Edited version of your private ruling

Authorisation Number: 1012456066252

Ruling

Subject: Car parking fringe benefit

Question 1

Can and internet early bird rate be used as the lowest fee in determining the taxable value of a car parking fringe benefit under section 39C of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

Answer

Yes

This ruling applies for the following periods:

1 April 2012 - 31 March 2013

The scheme commences on:

1 April 2012

Relevant facts and circumstances

· The company provides a car parking facilities to its employees.

· There is a car parking station (CPS) located within 1 km of the company's car parking facility

· The CPS provides internet early bird rates, early bird rates and normal rates.

· Internet early bird rates:

o The internet early bird rates provide low all-day fees if booked thought an online facility.

o The internet early bird rate is available Monday to Friday for one entry and one exit.

o Bookings are made in advance

o Entry to the car park must be made at the prearranged entry and exit time. However, there is a one hour grace period.

o Bookings must be paid with a credit card and it is this credit card that is used to gain entry into the car park.

o Upon entry the car park, patrons can park in any available bay in the car park except those bays marked with a reserved sign, disabled parking bay or loading docks.

o The internet early bird rate is above the car parking threshold.

· The company uses the commercial car parking station method to calculate the taxable value of its car parking fringe benefit.

· In respect of the car parking facilities provided by the company:

o The car is parked at premises that are owned or leased by or otherwise under the control of the provider.

o A commercial car parking station is located within 1km of the employer-provided parking facility

o The lowest fee charged in the ordinary course of business to members of the pubic for all day parking by a commercial car parking station exceeds the car parking threshold figure.

o The car is parked for a total of more than 4 hours between the hours of 7am and 7pm

o The car is owned by, leased to, or otherwise under the control of the employee or associate or it s provided by the employer or associate of the employer

o The parking is provided in respect of the employee's employment

o On that day, the employee has a primary place of employment

o The car is used by the employee to travel between place of residence and primary place of employment at least once that day

o The CPS is within 1 km of the company's parking facility.

· The CPS does not fall under one of the categories below:

o Car parking facilities with a primary purpose other than providing all day parking, that usually charge penalty rates significantly higher than the rates chargeable for all day parking at commercial all-day parking facilities

o A car park that is not run with a view to making a profit or which charges a nominal fee (usually significantly lower rate than the current market value), e.g. an all day parking fee of less than $2 is likely to be a nominal fee

o Car parking that is established for a short period to cater for a special function

o Car parking spaces leased to a tenant by a property developer as part of an overall lease agreement for business premises.

o Parking facilities provided by a sporting venue to persons associated with the venue where:

§ Parking facilities are usually available after 5pm to coincide with night events

§ Parking is only available for a specific event and the event is a daytime event

§ Parking is available to all members of the public only during sporting events

provided that, when there is no such event, the parking facilities are not usually available to members of the public;

o parking provided by a business for its own employees and those of a nearby business, but to no other person, if there is no commercial car park within 1 km;

o in an area without a commercial parking station and where street parking is not permitted, arrangements made by a business for its employees to park during business hours in yards and driveways of surrounding houses;

o a kerb side parking meter, from the FBT year commencing 1 April 1994, even where it is possible to purchase all-day parking at the meter in a single transaction.

· The CPS satisfies the following:

o it is a permanent facility as it is intended to function indefinitely

o it provides all day parking that is available in the ordinary course of business to members of the public

o it is run with a view to make a profit.

o It is not on a public street, road, lane thoroughfare or footpath

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 section 39C

Fringe Benefits Tax Assessment Act 1986 subsection 136(1)

Fringe Benefits Tax Assessment Act 1986 subsection 39A(1)

Reasons for decision

The term 'benefit' in subsection 136(1) of the FBTAA includes any right (including a right in relation to, and an interest in, real or personal property, privilege, service or facility and, without limiting the generality of the foregoing includes a right, benefit, privilege, service or facility that is, or is to be, provided under:

a) An arrangement for or in relation to:

i. The performance of work (including work of a professional nature) whether with or without the provision of property

ii. The provision of or of the use of facilities for, entertainment, recreation or instruction; or

iii. The conferring of rights, benefits or privileges for which remuneration is payable in the firm of a royalty, tribute, levy or similar exaction.

b) A contract of insurance

c) An arrangement for or in relation to the lending of money.

In this case, the company is providing its employees with car parking facilities. This is considered to fall under the definition of a 'benefit' above.

Under subsection 39A(1) of the FBTAA, a benefit is a car parking fringe benefit if it satisfies the following requirements:

39A(1) [Provision of car parking facilities]

If the following conditions are satisfied in relation to a daylight period, or a combination of daylight periods, on a particular day:

(a) during the period or periods, a car is parked on one or more premises of a person (the ``provider''), where:

(i) the premises, or each of the premises, on which the car is parked are business premises, or associated premises, of the provider; and

(ii) a commercial parking station is located within a 1 km radius of the premises, or each of the premises, on which the car is parked; and

(iii) 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 FBT year is more than the car parking threshold;

(b) the total duration of the period or periods exceeds 4 hours;

(c) any of the following applies:

(i) a car benefit relating to the car is provided on that day to an employee or an associate of an employee in respect of the employment of the employee;

(ii) the car is owned by, or leased to, an employee or an associate of an employee at any time during the period or periods;

(iii) the car is made available to an employee or an associate of an employee at any time during the period or periods by another person, where:

(A) the other person is neither the employer of the employee nor an associate of the employer of the employee; and

(B) the other person did not make the car available under an arrangement to which the employer of the employee, or an associate of the employer of the employee, is a party;

(d) the provision of parking facilities for the car during the period or periods is in respect of the employment of the employee;

(e) on that day, the employee has a primary place of employment;

(f) during the period or periods, the car is parked at, or in the vicinity of, that primary place of employment;

(g) on that day, the car is used in connection with travel by the employee between:

(i) the place of residence of the employee; and

(ii) that primary place of employment;

(h) the provision of parking facilities for the car during the period or periods is not taken, under the regulations, to be excluded from this section;

(i) the day is on or after 1 July 1993;

In response to each of the above criteria the benefit satisfies the requirements of a car parking fringe benefit in subsection 39A(1) of the FBTAA. Therefore, the company's provision of car parking facilities is a car parking fringe benefit.

There are three methods used to work out the taxable value of a car parking fringe benefit. The company has indicated that it will use the 'commercial car parking station' method in section 39C of the FBTAA.

Section 39C of the FBTAA states:

Subject to this Part, the taxable value, in relation to an FBT year, of a car parking fringe benefit provided on a day in the FBT year in connection with one or more premises is equal to:

a. If, on that day, there is only one commercial parking station located within a 1km radius of any of those premises the lowest fee charged by the operator of the parking station in the ordinary course of business to members of the public for all-day parking on that day; or

b. If, on that day, there are 2 or more commercial parking station located within a 1km radius of any of these premises - the lowest fee charged by any of the operators of those parking stations in the ordinary course of business to members of the public for all day parking on that day;

reduced by the amount of the recipients contribution.

The CPS is located within a 1km radius of the company's car parking facility. However, in order to determine whether the internet early bird rates are able to be used as the lowest fee for all-day parking, the CPS must be a 'commercial parking station'.

Subsection 136(1) of the FBTAA defines a 'commercial parking station' to mean:

a permanent commercial car parking facility where any or all of the car parking spaces are available in the ordinary course of business to members of the public for all-day parking on that day on payment of a fee, but does not include a parking facility on a public street, road, lane, thoroughfare or footpath paid for by inserting money in a meter or by obtaining a voucher.

Paragraph 81 of Taxation Ruling TR 96/26 Fringe benefits tax: car parking fringe benefits states that the following parking arrangements are not considered to constitute commercial parking stations:

81. We do not regard the following parking arrangements as constituting commercial parking stations:

· car parking facilities, with a primary purpose other than providing all-day parking, that usually charge penalty rates significantly higher than the rates chargeable for all-day parking at commercial all-day parking facilities (such as parking provided for short term shoppers or hotel guests);

· a car park that is not run with a view to making a profit or which charges a nominal fee (usually a significantly lower rate than the current market value), e.g., an all-day parking fee of less than $2.00 is likely to be a nominal fee;

· car parking that is established for a short period to cater for a special function;

· car parking spaces leased to a tenant by a property developer as part of an overall lease agreement for business premises;

· parking facilities provided by a sporting venue to persons associated with the venue where:

(a) parking facilities are usually available only after 5 pm to coincide with night events; or

(b) parking is available only for a specific event, and the event is a daytime event; or

(c) parking is available to all members of the public only during sporting events; and

(d) provided that, when there is no such event, the parking facilities are not usually available to members of the public;

· parking provided by a business for its own employees and those of a nearby business, but to no other person, if there is no commercial car park within 1 km;

· in an area without a commercial parking station and where street parking is not permitted, arrangements made by a business for its employees to park during business hours in yards and driveways of surrounding houses;

· a kerb side parking meter, from the FBT year commencing 1 April 1994, even where it is possible to purchase all-day parking at the meter in a single transaction.

From the information submitted by the applicant, CPS is a permanent car parking facility that provides all-day parking to the public for a fee. Further, CPS does not fall under one of the car parking arrangements in paragraph 81 of TR 96/26. Therefore CPS is considered to be a commercial car parking station under subsection 136(1) of the FBTAA.

In respect of early bird fees, paragraph 43 of TR 96/26 states that the lowest fee may include a fee which a commercial station charges for bona fide early bird parking or car 'pooling' arrangements where a reasonable number of parking spaces are set aside for those purposes.

In this case, the CPS provides internet early bird rates, early bird rates and normal parking rates. The internet early bird rates provide the lowest fees for all-day parking. The conditions to access the internet early bird rate of $X a day are that:

· Bookings are made online in advance

· The booking is available for Monday to Friday only

· The booking only allows one entry and one exit

· Entry to the car park must be made at the pre-booked time and exit at the pre-booked time. However, a 1hr grace period is allowed.

· Patrons are able to park in any bay except reserved and disabled bays and loading docks.

It is considered that the early bird rate is a bona fide early bird rate within the meaning of paragraph 43 of TR 96/26. The rate is available to members of the public and there is a reasonable amount of parking available for this purpose.

Therefore, CPS's internet early bird rate can be used as the lowest fee in calculating the taxable value of the company's car parking fringe benefit under section 39C of the FBTAA.

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