Taxation Laws Amendment (FBT Cost of Compliance) Act 1995 (145 of 1995)
Schedule 2 CAR PARKING
Part 2 AMENDMENT OF THE INCOME TAX ASSESSMENT ACT 1936
Division 1 Insertion of new Division dealing with car parking
12 After Division 4 of Part III
Insert:
"Division 4A-Car parking for certain self-employed persons,
partnerships and trusts
"Subdivision A-Key principle, overview and coverage of Division
The key principle
"89A.
No deduction is allowable under this Act to a self-employed person, a
partnership or a trust for certain parking expenditure unless the
amount that would otherwise be deductible is reduced by the amount
calculated using one of the approved valuation methods.
Overview of Division
"89AA. The following table summarises the contents of this Division:
OVERVIEW
Subdivision Coverage
A Key principle, overview and coverage of Division
B The basic requirement that the deduction must be
calculated using an approved valuation method
C The commercial parking station method
D The market value method
E The average cost method
F The statutory formula (spaces) method
G The 12 week record keeping method
H Special provisions-2 anti-avoidance provisions
J Definitions (many terms have the same meaning as in
the Fringe Benefits Tax Assessment Act 1986)
Deductions to which Division applies
"89AB.(1) This Division applies to any deduction that would otherwise
be allowable to a taxpayer who is a natural person (including a person
in the capacity of trustee) or a partnership if all of the conditions
set out in this section are satisfied.
The first condition
"(2) The first condition is that the deduction (the gross deduction)
would, apart from this Division, be allowable to the taxpayer under
this Act in respect of expenditure to the extent to which it is
incurred in respect of the provision of car parking facilities for a
car on a day (the parking day) on or after 1 July 1995.
The second condition
"(3) The second condition is that, on the parking day, the taxpayer
or a partner in the taxpayer (if the taxpayer is a partnership) has a
primary place of self-employment and the car is used in connection with
travel by the taxpayer or partner between his or her place of residence
and that primary place of self-employment.
The third condition
"(4) The third condition is that:
(a) on the parking day, the car is parked on particular premises (the
parking premises) for one or more daylight periods exceeding 4 hours in
total; and
(b) the parking premises are at, or in the vicinity of, the primary
place of self-employment; and
(c) a commercial parking station is located within a 1 km radius of
the parking premises; and
(d) the lowest fee charged by the operator of any such commercial
parking station in the ordinary course of business to members of the
public for all-day parking on the first business day of the year of
income is more than $5.00.
Note: An anti-avoidance provision applies to paragraph (4)(d)-see
section 89HA.
The final condition
"(5) The final condition is that the expenditure is in respect of the
provision of the parking facilities to which that parking relates.
Regulations may exclude certain cases
"89AC. This Division does not apply to a deduction if the provision
of parking facilities for the car during the period or periods to which
the deduction relates is taken, under the regulations, to be excluded
from this Division.
"Subdivision B-Deduction to be calculated using an
approved valuation method
Deduction to be calculated using an approved valuation method
"89B.(1) If this Division applies to a gross deduction, the gross
deduction is not allowable to the taxpayer, unless the taxpayer elects
to use an approved valuation method in calculating the amount of the
deduction.
"(2) The following are the approved valuation methods:
(a) the commercial parking station method;
(b) the market value method;
(c) the average cost method;
(d) the statutory formula (spaces);
(e) the 12 week record keeping method.
"Subdivision C-The commercial parking station method
What an election to use this method covers
"89C. A taxpayer may elect to use the commercial parking station
method to cover all gross deductions for the taxpayer that relate to:
(a) a particular car; and
(b) particular parking premises; and
(c) a particular day.
Amount of deduction using this method
"89CA.(1) The amount of the deduction worked out using this method
is:
Gross deduction amount - Commercial parking station amount.
"(2) The gross deduction amount is:
(a) if only one gross deduction is covered by the election-the amount
of that gross deduction; or
(b) if more than one gross deduction is covered by the election-the
sum of the amounts of those gross deductions.
"(3) The commercial parking station amount is equal to the lowest fee
charged by any operator of commercial parking stations within a 1 km
radius of the parking premises in the ordinary course of business to
members of the public for all-day parking on the parking day.
"Subdivision D-The market value method
What an election to use this method covers
"89D. A taxpayer may elect to use the market value method to cover
all gross deductions for the taxpayer that relate to:
(a) a particular car; and
(b) particular parking premises; and
(c) a particular day.
Amount of deduction using this method
"89DA.(1) The amount of the deduction worked out using this method
is:
Gross deduction amount - Market value amount.
"(2) The gross deduction amount is:
(a) if only one gross deduction is covered by the election-the amount
of that gross deduction; or
(b) if more than one gross deduction is covered by the election-the
sum of the amounts of those gross deductions.
"(3) The market value amount is the amount that the taxpayer could
reasonably be expected to have been required to pay in respect of the
provision of the parking facilities for the car on the parking day if:
(a) those facilities had been provided by another person; and
(b) the parties to the transaction were dealing with each other at
arm's length.
Valuer's report needed if method is used
"89DB. An election to use the market value method in relation to one
or more days in a year of income has no effect unless:
(a) a suitably qualified valuer gives to the taxpayer a report, in a
form approved by the Commissioner, about the valuation of the provision
of the car parking facilities; and
(b) the valuer is at arm's length in relation to the valuation; and
(c) the taxpayer's return for the year of income, in so far as it
relates to the market value method, is based on the report.
"Subdivision E-The average cost method
What an election to use this method covers
"89E. A taxpayer may elect to use the average cost method to cover
all gross deductions for the taxpayer that relate to:
(a) a particular car; and
(b) particular parking premises; and
(c) a particular day.
Amount of deduction using this method
"89EA.(1) The amount of the deduction worked out using this method
is:
Gross deduction amount - Average cost amount.
"(2) The gross deduction amount is:
(a) if only one gross deduction is covered by the election-the amount
of that gross deduction; or
(b) if more than one gross deduction is covered by the election-the
sum of the amounts of those gross deductions.
"(3) The average cost amount is equal to:
A + B
2
where:
A is the lowest fee charged in the ordinary course of business to
members of the public for all-day parking by any operator of a
commercial parking station located within a 1 km radius of the parking
premises on the first parking day for the taxpayer or the partner (as
the case requires) for those premises in that year of income.
B is the lowest fee charged in the ordinary course of business to
members of the public for all-day parking by any operator of a
commercial parking station located within a 1 km radius of any of the
parking premises on the last parking day for the taxpayer or the
partner (as the case requires) for those premises in that year of
income.
Fees must be representative if method is used
"89EB. An election to use the average cost method is of no effect if
the fees referred to in subsection 89EA(3) are not representative.
"Subdivision F-Statutory formula (spaces) method
The key principle
"89F. Under this Subdivision, a taxpayer may elect to reduce the
amount of certain deductions by an amount calculated using a statutory
formula based on the number and value of spaces available to the
taxpayer, or, if the taxpayer is a partnership, to partners in the
taxpayer who are covered by the election.
Spaces method of calculating total deduction for car parking expenses
Election
"89FA.(1) A taxpayer, other than a partnership, may elect to use the
statutory formula (spaces) method to cover all of the gross deductions
for the taxpayer for a year of income.
Election-partnerships
"(2) A partnership may elect to use the statutory formula (spaces)
method to cover all of the gross deductions for the taxpayer for a year
of income that relate to one or more partners in the taxpayer.
Partnership must specify partners covered by election
"(3) The partnership must specify that the election covers gross
deductions that relate to:
(a) all the partners; or
(b) all partners of a particular class; or
(c) particular partners.
Total value of deductions
"(4) Despite any other provision of this Act (other than section
89FB) the total amount of deductions covered by the election for the
year of income is the amount worked out using the spaces method under
subsection (5).
Note: Section 89FB covers the situation where the number of spaces
available to partners exceeds the number of partners.
Method
"(5) The spaces method is:
Step 1: Work out an amount using the following formula, for each space
for which there is, in the year of income, at least one gross deduction
for the taxpayer, or for a partner covered by the election (as the case
requires):
Number of days in
availability periods in
Daily rate amount X relation to space X 240
366
Step 2: Work out the total of all the amounts calculated under Step 1
(the total statutory deduction).
Step 3: Subtract the total statutory deduction from the gross deduction
amount.
Note 1: Section 89FC defines daily rate amount.
Note 2: Section 89FD defines availability period.
Note 3: Subsection (6) defines gross deduction amount.
"(6) The gross deduction amount is:
(a) if only one gross deduction is covered by the election-the amount
of that gross deduction; or
(b) if more than one gross deduction is covered by the election-the
sum of the amounts of those gross deductions.
"(7) The election is of no effect if, in working out the daily rate
for a space, the fees referred to in subsection 89EA(3) are not
representative (see section 89JB).
Number of spaces exceeds number of partners
"89FB.(1) This section applies if the taxpayer is a partnership and,
throughout the parking period (see subsection (5)), the average number
of partners covered by the election is less than the average number of
spaces (eligible spaces) for which there is an availability period.
Formula to reduce total statutory benefits
"(2) If this section applies, the total statutory deduction (see Step
2 in subsection 89FA(5)) is multiplied by the following fraction:
Average number of partners
Average number of eligible spaces
"(3) The average number of partners is:
Number of partners covered Number of partners
by election at the beginning + covered by election at the
of the parking period end of the parking period
2
"(4) The average number of eligible spaces is:
Number of eligible spaces at Number of eligible spaces at
the beginning of the parking + the end of the parking
period period
2
"(5) The parking period is the period:
(a) beginning on the first day in the year of income on which the
parking of a car in any space referred to in subsection 89FA(5) gives
rise to a gross deduction of the taxpayer that relates to a partner
covered by the election; and
(b) ending on the last day in the year of income on which the parking
of a car in any space referred to in subsection 89FA(5) gives rise to a
such a gross deduction.
Number of partners and number of spaces must be representative
"(6) This section does not apply if the number of partners or the
number of eligible spaces referred to in subsections (3) and (4) are
not representative (see subsection (7)).
Meaning of not representative
"(7) A number of partners, or a number of eligible spaces, as the
case requires, is not representative if the number of partners, or
eligible spaces, as the case requires, is substantially greater or less
than the average number throughout whichever of the following periods
is chosen by the employer:
(a) the 4 week period ending on the first day of the parking period;
or
(b) the 4 week period beginning on the last day of the parking
period.
Meaning of daily rate amount
"89FC. The daily rate amount for a space is the amount that would be
worked out under section 89EA as the gross deduction amount for the
space.
Meaning of availability period
"89FD. An availability period for a space:
(a) begins:
(i) in the case of a taxpayer other than a partnership-on the first
day in the year of income on which the parking of a car in the space
gives rise to a gross deduction of the taxpayer; or
(ii) in the case of a partnership-on the first day in the year of
income on which the parking of a car in the space gives rise to a gross
deduction of the taxpayer that relates to a partner covered by the
election; and
(b) ends on the last day in the year of income on which the parking
of a car in the space gives rise to such a gross deduction.
"Subdivision G-The 12 week record keeping method
The key principle
"89G.
Under this Subdivision, a taxpayer may keep a 12 week register of car
parking. A taxpayer who keeps such a register may elect that the total
amount of gross deductions for years of income for which the register
is valid is to be determined in accordance with the register.
What an election to use this method covers
"89GA.(1) A taxpayer may elect to use the 12 week record keeping
method to cover all gross deductions for the taxpayer for a year of
income.
"(2) A partnership may, alternatively, elect to use the 12 week
record keeping method to cover all gross deductions for the partnership
that relate to a particular partner, or particular partners, for a year
of income.
Amount of deduction using this method
"89GB. The total amount of the deductions covered by the election is:
( Allowable ) Number of days in
(deductions (register) X 52) X car parking
( 12) availability periods
366
Meaning of allowable deductions (register)
"89GC.(1) The allowable deductions (register), in relation to a year
of income, means the amount that would be the total allowable
deductions for the taxpayer for the 12 week period for which a register
is kept, assuming that:
(a) the register had been kept in that year of income; and
(b) the amount of the deductions were calculated in accordance with
the information in the register; and
(c) the allowable deductions were calculated using whichever of the
following methods that the taxpayer chooses:
(i) the commercial parking station method;
(ii) the market value method;
(iii) the average cost method.
"(2) In working out the allowable deductions (register) for a
partnership, only those deductions that are attributable to the
partners covered by the election are to be taken into account.
Meaning of car parking availability period
"89GD. The car parking availability period is the period:
(a) beginning on the first parking day for the taxpayer or a partner
covered by the election (as the case requires) in that year of income;
and
(b) ending on the last parking day for the taxpayer or a partner
covered by the election (as the case requires) in that year of income.
Choosing the 12 week period for a register
"89GE.(1) The register must be kept for a continuous period of at
least 12 weeks.
"(2) The period over which the register is kept must be
representative of usage for the first year of income for which it is
valid.
"(3) If subsection (1) or (2) is not satisfied, the register is not
valid.
Years of income for which register is valid
12 week period in one year of income
"89GF.(1) If the 12 week period begins and ends in the one year of
income, the register is valid for that year of income and, subject to
subsections (3), (4) and (5), for each of the 4 years of income
immediately following that year.
12 week period over two years of income
"(2) If the 12 week period begins in one year of income and ends in
another year of income, the register is only valid for the second year
of income and, subject to subsections (3), (4) and (5), for each of the
4 years of income immediately following that year.
When register ceases to be valid
"(3) A register that is valid for a year of income ceases to be valid
at the end of that year if before the end of that year of income, the
Commissioner gives the taxpayer a notice advising the taxpayer that the
register will cease to be valid at the end of the year of income.
Note: This means that if the Commissioner notifies the taxpayer, the
taxpayer will have to keep a new register in the following year of
income if the taxpayer wants to use this method.
"(4) A register kept by a taxpayer other than a partnership that is
valid for a year of income ceases to be valid if there is a later valid
register for that year.
"(5) A register kept by a taxpayer that is a partnership that is
valid for a year of income ceases to be valid if there is a later valid
register for that year of income that covers the same partners.
Matters to be included in register
"89GG.(1) The register must include the following details:
(a) the date on which each car covered by subsection (4) was parked;
(b) whether the car was parked for a total that exceeds 4 hours;
(c) whether the car was used in connection with travel by a person
between his or her place of residence and his or her primary place of
self-employment on that day;
(d) the place where the car was parked.
"(2) The person responsible for making entries in the register must
make the entry as soon as practicable after he or she knows the details
required by subsection (1).
"(3) If subsection (1) or (2) is not satisfied, the register is not
valid.
"(4) A car is covered by this subsection if the car was used in
connection with travel by the taxpayer, or a partner covered by the
election, between his or her place of residence and his or her primary
place of self-employment on any day in the 12 week period.
Fraudulent entries invalidate register
"89GH. For the purposes of this Act, a register is not valid if the
register contains an entry that is false or misleading in a material
particular.
"Subdivision H-Special provisions
Anti-avoidance-commercial parking stations
"89H. If either or both of the following apply:
(a) a transaction between the operator of a commercial parking
station and a customer is not at arm's length;
(b) the operator of a commercial parking station sets the level of a
fee for the sole or dominant purpose of enabling one or more taxpayers
to avoid, in whole or in part, the application of this Division;
then, for the purposes of this Division:
(c) if only paragraph (a) applies-it is to be assumed that the fee is
the fee that would have been payable if the operator and the customer
had been dealing with each other at arm's length in relation to the
transaction; and
(d) if only paragraph (b) applies-it is to be assumed that the fee is
the fee that would have been payable if it had been set without that
purpose in mind; and
(e) if both paragraphs (a) and (b) apply-it is to be assumed that the
fee is the fee that would have been payable if:
(i) the operator and the customer had been dealing with each other
at arm's length in relation to the transaction; and
(ii) it had been set without that purpose in mind.
Anti-avoidance-fee on first business day after 31 March not
representative
"89HA. For the purposes of paragraph 89AB(4)(d), any fee on the first
business day after 31 March in a year that is not representative is
taken to be more than $5.00.
"Subdivision J-Interpretation
When a commercial parking station is within 1 km
"89J. A commercial parking station is taken to be located within a 1
km radius of particular parking premises if, and only if, a car
entrance to the commercial parking station is situated less than 1 km,
by the shortest practicable route, from a car entrance to those
premises.
Daily rate equivalent for periodic parking arrangements
"89JA. If the operator of a commercial parking station provides
all-day parking in the ordinary course of business to members of the
public on a weekly, monthly, yearly or other periodic basis, the
operator is taken to charge a fee for all-day parking on a particular
day during the period equal to the amount worked out using the formula:
Total fee
Number of business days in period
where:
Total fee is the total fee charged by the operator in respect of
all-day parking on days in that period.
When fees are not representative
"89JB. A fee charged by an operator of a commercial parking station
on a particular day is not representative if the fee is substantially
greater or less than the average of the lowest fee charged by the
operator in the ordinary course of business to members of the public
for all-day parking on each of the days in whichever of the following
periods is chosen by the taxpayer:
(a) the 4 week period beginning on the day; or
(b) the 4 week period ending on the day.
Definitions
"89JC. In this Division:
all-day parking has the same meaning as in the Fringe Benefits Tax
Assessment Act 1986.
business day has the same meaning as in the Fringe Benefits Tax
Assessment Act 1986.
car has the same meaning as in the Fringe Benefits Tax Assessment Act
1986.
commercial parking station has the same meaning as in the Fringe
Benefits Tax Assessment Act 1986.
daylight period has the same meaning as in the Fringe Benefits Tax
Assessment Act 1986.
expenditure does not include expenditure of a capital nature.
income-producing activity, for a person, means an activity (including
an investment activity) carried on for the purpose, or purposes that
include the purpose, of producing:
(a) in any case-assessable income (other than salary or wages) of the
person of any year of income; or
(b) if the person is a partner in a partnership-assessable income of
the partnership of any year of income; or
(c) if the person is the trustee of a trust estate-assessable income
of the trust estate of any year of income.
place of residence has the same meaning as in the Fringe Benefits Tax
Assessment Act 1986.
primary place of self-employment, for a person on a day, means premises
where:
(a) if the person carried on income-producing activities on that day-
on that day; or
(b) in any other case-on the most recent day before that day on which
the person carried on income-producing activities;
those premises are or were the sole or primary place from which, or at
which, the person carried on income-producing activities.
salary or wages has the same meaning as in section 221A.".
Division 2-Consequential amendments