FBT- Exempt Benefits: mobile phones

Can a mobile phone that has many additional features, and would otherwise be considered for exemption under paragraph 58X(2)(a) of the Fringe Benefits Tax Assessment Act (1986) (FBTAA), instead be considered for exemption under either paragraph 58X(2)(g) or (h) of the FBTAA?

No. A mobile phone should only be considered for exemption from FBT as 'a mobile phone or a car phone' under paragraph 58X(2)(a) of the FBTAA.

An employer provides an employee with the latest model mobile phone, which as well as being used for voice communication, is able to: • send and receive email • take photographs and video clips • access the internet.

The item is marketed to the public as a mobile phone.

Subsection 58X(1) of the FBTAA exempts from FBT certain work related items. Subsection 58X(2) provides a list of 'eligible work related items', including at paragraph (a) 'a mobile phone or a car phone'; paragraph (g) 'an electronic diary or similar item'; and paragraph (h) 'a notebook computer, a laptop computer or a similar portable computer.' There are no definitions of these terms in the FBTAA, therefore they take on their ordinary meanings.

It is considered that the best way of determining the classification of any particular item is to identify its primary function. The primary function of a mobile phone is that it can be used for voice communication whilst the user is away from any fixed line phone service.

As distinct from a mobile phone, the primary function of an electronic diary or similar item is that they are used to record appointments, establish 'to do' lists, and store contact information. Furthermore, the primary function of a 'notebook computer, a laptop computer or a similar portable computer' differs to that of a mobile phone. Even though a mobile phone, with the features described above, may also be able to perform some of the functions of these other items, they are considered ancillary to its primary function.

In order to differentiate between items that may fall for consideration as exempt under different paragraphs of subsection 58X(2) of the FBTAA, it may be useful to consider the way particular items are marketed to the public. Where an item is marketed as a 'mobile phone' (albeit with many advanced features), it is unlikely that the item in question is 'an electronic diary or similar item, or 'a similar portable computer'.

Accordingly, it is considered that the item provided to the employee is a mobile phone and should be considered for exemption from FBT under paragraph 58X(2)(a) of the FBTAA.

Note: Subsection 58X(3) requires that a mobile phone is primarily for use in the employee's employment for the exemption from FBT to apply. This requirement does not apply to the other items listed in subsection 58X(2) of the FBTAA.