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Home internet should be FBT-exempt for employers that allow staff to work flexibly: Telstra’s federal budget pitch

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Home internet services should be treated as fringe benefits to take account of the fact that more Australians are working from home, telecommunications giant Telstra says.

In a submission to the federal government ahead of the May budget, Telstra’s director of taxation John Burke said the current law was outdated and needed a revamp to take into account flexible work arrangements.

In a submission to the federal government ahead of the May budget, Telstra said tax laws need to take into account ... In a submission to the federal government ahead of the May budget, Telstra said tax laws need to take into account flexible work arrangements. Photo: Peter Braig

Section 58X of the Fringe Benefits Tax Assessment Act was not designed with that in mind, he said.

The fact that these items are now regularly used as part of a worker’s normal employment, should be taken into account, Mr Burke said.

Currently reimbursement or payment of home internet service fees used for private purposes attract a fringe benefits tax that is paid by the employer.

Australian Taxation Office guidance states: “If entities do not hold otherwise deductible declarations signed by employees, the total payment for home telephone and home internet services becomes a fringe benefit, even if part of the use was for work-related purposes.”

Mr Burke said in the submission: “We believe that Section 58X should expressly provide that any associated telecommunications and fixed or wireless internet access services provided by the employer for the purposes of operating the eligible work-related item primarily for work, be also exempt from FBT.

“This would include the provision of voice and video call services, short messaging services, and wireless or fixed-line home broadband internet access.”

The submission comes as the Turnbull government considers introducing a “standard deduction” for all taxpayers in the May budget, in a bid to claw back an estimated $22 billion in tax deductions claimed by individuals for work-related expenses each year. 

In its recent submission to the federal government’s inquiry into tax deductibility, the ATO said it was “concerned about the level of non‐compliance in relation to work‐related expenses”.  

It said there were 8.6 million taxpayers claiming a total of $21.8 billion in work-related expenses in their 2015 tax returns, accounting for about 60 per cent of total deductions. 

Of these, 7.5 million (87 per cent) were taxpayers who are not in business, claiming $18.8 billion.

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