30 March 2024

EXEMPT LAPTOPS - DEPRECIATION AND INCOME TAX
28 January 2005

An employee is reimbursed for the purchase of a lap top computer. The employee proposes to use the lap top predominantly for business purposes and as per TD 93/145 they can claim depreciation on the lap top for the business usage portion.

The cost of the lap top would be an exempt benefit to the employer as per section 58X of the FBT Act 1986 and not subject to FBT.

In relation to the employee section 51AH(1)(c) of the ITAA 1936 would apply so that the reimbursement is not included in assessable income.

In addition section 23L of the ITAA 1936 also states that income derived by a taxpayer by way of the provision of a fringe benefit is not assessable income and is not exempt income to the taxpayer.

The Tax Office stated that sub-division 20-A of the Income Tax Assessment Act 1997 (ITAA 97) does not apply to make the reimbursement for a lap top computer, as set out above, where a deduction is available under Division 40 – Capital Allowances, an assessable recoupment.

The relevant section is sub-section 20-20(1) of the ITAA 97 - Assessable recoupments, which states that an amount is not an assessable recoupment to the extent that it is ordinary income, or it is statutory income because of a provision outside this subdivision.

For example, in Taxation Ruling TR 2001/10 – Income tax, fringe benefits tax and superannuation guarantee: salary sacrifice arrangements, at paragraph 28, it is stated that ‘benefits provided to or on behalf of an employee under an effective salary sacrifice arrangement may be derived as ordinary or statutory income by the employee’.

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