A member of the academic staff has requested reimbursement for a desktop computer for working from home. Will this incur FBT as it is not a laptop? The staff member wants the cost to be charged to his grant for the reimbursement plus the FBT to be no more than $1,500. The cost of the computer was $1,765 including GST. Can you please advise how much he can be reimbursed?
A desktop computer provided by Flinders University and located at the employee's residence will be a residual fringe benefit unless it is an exempt benefit. Subsection 47(3) provides an exemption where an employee has personal use of an employer's property but only where it is ordinarily located on the employer's business premises and wholly or principally used directly in connection with business operations. Section 47(3) will not apply as the desktop is ordinarily located at the employee's residence, not on the employer's business premises.
Fringe Benefits Tax will therefore be payable by the employee from their own after tax income (not consulting or grant funds) should a reimbursement be paid to them for the cost of the computer.
Are purchases made from University Consulting funds exempt from FBT?
Consulting funds are not exempt from FBT.
Expenditure such as seminar attendance fees, airfares (where the private component is not greater than the business component), professional membership fees and amounts that would otherwise be an allowable deduction to the employee had the University not paid for or reimbursed the expense are exempt from FBT.
Items purchased with consulting funds remain the property of the University, however this does not automatically exempt the items from fringe benefits tax. Fringe benefits tax is a ‘payment’ to an employee but in a different form to salary or wages. Benefits may also include rights, privileges or services.
For example a fringe benefit may be provided when an employer:
- Reimburses an employee for the purchase of second laptop with the same FBT year
- Allows an employee to use a work car for private purposes
- Pays an employee’s child care costs whilst away on business
- Gives an employee a cheap loan
- Rents a university owned house to an employee at a discounted rate (a rate less than the current market rate as determined by a third party)
- Non cash benefits to employees in lieu of salary or wages