primarily for use in your employee's employment
  • one item per FBT year for items that have a substantially identical function, unless the item is a replacement item. (From 1 April 2016, small businesses with an aggregated turnover of less than the relevant small business turnover threshold can provide employees with more than one qualifying work-related portable electronic device, even where the items have substantially similar functions)

An item is generally considered to be primarily for use in the employee's employment if it is provided principally to enable the employee to do their job. You can find further information about Primarily for use in the employee's employment under section 20.8.  

 

The reimbursement of the phone plan will generally give rise to an expense payment fringe benefit. An expense payment fringe benefit may arise in either of two ways:

  1. you (the employer) reimburse an employee for expenses they incur
  2. you pay a third party in satisfaction of expenses incurred by an employee.

The taxable value of the fringe benefit can be reduced by applying the otherwise deductible rule.

 

Thanks, JodieH.

Newbie

Replies 4

 

I'm new

Replies 3

Hi, what if the employees use their own mobile phones and the employer put them on their mobile phone plan for the call costs etc? The mobile phones are primarily used for work related purposes. Would the provision of the phone plan be subject to FBT?

Many thanks

Former Community Support

Replies 2

Hi @WHT ,

 

If the mobile phone is primarily for use in the employee's employment, the benefit is an exempt benefit.

 

See Primarily for use in the employee's employment under section 20.8 other exemptions of Fringe benefits tax - a guide for employers

 

Thanks for posting,

JasonT

Newbie

Replies 1

Hi Jason,

 

In reading your response to @WHT , it may just be me but I am still not sure what is FBT exempt when it comes to a mobile phone.

 

I see that there are 2 ways to have a mobile phone

  1. Purchase outright and pay as you go for calls, etc. OR 
  2. Have the phone supplied as part of a plan, which can incorporate the cost of calls, data download, etc.

 

I think purchasing the phone outright is clear, i.e. it is exempt from FBT if used predominantly for business purposes.

 

The question for me is if the phone is obtained via the 'plan' method, is this monthly cost of the plan exempt from FBT (again if the phone is used predominantly for business purposes).

 

I'm looking for something that is less of a generic response with a direction to the legislation/regulations and try to interpret it myself and have something definitive regarding mobile phone plans. Surely there is an Interpretive Decision or Public Ruling that covers this point and clarifies/answers this issue.

 

Thanks

Community Moderator

Replies 0

Hi @South24

 

Thanks for joining the conversation.

 

A similar question has been asked in our Community before. You can check out our response here: Mobile phone usage paid by employer

 

Apart from the information in our earlier responses, we don't have anything else we can point you. It sounds like you would like something a bit more definitive, so we suggest that you take advantage of our early engagement for advice service.