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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

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Edited version of your written advice

Authorisation Number: 1012792790026

Ruling

Question 1

Will a car parking benefit as defined in subsection 39A(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) arise when an employee parks his or her car in the staff car park for at least four hours?

Answer

Yes

Question 2

If the answer to 1 is yes, will the car parking benefit be included in the calculation of the employer's aggregate non-exempt amount?

Answer

No

Question 3

If the answer to question 1 is no will the benefit that arises from the parking be included in the calculation of the employer's aggregate non-exempt amount?

Answer

Not necessary to answer as the answer to question 1 is yes.

This ruling applies for the following period:

Year ending 31 March 2015

The scheme commences on:

1 April 2014

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

The employer is a public hospital.

The employer provides car parking facilities to its employees in a parking facility located at the business premises.

There are a number of car parking facilities located within a 1km radius of the parking facility used by the employees that are open to the public - car parks A, B and C.

Car park A is a multi-storey car park located on the employer's business premises and is operated by the employer.

The carpark charges an hourly rate and is capped at $ for all day parking.

Car park B is a multi-storey located next to the main shopping centre.

It has as an early bird daily rate available to anyone parking on various levels before 11 am). Otherwise, the first two hours are free, after which a hourly rate applies with a daily cap of $.

Car park C is a single level sealed car park with boom gates located across the road from the business premises. It charges an hourly rate for the first hour and $ per hour afterwards and is capped at $ for all day parking.

The cars that are parked in the employer's parking facility are either held by the employees or salary packaged by the employees.

The cars are parked near the employees' usual place of employment.

The cars are used by the employees to travel to and from work and are parked for more than four hours between the hours of 7am and 7pm.

The employees will enter into an effective salary sacrifice arrangement to pay for the cost of the car parking from pre-tax salary. The fees charged will be based on the days the car parking facilities are used.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 section 39,

Fringe Benefits Tax Assessment Act 1986 section 39A,

Fringe Benefits Tax Assessment Act 1986 section 58G and

Fringe Benefits Tax Assessment Act 1986 section 5B.

Reasons for decision

1. Will a car parking benefit as defined in subsection 39A(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) arise when an employee parks his or her car in the staff car park for at least four hours?

Subsection 39A(1) of the FBTAA provides that a car parking benefit will arise when the specified conditions are met.

Relevantly, paragraph 39A(1)(a) provides the following conditions:

For the purpose of this ruling it is assumed the car parking is provided on the employers business premises and the conditions in paragraphs 39A(1)(b) to (h) are met.

Therefore, to determine whether a car parking benefit will arise when an employee parks his or her car in the staff carpark for at least four hours it is necessary to consider the following questions:

(a) Is at least one of the three identified parking facilities a commercial parking station?

A commercial parking station is defined in subsection 136(1) of the FBTAA as:

In considering the application of the definition of commercial parking station it is necessary to determine whether the parking facility:

Guidance for considering each of these issues is provided in Taxation Ruling TR 96/26 Fringe benefits tax: car parking fringe benefits.

Are the parking facilities a permanent parking facility?

The Explanatory Memorandum to Taxation Laws Amendment (Car Parking) Bill 1992 (Explanatory Memorandum) stated the word 'permanent' has its normal dictionary meaning. It also provided several examples including a car park set up for a short period to cater for a special function (like an Easter Show) which it stated would not be permanent.

Further examples are provided in paragraph 81 of TR 96/26 which states that the following examples are regarded as not constituting commercial parking stations:

The Macquarie on line dictionary defines permanent to mean:

In applying this definition and the examples it is accepted that each of the parking facilities are permanent as they are established car parks with the relevant infrastructure for collecting fees that are operated on an ongoing basis into the foreseeable future.

Are the parking facilities commercial facilities?

The term 'commercial' is not defined in the FBTAA. The Explanatory Memorandum to Taxation Laws Amendment (Car Parking) Bill 1992 (Explanatory Memorandum) stated the word 'commercial' has its normal dictionary meaning. As an example of a parking facility that would not be regarded as a commercial facility it stated that a car parking facility that is not run with a view to making a profit (usually reflected in significantly lower car parking rates charged compared with normal market value for that facility) would not be commercial.

This example was also provided in paragraph 81 of TR 96/26 which provided the following example of a parking facility that would not be regarded as being commercial:

As is relevant, commercial is defined in the Macquarie on-line Dictionary as follows:

adjective

In applying this definition and the examples it is accepted that each of the parking facilities are commercial as the fees charged cannot be considered to be nominal and are reflective of the fees that would be charged by a car parking facility that is operated on a commercial basis.

Do the parking facilities provide car parking spaces in the ordinary course of business to members of the public for all-day parking on payment of a fee?

Each of the parking facilities provide car parking spaces that can be used on payment of a fee.

Are the car parking spaces provided in the ordinary course of business?

In considering whether these spaces are provided in the ordinary course of business, the definition of business operations in subsection 136(1) provides that business operations in relation to a government body or a non-profit company includes any operations or activities carried out by that body or company.

In applying this definition it is accepted that the car parking spaces are offered as part of the day to day operations or activities carried out by the car park operators.

Are the car parking spaces provided to members of the public?

The circumstances in which a parking facility will be considered to provide car spaces to members of the public was considered by the Full Federal Court in FC of T v Qantas Airways Ltd [2014] FCAFC 168; 2014 ATC 20-477 (Qantas).

In its submission to the Court, Qantas submitted the meaning of public was to be understood as being the public including persons commuting between home and work and not some broader public constituted by anyone using an airport parking station, such that the airport parking stations should be disregarded because employees did not use them.

The Court held that the word public should be given its ordinary meaning and that there is no rationale for imputing into the definition a requirement that a commercial parking station be one that employees of the employer commuting to work by car would or could in fact use.

The ordinary meaning of public is discussed in paragraphs 19 to 21 of Taxation Ruling TR 2000/10 Income tax: public libraries, public museums and public art galleries. At paragraphs 19 and 20 TR 2000/10 refers to the decision In re Income Tax Acts ( No 1 ) [1930] VLR 211.

Paragraphs 19 and 20 of TR 2000/10 state:

Paragraph 81 of TR 96/26 provides the following examples of parking arrangements that are not considered to be made available to members of the public:

In applying this discussion, it is accepted that each of the parking facilities are available to be used by the public at large.

Are spaces available for all-day parking?

Subsection 136(1) defines all-day parking to mean:

A daylight period is so much of a period as occurs after 7 a.m. and before 7 p.m.

The Explanatory Memorandum to Taxation Laws Amendment (Car Parking) Bill 1992 (Explanatory Memorandum) provides the following example of a parking arrangement that will not constitute a commercial parking station as it does not provide all-day parking:

This example is also included in paragraph 81 of TR 96/26.

In applying the definition and example, all of the parking facilities provide all-day parking to members of the public as they all have spaces that are available for anyone to park for at least six hours between 7 a.m. and 7 p.m. and there are no factors that indicate that all-day parking is discouraged.

Are the parking facilities on a public street, road, lane, thoroughfare or footpath?

The parking facilities are not a parking facility on a public street, road, lane, thoroughfare or footpath.

Conclusion

Each of the three parking facilities are a commercial parking station.

(b) Does the identified commercial parking station charge more than the car parking threshold for all-day parking?

The car parking threshold for the year ended 31 March 2015 is less than $10.00. The lowest fee charged for all-day parking in carparks A and C is above this amount.

Conclusion

A car parking benefit as defined in subsection 39A(1) will arise when an employee parks his or her car in the staff car park for at least four hours as there are two commercial parking stations located within a one kilometre radius of the premises on which the car is parked that charge more than the car parking threshold for all-day parking.

2. If the answer to 1 is yes, will the car parking benefit be included in the calculation of the employer's aggregate non-exempt amount?

As the employer is a public hospital the car parking benefit will be an exempt benefit under subsection 57A(3) of the FBTAA.

However, the employer will be liable to pay fringe benefits tax on the employer's aggregate non-exempt amount.

The method for calculating the employers aggregate non-exempt amount is provided in subsections 5B(1E) to 5B(1L) of the FBTAA. Fringe benefits that are car parking fringe benefits are excluded from this calculation by step 1 of the method statement in subsection 5B(1L).

Therefore, the car parking benefits that arise when an employee parks his or her car in the staff car park for at least four hours will not be included in the calculation of the employer's aggregate non-exempt amount.


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