• 14 Primary place of employment for the purposes of section 39A

    Question:

    The Question relates to the meaning of the term ‘primary place of employment’ and ‘regular place of employment’.  I would appreciate the ATO’s comment/view as to whether these terms have the same meaning, similar meaning or different meaning.  The question is specifically in relation to car parking fringe benefits.

    Background:

    Sometimes car log books are used for determining actual car parking benefits provided.

    It has been suggested by an accounting firm that ‘regular place of employment’ and ‘primary place of employment’ have different meanings for the purposes of the FBTAA.

    It has been suggested that regular place of employment is relevant when determining whether a journey in a car is for business or private purposes and is a location where a person habitually works.  However primary place of employment is relevant when determining whether a car parking fringe benefit has been provided (rather than regular place of employment) and is considered on a day to day basis.  It has been suggested that the primary place of employment would be the place, on a particular day that a reasonable person concludes to be the primary place of employment based on consideration of the time spent and substance of duties carried out.

    Sec 39A of the FBTAA provides that a car parking fringe benefit will arise if all 9 conditions are satisfied on a particular day.  Assuming all other conditions are satisfied i.e. the one being considered is 39A (1) (e) and 39A (1) (g).

    For example, if an employee spends equal time at head office and Site A, it has been suggested that a reasonable person would most likely conclude that head office is the primary place of employment on that day.  It has been suggested therefore there is one car parking benefit that arises (rather than two).   It has been suggested that if an employee visited 3 sites in one day, without any site standing out as the primary place of employment then a car parking fringe benefit would not arise on that day as there had not been a primary place of employment.  (rather than three) That is primary place of employment changes on a day to day basis.

    ATO Response

    As outlined in the agenda item, subsection 39A(1) of the FBTAA sets out the circumstances in which a car parking benefit will arise from the provision of parking facilities.

    Three of the paragraphs in section 39A refer to the ‘primary place of employment’; namely:

    • paragraph 39A(1)(e) which requires the employee on the particular day to have a ‘primary place of employment’;
    • paragraph 39A(1)(f) which requires the car during the relevant period or periods to be parked at, or in the vicinity of the ‘primary place of employment’; and
    • paragraph 39A(1)(g) which requires that on the particular day, the car is used in connection with travel by the employee between the place of residence of the employee and the ‘primary place of employment’.

    The term ‘principal place of employment’ is defined in subsection 136(1) of the FBTAA to mean:

    … business premises, or associated premises, of the employer of the employee, or of an associate of the employer, where:
    (a) if the employee performed duties of his or her employment on that day - on that day; or
    (b) in any other case - on the most recent day before that day on which the employee performed duties of his or her employment;
    those premises are or were:
    (c) the sole or primary place of employment of the employee; or
    (d) otherwise the sole or primary place from which or at which the employee performs duties of his or her employment.

    The Explanatory Memorandum to Taxation Laws Amendment (Car Parking) Bill 1992 in reference to this definition stated:

    The term "primary place of employment" is defined to mean the employer's business premises, or associated premises, on which the employee would normally carry out his or her employment duties. Where an employee carries out employment duties on more than one of the employer's business premises in a particular day, the primary place of employment on that day is the place where, in consideration of the time spent and the substance of the duties carried out, a reasonable person would conclude that place to be the primary place of employment.

    Further guidance as to the meaning of the term ‘primary place of employment’ in the context of paragraph 39A(1)(f) was provided by the Full Federal Court in Virgin Blue Airlines Pty Ltd v Federal Commissioner of Taxation 2010 FCAFC 137; 2010 ATC 20-226; 81 ATR 85. In considering the statutory context of the car parking provisions, the Full Court noted that Division 10A carved out from the general FBT exemption for car parking benefits those benefits that arise from an employee parking their car at, or in the vicinity of the employee’s primary place of employment and satisfy the other requirements of section 39A.

    In discussing the application of paragraph 39A(1)(f) Edmonds and Gilmour JJ at paragraph 54 said:

    The statutory test is whether the car park is in the vicinity of the employee's primary place of employment. The "primary place of employment" will ordinarily be capable of precise identification. That place is Terminal 3. It is not Melbourne Airport at large. The question is whether the parking provided is in the vicinity of Terminal 3. Consideration of whether or not the primary place of employment is functionally part of a large area such as Melbourne Airport, or a University Campus or a city's CBD is not warranted by the statutory language and serves only to distract from the question whether the car park is, synonymously, near, proximate or close to that place. It is the spatial and geographical separation between them that is important.

    Guidance is also provided in Taxation Ruling TR 96/26 Fringe benefits tax: car parking fringe benefits which at paragraph 12 states:

    12. Question 2
    Does employer-provided parking for vehicles used for work-related purposes, which are parked next to temporary places of work (e.g., electricity substations), constitute a car parking benefit?
    Answer
    An employee's primary place of employment is the business or associated premises of the employer where, on a day, duties of work are performed. A substation can constitute a place of employment on that day. A car parking fringe benefit may therefore arise where employer-provided parking is made available at these work sites.

    In applying this guidance to the example given in the agenda item, the ATO agreed the ‘primary place of employment’ will depend upon what the employee does on the particular day.

    However, the meaning of the term ‘primary place of employment’ is not the same as ‘regular place of employment’. The term ‘regular place of employment’ does not come within section 39A and is not relevant when determining whether a car parking fringe benefit has been provided. Rather, as indicated by the agenda item, ‘regular place of employment’ is a term used in Miscellaneous Taxation Ruling MT 2027 Fringe benefits tax: private use of cars: home to work travel. At paragraph 34, MT 2027 refers to a regular place of work as being a place to which the employee travels habitually. This may not be the same as the ‘primary place of employment’.

    In considering the examples provided in the agenda item of head office and Site A, the classification of either of the sites as the ‘primary place of employment’ will depend upon whether the sites are business premises or associated premises of the employer or an associate of the employer.

    If both are business premises or associated premises of the employer, or an associate of the employer then the determination of which site is the ‘primary place of employment’ will depend upon the time spent and the substance of the duties carried out at each of the sites.

    If one of the sites is considered to be the ‘primary place of employment’, for a car benefit to arise it is necessary for the other requirements in subsection 39A(1) of the FBTAA to be met. This includes requirements for:

    • the car to be parked in the vicinity of the primary place of employment for at least 4 hours between 7 am and 7 pm;
    • a commercial car park that charges more than the car parking threshold for all-day parking on the first business day of the FBT year to be located within one kilometre of the premises at which the car is parked; and
    • the car to be used to travel between the employee’s place of residence and primary place of employment.

    In the situation where an employee visits three sites in one day without any one of the three sites standing out as the primary place of employment, the first of these dot points is unlikely to be met.

      Last modified: 03 Feb 2014QC 38409