Edited version of your written advice

Authorisation Number: 1012930079662

Date of advice: 18 December 2015

Issue 1 - Laptop computers and desktop computers

Question 1a - Scenario 1

Is the employee provided an expense payment fringe benefit under section 20 of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) at the time when the employer approves his or her application, that is, on 31 March 20XX?

Answer

No.

Question 1b - Scenario 2

Is the employee provided an expense payment fringe benefit under section 20 of FBTAA at the time when the employer receives the computers from the computer company, that is, on 1 April 20XX?

Answer

No.

Question 1c - Scenario 3

Is the employer entitled to a refund of expense payment fringe benefits under section 20 of FBTAA at the time when the employee agrees to return the computer and refunds the internet expenses to the employer?

Answer

The provision of the computer will be a property fringe benefit which will have a nil taxable value if the computer has the same value on the date it is returned as it had on the date it was provided to the employee.

If the FBT assessment of the employer included an expense payment fringe benefit in relation to the computer, an objection or an amendment request can be lodged to the assessment.

Question 1d - Scenario 3

Can the employer change the employee's reportable fringe benefits amount that relates to the computer detailed in scenario 3 to zero under section 135P of the FBTAA?

Answer

If an amount has been included in the employee's reportable fringe benefits amount in relation to the expense payment fringe benefit referred to in question 1c, the reportable fringe benefits tax amount should be amended to reflect the amount included in the amended assessment.

Issue 2 - car parking

Question 2a

Is carpark 1 a "commercial parking station" that is located within 1 kilometre of the employer under section 39(A) of the FBTAA?

Answer

Yes

Question 2b

Is carpark 2 a "commercial parking station" that is located within 1 kilometre of the employer under section 39(A) of the FBTAA?

Answer

Yes

Question 2c

Is $ a daily equivalent parking rate for the carpark 1?

Answer

Yes

Question 2d

Is the early bird parking rate of $X at carpark 2 available to members of the public for all-day parking?

Answer

Yes

Question 2e

Is the $X evening rate of the carpark 3, a rate for all-day parking?

Answer

No

Question 2f

Is $X a daily equivalent parking rate for carpark 4?

Answer

Yes

Question 2g

Will a car parking fringe benefit arise under section 39A of the FBTAA during the year ending 31 March 20XX if parking is provided within one kilometre of the business?

Answer

No

Question 2h

Is $X the daily equivalent parking rate for the car park 5?

Answer

Yes

Issue 3 - Cars

Question 3a

Is Vehicle 1 considered a 'car' in line with the definition of a car in subsection 136(1) of the FBTAA?

Answer

No

Question 3b

Is Vehicle 2 considered a 'car' in line with the definition of a car in subsection 136(1) of the FBTAA?

Answer

Yes

Question 3c

Will the home to work travel in the Vehicle 2 be an exempt fringe benefit under sub-section 8(2) of the FBTAA?

Answer

The car benefits that arise from the home garaging and the home to work travel will be an exempt benefit if any other private use is minor, infrequent and irregular.

Question 3d

Are the journeys between home and work of an employee whilst on call considered to be business journeys for the purpose of calculating the taxable value of a car fringe benefit under section 10 of the FBTAA?

Answer

Yes

Issue 4 - salary packaged car

Question 4

In relation to the scenario, for the purposes of the application of the Statutory Formula method, is the time that the car is first held the date on which the employee transferred to a new job with the employer?

Answer

No

Issue 5 - Interstate transfer

Question 5

Will the employer be liable to pay fringe benefits tax on the benefits provided to the employee during the twelve month period in which the employee is employed by interstate?

Answer

No

This ruling applies for the following periods:

Year ended 31 March 2016

Year ended 31 March 2017

Year ended 31 March 2018

Year ended 31 March 2019

Year ended 31 March 2020

The scheme commences on:

1 April 2015

Relevant facts and circumstances

Laptop computers and desktop computers

Under the industrial award, employees are entitled to either a desktop computer or laptop computer every five years.

When an employee has been transferred to a remote area for more than six weeks, he or she is entitled to apply for a desktop or laptop computer. These computers are used solely for personal use with the objective that the employees can work in the country for longer periods of time.

To apply for a computer the procedure is:

1. Employee completes the application form

2. Employee's Manager approves the form

3. The form is emailed to the Unit

4. The Unit approves the form.

5. The Unit sends the form to another Unit.

6. The Unit asked a private computer company to deliver the computer to the employee in the country area; however, the delivery company is now out of business.

As a result of the previous delivery company is now out of business, the new procedures for delivery of the computers are:

1. The employer requests a salesperson at the private computer company to provide a quotation for the computers. The employer orders the computers on bulk.

2. The employer receives the quotation and processes it as a purchase order in the employer's accounting software system.

3. The computers are delivered to the employer.

4. After delivery, the employer pays the computer company, cancels the purchase order in the accounting software system and stores the computers in the Unit.

5. Once an employee's application is approved, the computer is sent to the employee's work location.

The employer has been including the computers in its Fringe Benefits Tax returns and the computers are also a component of the employees' reportable fringe benefits.

Three scenarios have been proposed as part of the ruling application:

Scenario 1:

Assume that the employer has sufficient laptop and desktop computer stock to deliver a computer to an employee:

25 March: An employee provides a completed computer application to his or her Manager.

30 March: Manager approves the computer application.

31 March: Unit approves the application.

1 April: Unit dispatches the computer to the employee.

The employee is entitled to the computer on the date that the Unit approves the application.

Scenario 2:

The new company is very slow to provide the employer with the quotation. As the new company needs to contact various computer suppliers it might take several months before it can provide the employer with a quotation.

Assume the computer company cannot give the employer a quotation for the computers within the required timeframe and the employer does not have any computers in storage:

25 March: An employee provides a completed computer application to his or her Manager.

30 March: Manager approves the computer application.

31 March: Unit approves the application.

1 April: Unit receives the computer from the computer company.

2 April: Unit dispatches the computer to the employee.

The employee is entitled to the computer on the date that the Unit approves the application.

Scenario 3:

On 31 March, the employer gives an employee a desktop computer and pays the internet expenses. Both the computer and internet expenses are used solely for personal use.

On 2 April, the employer's internal audit department advises that the employee is not entitled to the benefits due to changes in the industrial award.

The employee returns the computer and reimburses the internet expenses to the employer.

Car parking

The car parks are:

• Carpark 1 (5 days early pass of $X which is equivalent to $X per day)

• Carpark 2 (rate of $X)

• Carpark 3 (Monday to Friday evening rate 3pm to 6am flat rate of $X)

• Carpark 4 (monthly unreserved $X Equivalent parking rate is $X)

• Business (first two hours free, five to six hours $X)

• Carpark 5 ($X per year Monday to Friday. Equivalent parking rate is $X per day)

The employer has workstations at the following locations:

• Location A

• Location B

• Location C

The employer has two offices within one kilometre of a Carpark.

All car parks near the business have been providing free car parking to the public; however, a few months ago, the business started offering car parking for a fee to the public. The business leases their car park from the Council.

In your response to the request for further information, you have advised that:

• the operating hours of the business car park is from 7:00 am to 3:00 am the following day.

Therefore the car park is closed from 3:00 am to 7:00 am daily.

• There is no limit in the number of car parking bays available to the public.

• If a non-member parks his or her car in the business for six hours, the relevant fee is $X. After six hours the non-member needs to pay an additional $X for every hour thereafter.

Vehicle 1,Vehicle 2 and cars

Vehicle 1 has been used by employees.

Details of this vehicle were provided.

Under the employer's policy there is no home garaging.

Vehicle 2

Vehicle 2 has been used by other employees.

Details of this vehicle were provided.

The employees have only been using the vehicle for the following journeys:

• Home and workplaces; and

• Office and workplaces to perform duties of employment.

Cars

Equipment has been installed or placed inside these cars and the total value of the equipment is more than the value of the car itself:

Under the employer's car policy, employees can use these vehicles only for the following two journeys:

• Workplaces and home for on-call purposes

• Office and workplaces to perform duties of employment

Salary packaged cars

The government has outsourced its salary-packaged cars function for non-executive employees to private companies.

The following scenario has been provided:

On 27 May 2013, employee X commenced a salary packaged car arrangement with an associate of the employer.

On 2 April 2015, employee X transferred to a new job with Employer. He or she continues the salary packaged car arrangement.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 section 7

Fringe Benefits Tax Assessment Act 1986 section 9

Fringe Benefits Tax Assessment Act 1986 subsection 10(2)

Fringe Benefits Tax Assessment Act 1986 section 20

Fringe Benefits Tax Assessment Act 1986 section 31

Fringe Benefits Tax Assessment Act 1986 section 39A

Fringe Benefits Tax Assessment Act 1986 section 39B

Fringe Benefits Tax Assessment Act 1986 section 39DA(3)

Fringe Benefits Tax Assessment Act 1986 section 39E

Fringe Benefits Tax Assessment Act 1986 section 45

Fringe Benefits Tax Assessment Act 1986 Subsection 47(6)

Fringe Benefits Tax Assessment Act 1986 section 135

Fringe Benefits Tax Assessment Act 1986 subsection 136(1)

Fringe Benefits Tax Assessment Act 1986 subsection 162

Income Tax Assessment Act 1997 section 8-1

Income Tax Assessment Act 1997 subsection 995-1(1)

Reasons for decision

Ruling

Subject: Fringe Benefits Tax

Issue 1 Question 1a

Detailed reasoning

An expense payment benefit will arise under section 20 when a provider:

• makes a payment that discharges the whole or part of an obligation of the recipient to pay an amount to a third person; or

• reimburses the recipient the whole or part of an amount of expenditure incurred by the recipient.

Under the arrangement the employer will provide its employees with a desktop or laptop computer. As this does not involve a payment or reimbursement of expenditure incurred by the employee, the benefit is not an expense payment benefit.

Rather, the benefit will be a property benefit which is a benefit referred to in section 40 of the FBTAA:

Where, at a particular time, a person (in this section referred to as the provider) provides property to another person (in this section referred to as the recipient), the provision of the property shall be taken to constitute a benefit provided by the provider to the recipient at that time.

Subsection 136(1) of the FBTAA defines 'provide' to mean:

a) in relation to a benefit - includes allow, confer, give, grant or perform; and

(b) in relation to property - means dispose of (whether by sale, gift, declaration of trust or otherwise):

(i) if the property is a beneficial interest in property but does not include legal ownership - the beneficial interest; or

(ii) in any other case - the legal ownership of the property.

In applying this definition, a property benefit will arise on the date that legal ownership of the computer is provided to the employee.

Issue 1 Question 1b

Detailed reasoning

The benefit provided is a property benefit. Under section 40 of the FBTAA a property benefit arises when the legal ownership is provided to the employee.

Please refer to Question 1a above for the analysis of the relevant legislation which is also applicable to scenario 2.

Issue 1 Question 1c

Detailed reasoning

In scenario 3, the employer provides the legal ownership of the computer to the employee on 31 March. On 2 April, the internal audit department advises the employee was not entitled to receive the benefit and the employee returns the computer. At the time the computer is returned, the employee reimburses the cost of the employer for the internet expenses that arose from the use of the computer.

As the computer was originally purchased by the employer under an arm's length transaction, the taxable value of the fringe benefit under paragraph 43(a) of the FBTAA is the cost price of the computer less the amount of the recipient's contribution.

Subsection 136(1) defines recipients contribution to mean:

the amount of any consideration paid to the provider or to the employer by the recipient or by the employee in respect of the provision of the recipients parking, the recipients property, the recipients benefit or the recipients meal, as the case may be, reduced by the amount of any reimbursement paid to the recipient in respect of that consideration

The consideration provided is the return of the computer and the payment of the internet expenses. Section 145 of the FBTAA deals with a situation where consideration is not in cash. Section 145 states:

For the purposes of this Act, where, upon any transaction, any consideration is given by way of the provision of property (other than money), the money value of that consideration shall be deemed to have been paid or given.

In applying this section, the consideration provided by the employee is the value of the computer and the amount paid for the internet usage.

Where the value of the computer did not change between the dates on which it was provided to the employee and returned by the employee, the taxable value will be nil.

Issue 1 Question 1d

Detailed reasoning

In general terms an employee's reportable fringe benefits amount is the grossed up value of the employee's share of the employer's fringe benefits.

If an employee receives a fringe benefit that has a nil taxable value, no amount will be included in the employee's reportable fringe benefits amount.

Therefore, if an amount has been included in the employee's reportable fringe benefits amount in relation to the expense payment fringe benefit referred to in question 1c, the reportable fringe benefits tax amount should be amended to reflect the amount included in the amended assessment.

Issue 2 Question 2a

Detailed reasoning

Section 39A of the FBTAA provides that car parking benefits arise when several conditions are satisfied. These conditions, in relation to daylight or a combination of periods on a particular day can be summarised as follows:

• A car must be parked on the premises of the provider where the following conditions are satisfied:

• the premises are business premises

• a commercial parking station is located within a 1 kilometre radius of the premises on which the car is parked

• the lowest fee charged by any commercial parking station is more than the car parking threshold

• the total duration of the period exceeds 4 hours

• a car benefit is provided or leased to, or a car is owned by, an employee (or associate)

• the provision of parking facilities is in respect of the employment of the employee

• during the period or periods, the car is parked at or in the vicinity of the primary place of employment

• the car is used for the employee's travel between his or her place of residence and primary place of employment.

'Commercial parking station' is defined in section 136 of the FBTAA as:

in relation to a particular day, means 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.

For the purposes of section 39A, a parking facility will be a commercial parking station where it meets this definition.

The terms 'all-day parking' and 'daylight period' are defined in subsection 136(1) of the FBTAA as follows:

all-day parking , in relation to a particular day, means parking of a single car for a continuous period of 6 hours or more during a daylight period on that day.

daylight period , in relation to a day, means so much of a period on that day as occurs:


(a) after 7 a.m. on that day; and


(b) before 7 p.m. on that day.

The term 'permanent' is not defined in the FBTAA and therefore takes it normal dictionary meaning.

The term 'commercial is not defined in the FBTAA. In the Explanatory Memorandum (EM) to the Taxation Laws Amendment (Car Parking) Bill 1992, the term 'commercial parking station' is addressed as part of the explanation of proposed amendments. According to the explanation:

• the word 'commercial' takes its normal dictionary meaning

• 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, and

• short term shopper parking facilities that charge penalty rates to discourage all-day parking are not treated as commercial parking stations.

The Macquarie Dictionary defines commercial to mean:

1. of, or of the nature of, commerce.

2. engaged in commerce.

3. capable of returning a profit: a commercial project.

4. capable of being sold in great numbers: is the invention commercial?

In relation to the third definition of commercial, namely being 'capable of returning a profit', paragraph 81 of Taxation Ruling TR 96/26 Fringe benefits tax: car parking fringe benefits (TR 96/26) sets out the parking arrangements which do not constitute 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 $X2.00 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

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 kilometre;

• 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.

The phrase 'car parking spaces are available in the ordinary course of business to members of the public for all-day parking' means that where there are no restrictions to prevent members of the public from parking in the relevant car park, car parking spaces will be available in the ordinary course of business to members of the public.

The EM states that 'some car parking facilities have a primary purpose of providing short term shopper parking', the EM goes on to discuss that such facilities use penalty rates to discourage all-day parking. Penalty rates are described in the EM to be rates 'significantly greater than the rates that would be charged by a similar facility that encouraged all-day parking'.

As set out above, paragraph 81 of TR 96/26 states that car parking facilities, with a primary purpose other than providing all-day parking, that usually charge penalty rates significantly higher than the rates charged for all-day parking [emphasis added] at commercial all-day facilities (such as parking provided for short term shoppers or hotel guests) are excluded from the definition of commercial parking station.

Further, paragraph 80 of TR 96/26 which states:

A vacant lot, utilised commercially as a car park, could be considered to be a permanent commercial car park even where it is intended that a building will be erected on the site in due course.

The parking station falls within the definition of commercial parking station in subsection 136(1) of the FBTAA as all the requirements in the definition are satisfied.

TR 96/26 also provides guidance for measurement of the 1 kilometre radius between a commercial parking station and car parking premises. Paragraphs 82 to 83 state:

82. A commercial car parking station is taken to be located within a 1 km radius of business or associated 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. This route can be travelled by foot, car, train, boat, etc., whichever produces the shortest practicable route.

83. Where the shortest route can be travelled on foot, we expect that public thoroughfares such as arcades through shopping centres will be utilised in determining the distance. However, illegal or impractical shortcuts through, e.g., private property, will not be considered to be part of a practicable route.

84. The 1 km radius may be measured by using an odometer reading, a street directory, information available from a public transport authority or by measurement on a scale map or any other method that will give a correct indication.

The website search provided with the private ruling application shows a Y metre distance from Carpark 1, which does fall within the 1 kilometre radius as described in paragraph 84 of TR 96/26.

Furthermore, there are shorter practical routes by travelling on foot between the locations.

Therefore, the car park is a commercial parking station that is located within 1 kilometre of Location A.

Issue 2 Question 2b

Detailed reasoning

The explanation of the relevant law and definitions referred to in question 2(a) above are equally applicable to reasoning in this question.

As discussed above, it is accepted that Carpark 1 is a commercial parking station.

The website search shows a Y metre distance, which does fall within the 1 kilometre radius as described in paragraph 84 of TR 96/26.

As set out above in Question 1a, TR 96/2 provides guidance for measurement of the 1 kilometre radius between a commercial parking station and car parking premises.

A search from the car park access to the employer's address shows a driving distance of less than 1 kilometre.

Furthermore, there are shorter practical routes by travelling on foot between the locations and thus, the requirements of section 39B are satisfied.

Therefore, the car park is a commercial parking station, offering all day parking to members of the public during daylight hours, and is located within 1 kilometre of Location B.

Issue 2 Question 2c

Detailed reasoning

Section 39E of the FBTAA provides a formula for determining the daily fee for parking stations that provide parking on a periodic basis.

The parking station is taken to charge, on any particular day, a daily rate equivalent. This is calculated by use of the formula:

Total Fee/Number of business days in period

Total fee is the total fee charged by the operator in respect of all-day parking for the total days in that period.

A business day is a day other than a Saturday, Sunday or a public holiday in the place concerned.

Total Fee/Number of business days in period = Z

Therefore, $X is a daily equivalent rate.

Issue 2 Question 2d

Detailed reasoning

Assuming Carpark 2 is a commercial parking station in accordance with subsection 136(1) of the FBTAA, the carpark offers a range of parking options. The early bird rate of $X is available if the parking spot is booked online.

The rate applies to cars which enter between 6:00 am and 9:30 am and exit between 4:00 pm and 6:30 pm.

Under section 136(1) of FBTAA "all day parking" is defined to mean, in relation to a particular day:

in relation to a particular day, means parking of a single car for a continuous period of 6 hours or more during a daylight period on that day.

"Daylight period" is further defined to mean

in relation to a day, means so much of a period on that day as occurs:

(a) after 7 a.m. on that day; and

(b) before 7 p.m. on that day.

As the rate requires the car to be parked for a minimum of six hours thirty minutes it is a rate for all-day parking.

Therefore, it is accepted that the early bird rate is a rate that is available to members of the public for all-day parking.

Issue 2 Question 2e

Detailed reasoning

Under section 136(1) of FBTAA "all day parking" is defined to mean, in relation to a particular day:

in relation to a particular day, means parking of a single car for a continuous period of 6 hours or more during a daylight period on that day.

"Daylight period" is further defined to mean

in relation to a day, means so much of a period on that day as occurs:

(a) after 7 a.m. on that day; and

(b) before 7 p.m. on that day.

The $X evening rate does not come within this definition as it only applies to parking that commences after 3 pm. Therefore, it is not possible to park for at least 6 hours prior to 7 pm.

Issue 2 Question 2f

Detailed reasoning

Carpark 4 has a monthly unreserved fee of $X. The fee covers the time period from 7am to 7pm.

Section 39E provides that the car park is taken to charge, on any particular day, a daily rate equivalent. This is calculated by use of the formula:

Total Fee/Number of business days in period

Total fee is the total fee charged by the operator of the car park in respect of all-day parking for the total days in that period.

A business day is a day other than a Saturday, Sunday or a public holiday in the place concerned.

Using the monthly reserve rate of $X and assuming the number of business days for the month being Monday to Friday (excluding public holidays) is 20, the lowest rate charged for all-day parking on a particular day can be calculated to be:

Total Fee/Number of business days in period = Z = $X

Therefore the daily equivalent rate charged by Carpark 4 for all-day parking on a particular day is therefore $X.

Issue 2 Question 2g

Detailed reasoning

Section 39A of the FBTAA provides that car parking benefits arise when several conditions are satisfied. These conditions, in relation to daylight or a combination of periods on a particular day can be summarised as follows:

• A car must be parked on the premises of the provider where the following conditions are satisfied:

• the premises are business premises

• a commercial parking station is located within a 1 kilometre radius of the premises on which the car is parked

• the lowest fee charged by any commercial parking station is more than the car parking threshold

• the total duration of the period exceeds 4 hours

• a car benefit is provided or leased to, or a car is owned by, an employee (or associate)

• the provision of parking facilities is in respect of the employment of the employee

• during the period or periods, the car is parked at or in the vicinity of the primary place of employment

• the car is used for the employee's travel between his or her place of residence and primary place of employment.

The facts as provided are that business is the only car parking facility located within one kilometre of the employer that charges for parking. Further, the rate charged ($X plus $X for every hour thereafter) only applies where the car has been parked for six hours.

The terms 'all-day parking' and 'daylight period' are defined in subsection 136(1) of the FBTAA as follows:

all-day parking, in relation to a particular day, means parking of a single car for a continuous period of 6 hours or more during a daylight period on that day.

daylight period, in relation to a day, means so much of a period on that day as occurs:

(a) after 7 a.m. on that day; and


(b) before 7 p.m. on that day.

The car parking threshold is set each year by the Commissioner via the publication of Taxation Determinations. The Commissioner's determination for the FBT year ending 31 March 20XX is set out in Taxation Determination TD 2015/11 Fringe benefits tax: for the purposes of section 39A of the Fringe Benefits Tax Assessment Act 1986 what is the car parking threshold for the fringe benefits tax year commencing on 1 April 2015 (TD 2015/11. The car parking threshold for the 2015/16 FBT year is $X.

Although, the Business car park rates and conditions are subject to change, the car park's rate for six hours is currently $X. Therefore, the lowest fee is $X which does not exceed the current car parking threshold of $X and thus cannot be a car parking fringe benefit.

Therefore, although the Business car park meets the definition of a commercial parking station, it does not charge more than the car parking threshold for the FBT year ended 31 March 20XX.

Issue 2 Question 2h

Detailed reasoning

Section 39E of the FBTAA applies if the 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.

Carpark 5 has no limit to the number of days of continuous parking. Under this arrangement, it is accepted that customers could park their car on a longer term periodic basis and as a practical general rule for a continuous period of up to one year. In order to determine the lowest rate charged for all-day parking by the car park, on a particular day, the formula in section 39E of the FBTAA would be applied on the basis that a car had been parked for a continuous period of one year, excluding weekends and public holidays. This would result in 250 business days.

The parking station is taken to charge, on any particular day, a daily rate equivalent. This is calculated by use of the formula:

Total Fee/Number of business days in period

Total fee is the total fee charged by the operator in respect of all-day parking for the total days in that period.

A business day is a day other than a Saturday, Sunday or a public holiday in the place concerned.

Total Fee/Number of business days in period = Z = $X

Therefore the daily equivalent rate charged by Carpark 5 for all-day parking on a particular day is $X.

Issue 3 Question 3a

Detailed reasoning

Subsection 136(1) of the FBTAA defines car as having the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997). In relation to the term 'car' this subsection provides that car means a:

motor vehicle (except a motor cycle or similar vehicle) designed to carry a load of less than one tonne and fewer than 9 passengers.

The vehicle does not satisfy the definition of a car.

Issue 3 Question 3b

Detailed reasoning

As set out above, subsection 136(1) of the FBTAA defines car as having the meaning given by subsection 995-1(1) of the ITAA 1997.

The vehicle does satisfy the definition of a car. Therefore Vehicle 2 is a car as defined in subsection 136(1) of the FBTAA.

Issue 3 Question 3c

Summary

The car benefits that arise from the home garaging and the home to work travel will be an exempt benefit if any other private use is minor, infrequent and irregular.

Detailed reasoning

It has been established that Vehicle 2 is a car, as defined in subsection 136(1) of the FBTAA.

Therefore, a car benefit will arise if the Vehicle is used for private purposes, or is garaged at or near an employee's residence.

These car benefits will be exempt if subsection 8(2) of the FBTAA applies. Subsection 8(2) provides:

A car benefit provided in a year of tax in respect of the employment of a current employee is an exempt benefit in relation to the year of tax if:

(a) the car is:

(i) a taxi, panel van or utility truck, designed to carry a load of less than 1 tonne; or

(ii) any other road vehicle designed to carry a load of less than 1 tonne (other than a vehicle designed for the principal purpose of carrying passengers); and

(b) there was no private use of the car during the year of tax and at a time when the benefit was provided other than:

(i) work-related travel of the employee; and

(ii) other private use by the employee or an associate of the employee, being other use that was minor, infrequent and irregular.

Work-related travel is defined in subsection 136(1) of the FBTAA to mean:

(a) travel by the employee between:

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

(ii) the place of employment of the employee or any other place from which or at which the employee performs duties of his or her employment; or

(b) travel by the employee that is incidental to travel in the course of performing the duties of his or her employment.

Therefore, the travel between home and work in Vehicle 2 is work-related travel for the purposes of considering subsection 8(2) and the car benefits will be exempt benefits if the vehicle is a utility truck and any other private use is minor, infrequent and irregular.

Issue 3 Question 3d

Detailed reasoning

Where the operating cost method is used to calculate the taxable value of a car fringe benefit, the taxable value is a percentage of the total costs of operating the car during the FBT year. The relevant percentage depends upon the business use percentage.

The business use percentage is determined by dividing the number of business kilometres travelled by the car during the holding period by the total number of kilometres travelled by the car during the holding period. The number of business kilometres is the distance travelled in the car on a business journey.

Subsection 136(1) of the FBTAA defines business journey to be a journey that does not involve the application of the car to a private use.

Private use is defined in subsection 136(1) of the FBTAA to mean:

… any use of the motor vehicle by the employee or associate, as the case may be, that is not exclusively in the course of producing assessable income of the employee.

Taxation Ruling TR 95/34 Income tax: employees carrying out itinerant work - deductions, allowances and reimbursements for transport expenses (TR 95/34), Taxation Ruling IT 112 Deductibility of travelling expenses between residence and place of employment or business (IT 112) and Miscellaneous Taxation Ruling MT 2027 Fringe benefits tax: private use of cars: home to work travel (MT 2027) provide guidance as to the classification of home to work travel.

Generally expenditure incurred in travelling between home and a person's regular place of employment or business is private in nature and is not an allowable deduction, as the expenditure is a pre-requisite to the earning of assessable income as opposed to expenditure which is incurred in the actual course of gaining or producing income. This is confirmed in paragraph 14 of MT 2027 which states "put at its simplest, travel to work is private, travel on work is business".

MT 2027 sets out that there are some exceptions to this general rule which include:

1. Employment duties of an itinerant nature

2. Business trip on way to and from work

3. Travel incorporating the transport of bulky equipment.

The relevant exception in this instance is whether the employment duties of the employee are of an itinerant nature. The essence of MT 2027 provides that although in general, expenditure incurred in travelling between home and a person's regular place of employment or business is private in nature, it is acknowledged that travel from an employee's home may constitute business travel where the nature of the office or employment is inherently itinerant.

This issue was addressed in FCT v Wiener 78 ATC 4006; 8 ATR 335 (Wiener's case), from which the following guidelines for the application of the principle have been adopted. These are that travel will be indicated as business travel where the nature of the office or employment is such that:

(a) it is inherently itinerant;

(b) travel is a fundamental part of the employee's work;

(c) it is impractical for the employee to perform the duties without the use of a car;

(d) the terms of employment require the employee to perform duties at more than one place of employment;

(e) the nature of the job itself makes travel in the performance of duties essential; and

(f) it can be said of the employee that he or she is travelling in the performance of the employment duties from the time of leaving home.

The use of the car is fundamental to an employee's work. It is impractical for employees to perform their duties without the use of a car. Also inherent in the job is the need for employees to perform duties at various locations, thereby making travel essential.

As the position is itinerant in nature, the journeys between home and work will be business journeys.

Issue 4 Question 1

Detailed reasoning

In general terms, the taxable value of a car fringe benefit under the statutory formula method will be 20% of the base value of the car at the earliest holding time.

Paragraph 9(2)(b) of the FBTAA sets out the time that is the earliest holding time. Paragraph 9(2)(b) states:

(b) the earliest holding time, in relation to a car held by the provider at a particular time (in this paragraph referred to as the current time), is the earliest time before the current time when the car was held by the provider or an associate of the provider;…

Therefore, the earliest holding time is the time at which the car was first held by the associate of the employer.

Issue 5 Question 1

Detailed reasoning

The facts as provided are that the employee will be employed interstate during the twelve month period. As the liability to pay tax is imposed on the employer by section 66 of the FBTAA, the regular employer will not be liable to pay fringe benefits tax on the benefits that relate to the employment.

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