In recent years, major developments in the technological capabilities of electronic devices such as mobile phones have resulted in the introduction of a new device that is commonly referred to as a ‘smart watch’ (e.g., Apple Watch, Samsung Gear, Garmin Fenix).
Smart watches function as a traditional wristwatch but often with smartphone-like capabilities far beyond the classification of the device for marketing purposes.
Interestingly, the technological developments with respect to smart watches have inadvertently created uncertainty around the FBT rules. In particular, employers providing employees with a smart watch may be entitled to claim the FBT exemption applicable to certain work-related items, where the requirements of S.58X are met.
One of those key requirements is that the device is a ‘portable electronic device’.
To that end, the ATO has been asked in several FBT forums to provide guidance on the concept of a ‘portable electronic device’ for the purposes of the FBT exemption under S.58X. On each occasion, the guidance has been general in nature and has left many employers unsure about whether the exemption applies to commonly available electronic devices provided to employees.
More recently, however, the ATO issued a Private Binding Ruling (‘PBR’) which accepted that a smart watch is potentially capable of satisfying the definition of a ‘portable electronic device’ for the purposes of applying the FBT exemption under S.58X.