Highlights

  • Salary-packaged work devices face tighter FBT treatment from April 2027.
  • Ordinary employer-issued equipment remains a separate arrangement.
  • The $1,000 standard deduction changes the tax comparison.
  • Employees should confirm total package costs before ordering devices.

That new laptop may look cheaper when its price comes out of pre-tax pay. But the calculation is changing. From the fringe benefits tax year beginning 1 April 2027, workers and employers need to distinguish salary-sacrificed equipment from gear supplied simply because the job requires it.

Where the Old Advantage Narrows

The tax reform package changes the eligible work-related items exemption in section 58X of the fringe benefits tax rules. Portable electronic devices, software, protective clothing, briefcases and tools supplied through a salary packaging arrangement no longer receive that particular exemption for the relevant new FBT years. An employer may face FBT unless another concession applies. That cost can undermine the apparent benefit of sacrificing salary to obtain equipment.

A Laptop Is Not Always a Salary Package

The distinction turns on how the item is provided. A business that issues an employee a laptop primarily for employment, without reducing the employee's salary or exchanging part of remuneration, can generally continue to access the eligible work-related items exemption. A device obtained under an agreement to forgo salary is treated differently. Labels on an invoice are less important than the substance of the arrangement. Employers should document whether the equipment is business-issued or part of negotiated pay.

Put the Tax Saving in Perspective

Consider an illustrative $1,800 work laptop and an employee whose marginal income-tax rate, including Medicare levy, is 32%. Paying for an eligible item from pre-tax salary might previously have saved roughly $576 in income tax. Once FBT becomes relevant, however, an employer may charge the employee for the additional cost through the package. Actual outcomes depend on GST treatment, any available reductions and the employer's policy. The headline income-tax saving is therefore not the final number.

How the $1,000 Deduction Fits In

A standard deduction of up to $1,000 for eligible labour-income earners begins in the 2026–27 income year. It reduces taxable income; it is not a $1,000 cash payment. Employees with higher substantiated covered work expenses can instead claim eligible actual costs, subject to the rules. The salary packaging amendments aim to prevent overlapping tax advantages. Employees buying their own work devices should keep invoices and work-use records in case itemised deductions are more valuable.

What to Check Before April

Ask payroll whether an equipment benefit is genuinely employer-provided or salary-packaged, and whether any FBT will be passed on. Review agreements for devices ordered near the changeover, including the date a benefit is provided. Draft administrative guidance may still be refined, even where the legislative change is settled. A clear written cost comparison can prevent a supposed perk from becoming an expensive surprise.

A Practical Detail Worth Checking

There is also a practical budgeting question: who owns the device, who pays for repairs and what happens when employment ends? These terms may matter more than a small theoretical tax saving. Ask for a written breakdown of both the pre-tax reduction and any post-tax costs before agreeing.

General information only. This article is not personal taxation or financial advice.