Taxation Laws Amendment (Car Parking) Bill 1992

Second Reading Speech

by the Minister for Industry, Technology and Commerce the Hon. John Button MP

I move that the Bill be now read a second time.

This Bill will give effect to the Budget measure announced on 18 August 1992 to tax certain car parking benefits. The Government finds it inequitable that some employees receive these car parking benefits in a tax exempt form while other employees, most of whom will not get a tax deduction for their car parking costs, must pay for equivalent facilities out of their after tax income.

Accordingly, the Bill will amend the Fringe Benefits Tax Assessment Act 1986 to impose fringe benefits tax on certain car parking benefits received by employees. However, a benefit will only arise where a car used to commute from home to work is parked at or near the employee's main workplace for more than 4 hours between the hours of 7.00am and 7.00pm.

Where the employer reimburses an employee's car parking expenses, the value of the benefit will be the amount of that reimbursement. Where the employer provides car parking facilities to an employee, the value of the benefit will be determined in accordance with the mechanism set out in the budget papers. That is, the value of the lowest cost all-day parking at a permanent commercial parking station available to the public within one kilometre of the employer-provided facilities.

The Bill will also amend the Income Tax Assessment Act 1936 to deny to employees a deduction for similar car parking expenses which arise from parking a car used to commute to work at or near the employee's main workplace for more than 4 hours between the hours of 7.00am and 7.00pm. This denial of a deduction will ensure that the overall tax effect of providing either a car parking benefit or an allowance to an employee to cover car parking expenses is substantially similar.

To minimise concerns about any unintended impact of these measures, the Government has ensured that the Bill provides that the provision of certain parking facilities can be exempted by Regulation. Such exemptions may include parking facilities provided by employers that are of a minimal value or parking facilities which would not normally be considered to be "commercial parking stations" for the purpose of these measures. The Government will consider the circumstances under which it would be appropriate for it to recommend to the Governor-General to make such Regulations.

The measures introduced in this Bill will result in an increase to revenue of $90m in 1993-94, $253m in 1994-95 and $203m in each subsequent year.

In order to give employers and car parking operators sufficient time to adjust their procedures as a result of this Bill, and so that the Government can consider what Regulations may be required, the provisions of this Bill will not apply until 1 July 1993.

I present the Explanatory Memorandum which contains more detailed explanation of the provisions of the Bill.

I commend the Bill to the Senate.