Edited version of your written advice

Authorisation Number: 1013105963969

Date of advice: 18 October 2016

Ruling

Subject: FBT - Multiple Issues

Issue 1

Question 1

Are the named parking facilities a “commercial car parking station” as defined in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

● A

● B

● C

● D

Answer

● A. Yes

● B. Yes

● C. Yes

● D. Yes

Question 2

Can the amounts charged for all day rates, by the named parking stations be used as the lowest fee charged for all day parking by a commercial car parking station for the purposes of calculating the taxable value of car parking fringe benefits under section 39C of the FBTAA 1986?

A. …….$10.00

B. …….$9.00

C. …….$8.25

D. …….$12.10

E. …….$36.00

Answer

A. Yes

B. Yes

C. Yes

D. Yes

E. Yes

Issue 2

Question 1

Does a fringe benefit arise under section 7(1) of the FBTAA 1986 when an employee is allowed to take a car home and garage it at their residence whilst on call?

Answer

No

Question 2

If the answer to question 1 is yes, will the taxable value of a car fringe benefit using the statutory formula method for an emergency vehicle under subsection 9(1) of the FBTAA 1986, will the number of private use days for this employee on the relevant day be one?

Answer

Not Applicable

Question 3

If the answer to question 1 is yes will the private kilometres used in the relevant vehicle on the relevant day be equivalent to the actual travelling distance between the employee's home and his or her work under subsection 10(2) of the FBTAA 1986?

Answer

Not applicable

Question 4

If the answer to question 1 is yes, when calculating the taxable value of a car fringe benefit using the statutory formula method, the number of private use days for this employee on the relevant day will be zero under subsection 9(1) of the FBTAA 1986?

Answer

Not applicable

Issue 3

Question 1

Do any of the following types of vehicles fall within the definition of a 'car' as defined under subsection 136(1) of the FBTAA 1986?

● Vehicle 1 4 x 4 XL Double Cab Pick-Up 3.2L

● Vehicle 2 4 x 4 XLT Double Cab Pick-Up 3.2L

● Vehicle 3 4 x 4 Crew Cab LS AT (Pick-Up)

● Vehicle 4 Styleside Box

● Vehicle 5 4 x 4 Double Cab Pick-Up 2.8L

Answer

● Vehicle 1 4 x 4 XL Double Cab Pick-Up 3.2L - No

● Vehicle 2 4 x 4 XLT Double Cab Pick-Up 3.2L - Yes

● Vehicle 3 4 x 4 Crew Cab LS AT (Pick-Up) - No

● Vehicle 4 Styleside Box - No

● Vehicle 5 4 x 4 Double Cab Pick-Up 2.8L - Yes

Question 2

If the answer to issue 3, question 1 is yes, is the use of these vehicles by an employee an exempt benefit under section 8 of the FBTAA 1986?

Answer

● Vehicle 2 4 x 4 XLT Double Cab Pick-Up 3.2L - Yes

● Vehicle 5 4 x 4 Double Cab Pick-Up 2.8L - Yes

Question 3

If the answer to issue 3, question 1 is no, is the use of these vehicles by an employee an exempt benefit under section subsection 47(6) of FBTAA 1986?

Answer

● Vehicle 1 4 x 4 XL Double Cab Pick-Up 3.2L - Yes

● Vehicle 3 4 x 4 Crew Cab LS AT (Pick-Up) - Yes

● Vehicle 4 Styleside Box - Yes

Question 4

Does the parking of the following vehicles used by the employees in the named locations give rise to a car parking fringe benefit under section 39A or any other section of the FBTAA 1986?

● Vehicle 1 4 x 4 XL Double Cab Pick-Up 3.2L

● Vehicle 2 4 x 4 XLT Double Cab Pick-Up 3.2L

● Vehicle 3 4 x 4 Crew Cab LS AT (Pick-Up)

● Vehicle 4 Styleside Box

● Vehicle 5 4 x 4 Double Cab Pick-Up 2.8L

Answer

● Vehicle 1 4 x 4 XL Double Cab Pick-Up 3.2L - Yes

● Vehicle 2 Double Cab Pick-Up 3.2L - Yes

● Vehicle 3 4 x 4 Crew Cab LS AT (Pick-Up) - Yes

● Vehicle 4 Styleside Box -Yes

● Vehicle 5 4 x 4 Double Cab Pick-Up 2.8L- Yes

Question 5

Is the use of the following vehicles from home to work by an employee who is on-call an exempt benefit under section 47(6) of the FBTAA 1986?

● Vehicle 3 4 x 4 Crew Cab LS AT (Pick-Up)

● Vehicle 4 Styleside Box

Answer

● Vehicle 3 4 x 4 Crew Cab LS AT (Pick-Up) - Yes

● Vehicle 4 Styleside Box - Yes

Question 6

Is the use of the following vehicle from home to work by an employee who is on-call an exempt benefit under section 8 of FBTAA 1986?

● Vehicle 5 4 x 4 Double Cab Pick-Up 2.8L - Yes

Answer

Yes

Issue 4

Question 1

Can the taxable value for the reimbursement by the employer on a cents-per-kilometre basis for relocation transport expenses incurred by the employee's spouse be reduced to nil pursuant to section 61B of the FBTAA 1986?

Answer

Yes

Question 2

If the answer to question 1 is no, please confirm whether the employer's payment on a cents-per-kilometre basis of the relocation transport expenses incurred by the employee's spouse is a minor exempt benefit under section 58(P) of the FBTAA 1986?

Answer

Not Applicable

Question 3

Is a valid relocation transport declaration form required by the Commissioner?

Answer

Yes

Question 4

Can the relocation transport declaration be stored in electronic form?

Answer

Yes

Issue 5

Question 1

If an ineffective salary sacrifice arrangement (SSA) is in place, is the money forgone considered salary and wages?

Answer

Yes

Issue 6

Question 1

Using the facts in the scenario, is the 1/3 reduction in the base value of the vehicle allowable under paragraph 9(2)(a) of the FBTAA 1986?

Answer

Yes

Question 2

Are the repairs to the taps, as outlined in the scenario, and paid for by the employee considered to be the recipients payment under section 9(1)(e) of the FBTAA 1986?

Answer

Yes

The scheme commences on:

April 20XX

Relevant facts and circumstances

The employer has a policy (car policy) that employees can use the work cars or vehicles for the following journeys:

1. Home and work travel for on-call purposes

2. Work purposes or

3. Work location to work location travel for work-related purposes.

The only possible exceptions to the above car policy are those senior staff who have approved SSA's in place.

Associates of employees cannot use the cars or vehicles under the terms of the car policy.

Issue 1 Facts

Employees are provided with designated parking spaces located at named office locations.

● A

● B

● C

● D

● E

Location A

The location is within a 1kim radius of both of the following parking stations.

Local carpark 1

The car park is open 24 hours a day and the rates are as follows:-

4.0 - 1.0 hrs = $3.00

5.0 - 2.0 hrs = $6.00

6.0 - 3.0 hrs = $9.00

7.0 + = $12.00

Local carpark 2

Located at a shopping centre and has outsourced the management of its car parking facilities.

It is open from 5am to 12am daily.

The rates charged are as follows:-

Time Parked

0 - 45 mins = $2.00

45 mins - 90 mins = $4.00

1.5 - 2.5 hrs = $6.00

2.5 - 3.5 hrs = $8.00

3.5 - 4.5 hrs = $10.00

All day maximum = $11.00

Location B

The location is within a 1km radius of the car parking station.

Local carpark 1

A Previous ruling states that this car park is a commercial car park for the purposes of FBT.

The car park operates during the following hours:-

Monday - Wednesday:- 6.00am - 10.00pm

Thursday and Friday:- 6.00am - 11.00pm

Saturday and Sunday:- 7.00am - 10.00pm

Location C

The location is within a 1km radius of the car parking stations.

Local carpark 1

One car park has been determined in a previous private ruling that it is a commercial parking station for FBT purposes.

$8.25 is the lowest fee charged at the car park for all day parking.

Local carpark 2

The other parking station is located at a shopping mall.

Opening Hours and Prices

Monday ­ Friday: 7 am ­ 7 pm

1 hr = $2.70

2 hrs = $5.40

3 hrs = $8.10

4 hrs = $10.80

Early bird in by 9.30am up to 7 hours = $8.50

Until closing = $16.20

Per month (reserved) = $210.00

Per month (unreserved) = $165.00

Location D

The location is within a 1km radius of the following parking station.

Local carpark 1

Hours

Monday ­ Sunday: 24 hours 7 days access

Casual rates

All rates apply per entry per day (each day starts from 6am).

0 ­ ½ hour = Free

½ hour ­1 hour = $8.00

1­2 hours = $16.00

2­3 hours= $25.00

3­4 hours = $32.00

4+ hours = $40.00

Location E

The location is in a 1km radius of the following parking station.

Local carpark 1

The shopping centre carpark has outsourced its car parking management. The car parking is located in the basement. Above the car park there are serviced apartments and residential units.

Opening hours are as follows:-

Daily 6.00 am - 12.00am

The rates charged are as follows:

0.0 -1.0 hr = $5.00

1.00 -1.5 hrs = $8.00

1.5 - 2.0 hrs = $16.00

2.0 - 3.0 hrs = $24.00

3.0 - 4.0 hrs = $30.00

4.0 + hrs = $36.00

Assumptions Issue 1

Nil

Issue 2 Facts

Employees can work rostered work.

On the relevant date in 20XX no-one uses the vehicle.

On the relevant date, an employee takes this car to travel from the work location to home for on-call purposes at a specific time. There is no other private use on this day.

On a relevant date, the vehicle is garaged at the employee's home for a specified period.

Assumptions Issue 2

Nil

Issue 3 Facts

Vehicle 1 Double Cab Pick-Up 3.2 L

Employees need to carry heavy equipment.

For the purposes of this question this vehicle is not used for salary-packaging purposes.

The vehicle has a seating capacity of five.

The vehicle is a 20XX model.

The gross vehicle weight is 3200 kg.

The kerb weight of the vehicle is 2140 kg.

The payload of the vehicle is 1060 kg.

Vehicle 2 Double Cab Pick-Up 3.2L

Employees need to carry heavy equipment.

For the purposes of this question this vehicle is not used for salary-packaging purposes.

The vehicle has a seating capacity of five.

The vehicle is a 20XX Model.

The gross weight is 3200 kg.

The kerb weight of the vehicle is 2229 kg.

The payload of the vehicle is 970 kg.

Vehicle 3 4 x 4 Crew Cab LS AT (Pick-Up)

Employees use these vehicles for on-call purposes.

They are required to carry special equipment that needs to be stored appropriately.

The employee cannot use the vehicle privately.

The vehicle has a seating capacity of five.

The vehicle is a 20XX model.

The gross weight of the vehicle is 3150 kg.

The kerb weight of the vehicle is 2079 kg.

The payload is 1071 kg.

Vehicle 4 Styleside Box

The employee cannot use the vehicle privately.

The vehicle has a seating capacity of two.

The vehicle is a single cab.

The vehicle is a 20YY model.

The gross weight of the vehicle is 2820 kg

The kerb weight of the vehicle is 1770 kg.

The payload of the vehicle is 1050Kg.

Vehicle 5 4 x 4 Double Cab Pick-Up 2.8L

This type of car is required to perform duties of employment for on-call purposes.

The employees who use these vehicles are required to carry heavy equipment and or work on call.

The employee cannot use the vehicle privately.

The vehicle has a seating capacity of five.

The vehicle is a 20XX model.

The gross weight of the vehicle is 3000 kg.

The kerb weight of the vehicle is 2080 kg.

The payload of the vehicle is 920 kg.

The vehicle is not designed for the principle purpose of carrying passengers.

Assumptions Issue 3

Nil

Issue 4 Facts

An employee has been transferred to a rural area.

The employee drove the family car owned by them from his or her usual place of residence to the location of the new position.

The employee was reimbursed on a cents-per-kilometre basis for using their own car during the relocation.

The employee has provided a completed employee relocation transport declaration.

Under the industry award, if the spouse of the employee uses an additional car for the employee's relocation, the employee can receive an additional cents-per-km of travel allowance.

The employee in this scenario has used two cars to relocate to the new position. One was driven by the employee and the other was driven by their spouse.

The taxable value of the travel allowance of the spouse was less than $300.

Assumptions Issue 4

Nil

Issue 5 Facts

Employees can salary sacrifice a car but the current policy does not allow for computers to be salary sacrificed.

The management of salary packaging arrangements has been outsourced to a private company.

There is an ineffective salary packaging arrangement in place.

This private company has allowed an employee to salary sacrifice a computer.

Assumptions Issue 5

Nil

Issue 6 Facts

The employee has a salary packaged arrangement of a motor-powered road vehicle which satisfies the definition of a car.

The car is held for four full FBT years and is included in the fifth year FBT return.

A once-only one third reduction in the base value of the vehicle is available and should be included in the calculation of the statutory formula method calculations.

The reduction does not apply to non-business accessories fitted after the car was acquired.

The purchaser replaced the oven.

The cost price reduction is applied from the 5^th year.

The oven is a non-business accessory replaced after acquisition and is not subject to the reduction.

The taps in the toilet were repaired.

Assumptions Issue 6

The arrangement is an effective salary sacrifice arrangement in accordance with the meaning provided by Taxation Ruling TR 2001/10 Income tax: fringe benefits tax and superannuation guarantee: salary sacrifice arrangements (TR 2001/10).

Relevant legislative provisions

Section 61B of the Fringe Benefits Tax Assessment Act 1986

Section 58(P) of the Fringe Benefits Tax Assessment Act 1986

Section 20 of the Fringe Benefits Tax Assessment Act 1986

Section 143A of the Fringe Benefits Tax Assessment Act 1986

Paragraph 58F(c)(i) of the Fringe Benefits Tax Assessment Act 1986

Subsection 22(c) of the Fringe Benefits Tax Assessment Act 1986

Section 24 of the Fringe Benefits Tax Assessment Act 1986

Subsection 61B(a) of the Fringe Benefits Tax Assessment Act 1986

Division 28 of the Fringe Benefits Tax Assessment Act 1986

Subsection 61B(b) of the Fringe Benefits Tax Assessment Act 1986

Paragraph 61B(c)(i) and (ii) of the Fringe Benefits Tax Assessment Act 1986

Subdivision 900-E of the Income Tax Assessment Act 1997

Subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986

Subsections 900-115(2) of the Income Tax Assessment Act 1997

Subsection 900-120(2) of the Income Tax Assessment Act 1997

Subsection 900-115(3) of the Income Tax Assessment Act 1997

Subdivision 900-H of the Income Tax Assessment Act 1997

Subsection 9(1) of the Fringe Benefits Tax Assessment Act 1986

Section 39C of the Fringe Benefits Tax Assessment Act 1986.

Subsection 9(2)(e) of the Fringe Benefits Tax Assessment Act 1986

Section 7(1) of the Fringe Benefits Tax Assessment Act 1986

Subparagraph 9(2)(e)(ii)(B) of the Fringe Benefits Tax Assessment Act 1986

Subparagraph 9(2)(a)(i) of the Fringe Benefits Tax Assessment Act 1986

Subparagraph 9(2)(a)(ii)) of the Fringe Benefits Tax Assessment Act 1986

Reasons for decision

Issue 1

Question 1

Are the parking facilities a “commercial car parking station” as defined in subsection 136(1) of the FBTAA 1986?

● A

● B

● C

● D

Summary

The car parking stations are considered commercial car parking stations as defined by the act.

Detailed reasoning

The parking facilities being considered in this ruling are located within one kilometre of the premises on which an employee has parked his or her car. For the purposes of this ruling it is agreed that a car parking benefit as defined in subsection 39A(1) of the FBTAA 1986 will arise from the parking if the relevant parking facility is a commercial parking station.

Commercial parking station is defined in subsection 136(1) of the FBTAA to mean:

“….a permanent commercial car parking facility where any or all of the car parking spaces are available on 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.”

The term “all day parking”, as used above, is a defined term and means:

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

“Daylight period” is defined to be the period between 7am and 7pm.

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

● is a permanent car parking facility

● is a commercial car parking facility

● provides car parking spaces in the ordinary course of business to members of the public for all-day parking on payment of a fee, and

● is not a parking facility on a public street, road, lane, thoroughfare or footpath paid by inserting money in a meter or obtaining a voucher.

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

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:

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

● 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;

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

The Macquarie on line Dictionary defines permanent to mean:

1. lasting or intended to last indefinitely; remaining unchanged; not temporary; enduring; abiding

In applying this definition and the examples, each of the parking facilities are considered to be permanent as they are established car parks 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 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 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:

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 value), e.g., an all-day parking fee of less than $2.00 is likely to be a nominal fee.

The Macquarie on line Dictionary defines commercial as follows:

adjective

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 applying this definition and the examples, each of the parking facilities are considered to be commercial facilities 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 operates 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) of the FBTAA 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 (TR 2000/10). 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:

19. In deciding whether other institutions make their collections available to the public, some guidance is given by the principles in re Income Tax Acts (No 1) [1930] VLR 211. This case considered whether a benevolent asylum was 'public'. The asylum had been founded and controlled by Freemasons for the benefit and their wives and widows. The Court held that the institution was not carried on for the benefit of the public. The word 'public' in relation to institutions connotes 'the carrying on of the institution for the benefit of the public generally, or at least of a definitely ascertainable section of the public, where the benefit of the institution is available without discrimination to every member of the public or of that section of it' (per Lowe J at [1930] VLR 222).

20. By example, Lowe J went on to suggest that a club, literary society or trade union would not be construed as public. He distinguished these associations by the power they had to admit or exclude members of the public. The provision of rules and regulations, which accorded some arbitrary test before membership, distinguished these bodies. Public character was missing due to selective membership. Where admission to membership of a body or inclusion in a class depends on the consent of members or of a committee of members, it is not provided for 'a section of the public'. Such associations exist for the benefit of their members, not the public or a section of the public.

Paragraph 81 of TR 96/26 provides further examples (other than those previously discussed) of parking arrangements that are not considered to be made available to members of the public:

* 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);

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

* 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.

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

Are spaces available for all-day parking?

All-day parking is defined in subsection 136(1) of the FBTAA to mean:

parking of a single car for a continuous period of 6 hours or more during a daylight period on that day.

Subsection 136(1) of the FBTAA defines 'daylight period' to mean the period of the day that occurs after 7 a.m. and before 7 p.m. on that day.

The 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:

Some car parking facilities have a primary purpose to provide short-term shopper parking. To discourage all-day parking, the operators of these facilities charge penalty rates for all-day parking. These rates are significantly greater than the rates that would be charged by a similar facility which encouraged all-day parking. For the purposes of these provisions, short-term shopper parking facilities using penalty rates for all-day parking will not be treated as a “commercial parking station”.

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

Parking facility 1

In applying the definition and examples, it is possible to park in this Car Park for a continuous period of at least six hours as the car park is open for 24 hours a day 7 days a week. Further, the web site advises that parking is available for casual, weekend and night shopping and that monthly, weekend and nights are available.

The rates charged are comparable to other parking areas in the district. In this regard, the rates charged can be summarised as follows:

Time Parked → Total Charge → Fee / hour

0 - 1 hr $3.00 $3.00

1 - 2 hrs $6.00 $3.00

2 - 3 hrs $9.00 $3.00

3 + hrs $12.00 $3.00

From this table it can be seen that the fee per hour remains the same with the length of parking. Further, there is no indication of penalty rates being charged for all-day parking.

Parking facility 2

The car park is open from 5am to midnight Monday to Friday only. Further, all day parking is available. Monthly parking is not available. The fees charged can be summarised as follows:

Time Parked →Total Charge → Fee/ per 45 mins → Fee / hour

0 - 45 mins $2.00 $2.00

45 - 90 mins $4.00 $2.00

1.5 - 2.5 hrs $6.00 $2.40

2.5 - 3.5 hrs $8.00 $2.28

3.5 - 4.5 hrs $10.00 $2.22

All day maximum $11.00

From this table it can be seen that the fee per hour basically increases slightly and then decreases once you have parked for more than 2.5 hours. Further, there is no indication of penalty rates being charged for all-day parking.

Parking facility 3

The car park is open 24 hours a day. All day parking is available. Each day starts from 6am.The fees charged are set out below:-

Time Parked Total Charge Fee/hour

0 - 30 mins Free Free

30min - 1 hr $8.00 $8.00

1 - 2 hrs $16.00 $8.00

2 - 3 hrs $25.00 $8.33

3 - 4 hrs $32.00 $8.00

4 + hrs $40.00 $10.00

Parking facility 4

The car park is open from 6am to 12am every day of the week. Further, all day parking is available as it is possible to park in the facility for a continuous period of six hours. The website does not advertise that monthly parking is available.

The rates charged are comparable to other parking areas in the district. In this regard, the rates charged can be summarised as follows:

Time Parked → Total Charge → Fee/Hour

0 - 1 hr $5.00 $5.00

1 - 1.5 hrs $8.00 $5.33

1.5 - 2 hrs $16.00 $8.00

2 - 3 hrs $24.00 $8.00

3 - 4 hrs $30.00 $7.50

4 + hrs $36.00 $9.00

From this table it can be seen that the fee per hour varies slightly with the length of parking. Further, there is no indication of penalty rates being charged for all-day parking.

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

None of the parking facilities at the locations discussed above are a parking facility on a public street, road, lane, thoroughfare or footpath.

Conclusion

Each of the facilities meets the definition of a commercial parking station within the meaning of subsection 136(1) of the FBTAA.

Question 2

Can the amounts charged for all day rates, by the following parking stations be used as the lowest fee charged for all day parking by a commercial car parking station for the purposes of calculating the taxable value of car parking fringe benefits under section 39C of the FBTAA 1986?

A. $10.00

B. $9.00

C. $8.25

D. $12.10

E. $36.00

Summary

The fees charged can be considered the lowest fee charged by a commercial car parking station for the purposes of calculating the taxable value of car parking fringe benefits.

Detailed reasoning

Under section 39C of the FBTAA, the taxable value of car parking fringe benefits is the lowest fee charged for all-day parking on that day by any commercial parking station within a one-kilometre radius of the premises on which the car is parked, less any employee contribution.

As explained at Question 1 above, or as given to us as a fact the parking stations listed are commercial parking stations which offers all day parking to members of the public during business hours for a fee. They are all located within a one-kilometre radius of the premises on which the cars are parked.

Therefore, the rates as provided by you can be considered the all day rate and can be used as the lowest fee charged for all day parking by a commercial car parking station for the purposes of calculating the taxable value of car parking fringe benefits under section 39C of the FBTAA.

Issue 2

Question 1

Does a fringe benefit arise under section 7(1) of the FBTAA 1986 when an employee is allowed to take a car home and garage it at their residence whilst on call?

Summary

A fringe benefit will not arise from the scenario as described.

Detailed reasoning

Section 7(1) of the FBTAA 1986 discusses private use of a car. Generally speaking, a car fringe benefit most commonly arises where the employer makes a car you 'hold' available for the private use of an employee (or the car is treated as being available). A car you hold generally means a car you own or lease.

The following types of vehicles (including four-wheel drive vehicles) are cars:

● motor cars, station wagons, panel vans and utilities (excluding panel vans and utilities designed to carry a load of one tonne or more)

● all other goods-carrying vehicles designed to carry less than one tonne

● all other passenger-carrying vehicles designed to carry fewer than nine occupants.

Section 7(2) of the FBTAA 1986 goes on to discuss where the employee makes a car available for private use by an employee on any day that either:

● the car is actually used for private purposes by the employee

● the car is available for the private use of the employee.

A car is treated as being available for private use by an employee on any day that either:

● the car is not at your premises, and the employee is allowed to use it for private purposes

● the car is garaged at the employee's home.

A car that is garaged at an employee's home is treated as being available for the private use of the employee regardless of whether they have permission to use it for private purposes. Similarly, where the place of employment and residence are the same, the car is taken to be available for the private use of the employee.

As a general rule, travel to and from work is private use of a vehicle.

Home garaging for cars will not result in a car being treated as available for private use under the 'home garaging rule'. However, if the car is otherwise made available for private use, such as by actual private travel between work and home, a car fringe benefit may arise.

To qualify under the home garaging rule the criteria in subsection 7(2A) of the FBTAA 1986 must be met.

Applying the facts of the scenario you have described in your application, a fringe benefit does not arise and therefore FBT is not applicable.

Questions 2, 3 and 4 are not applicable.

Issue 3

Question 1

Do any of the following types of vehicles fall within the definition of a 'car' as defined under subsection 136(1) of the FBTAA 1986?

● Vehicle 1 4 x 4 XL Double Cab Pick-Up 3.2L

● Vehicle 2 Double Cab Pick-Up 3.2L

● Vehicle 3 4 x 4 Crew Cab LS AT (Pick-Up)

● Vehicle 4 Styleside Box

● Vehicle 5 4 x 4 Double Cab Pick-Up 2.8L

Summary

Some of the cars as listed below meet the definition of a car.

Detailed reasoning

The definition of car in subsection 136 (1) of the FBTAA states that car has the meaning giving by subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997).

Subsection 995-1(1) of the ITAA 1997 defines a car to mean:

a motor vehicle (except a motor cycle or similar vehicle) designed to carry a load less than 1 tonne and fewer than 9 passengers.

There are certain vehicles that are not within the subsection 136(1) of the FBTAA definition of a car (for example, a truck designed to carry one tonne or more). The private use of these vehicles will not result in a car fringe benefit, but it may result in a residual fringe benefit.

The following cars are under consideration:-

Vehicle 1 Double Cab Pick-Up 3.2L

The Double Cab Pick-Up 3.2L is a variant of a conventional goods vehicle. This dual cab has 3 additional seats which are provided behind the driver and front passenger seat.

According to the specifications provided, the gross vehicle weight is 3200 kilograms and the kerb weight is 2140 kilograms, therefore the load carrying capacity is 1060 kilograms.

1060 kilograms is more than one tonne (1000 kilograms), therefore the Vehicle 1 4x4 XL Double Cab Pick-Up 3.2 L is designed to carry a load of more than 1 tonne.

This dual cab has seating for five persons, hence designed to carry less than nine people (inclusive of the driver).

As both conditions are not met, the Vehicle 1Double Cab Pick-Up 3.2 L does not meet the definition of a car.

Vehicle 2 Double Cab Pick-Up 3.2L

Vehicle 2 Double Cab Pick-Up 3.2L is a variant of a conventional goods vehicle. This dual cab has 3 additional seats which are provided behind the driver and front passenger seat.

According to the specifications provided, the gross vehicle weight is 3200 kilograms and the kerb weight is 2229 kilograms, therefore the load carrying capacity is 971 kilograms.

971 kilograms is less than one tonne (1000 kilograms), therefore the Vehicle 2 Double Cab Pick-Up 3.2L is designed to carry a load of less than 1 tonne.

This dual cab has seating for five persons, hence designed to carry less than nine people (inclusive of the driver).

As both conditions are met, the Vehicle 2 Double Cab Pick-Up 3.2L meets the definition of a car.

Vehicle 3 4 x 4 Crew Cab LS AT (Pick-Up)

The Vehicle 3 4 x 4 Crew Cab LS AT (Pick-Up) is a variant of a conventional goods vehicle. This crew cab has 3 additional seats which are provided behind the driver and front passenger seat.

According to the specifications provided, the gross vehicle weight is 3150 kilograms and the kerb weight is 2079 kilograms, therefore the load carrying capacity is 1071 kilograms.

1071 kilograms is more than one tonne (1000 kilograms), therefore the Vehicle 3 4 x 4 Crew Cab LS AT (Pick-Up) is designed to carry a load of more than 1 tonne.

This dual cab has seating for five persons, hence designed to carry less than nine people (inclusive of the driver).

As both conditions are not met, the Vehicle 3 4 x 4 Crew Cab LS AT (Pick-Up) does not meet the definition of a car.

Vehicle 4 Styleside Box

The Vehicle 4 Styleside Box is a single cab car with two seats. It is therefore designed to carry a load of less than nine passengers.

According to the specifications provided, the gross vehicle weight is 2820 kilograms and the kerb weight is 1770 kilograms, therefore the load carrying capacity is 1050 kilograms.

1050 kilograms is more than one tonne (1000 kilograms), therefore the Vehicle 4 Styleside Box is designed to carry a load of more than 1 tonne.

As both conditions are not met, the Vehicle 4 Styleside Box does not meet the definition of a car.

Vehicle 5 4 x 4 Double Cab Pick-Up 2.8L

The Vehicle 5 4 x 4 Double Cab Pick-Up 2.8L is a variant of a conventional goods vehicle. This crew cab has 3 additional seats which are provided behind the driver and front passenger seat.

According to the specifications provided, the gross vehicle weight is 3000 kilograms and the kerb weight is 2080 kilograms, therefore the load carrying capacity is 920 kilograms.

920 kilograms is less than one tonne (1000 kilograms), therefore the Vehicle 5 4 x 4 Double Cab Pick Up 2.8L is designed to carry a load of less than 1 tonne.

This dual cab has seating for five persons, hence designed to carry less than nine people (inclusive of the driver).

As both conditions are met, the Vehicle 5 4 x 4 Double Cab Pick-Up 2.8L meets the definition of a car.

Question 2

If the answer to issue 3, question 1 is yes, is the use of these vehicles by an employee an exempt benefit under section 8 of the FBTAA 1986?

Summary

For the exemption to apply the private use of the vehicle must be restricted to work related travel. As the private use is restricted for the vehicles in question the exemption will apply.

Detailed reasoning

Miscellaneous Taxation Ruling MT 2024 fringe benefits tax: dual cab vehicles eligibility for exemption where private use is limited to certain work-related travel (MT 2024) outlines that a liability for FBT arises where an employer's motor vehicle is used by an employee for private purposes or is available for the private use of an employee.

Under subsection 8(2) a liability for FBT will not arise where the private use of certain vehicles by employees during a particular year of tax is limited to certain work related travel and non-work related use that is minor, infrequent and irregular.

Subsection 8(2) of the FBTAA states:

8(2) [Exempt vehicles]

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 View history reference

(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.

The two types of vehicles that are being considered under this provision of the act are:-

● Vehicle 2 Double Cab Pick-Up 3.2L

● Vehicle 5 4 x 4 Double Cab Pick-Up 2.8L

The use of these cars in the manner described by the applicant meets all the requirements in subsection 8(2) of the FBTAA 1986 and consequently the car benefits provided are exempt benefits pursuant to this subsection.

Question 3

If the answer to issue 3, question 1 is no, is the use of these vehicles by an employee an exempt benefit under section subsection 47(6) of FBTAA 1986?

Summary

For the exemption to apply the private use of the vehicle must be restricted to work related travel. As the private use is restricted the exemption will apply.

Detailed reasoning

Subsection 47(6) of the FBTAA 1986 provides an exemption for a benefit that arises from the use of a motor vehicle that is not a car. For that exemption to apply there has to be a limitation on the private use of that vehicle. This is outlined in paragraph 47(6)(b) which states:

there was no private use of the motor vehicle 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 of the motor vehicle by the employee or an associate of the employee, being other use that was minor, infrequent and irregular;

The three cars being considered under this section of the act are:-

● Vehicle 1 Double Cab Pick-Up 3.2L

● Vehicle 3 4 x 4 Crew Cab LS AT (Pick-Up)

● Vehicle 4 Styleside Box

In this case these vehicles are being used for day-to-day travel due to the on-call nature of the employee's jobs and the necessity to carry heavy equipment at all times.

Work-related travel is defined in subsection 136(1) of the FBTAA 1986 and covers travel;

● between the employee's place of residence and place of employment or a place they are performing duties of employment; or

● travel that is incidental to travel in the course of performing the duties of employment

Any travel by these employees in the vehicle from home to work would be work-related travel however there are restrictions on the use of the vehicle outside of that home to work travel. No private use of the vehicle is allowed.

For the exemption to apply the 'other' private use must be limited to use that is minor, infrequent and irregular. Given that the employer has a very strict policy on private use of the vehicle it can be accepted that the 'other' private use will be limited to travel that is minor, infrequent and irregular.

Therefore the exemption under subsection 47(6) of the FBTAA 1986 will apply.

Question 4

Does the parking of the following vehicles used by the employees in the following locations give rise to a car parking fringe benefit under section 39A or any other section of the FBTAA 1986?

● Vehicle 1Double Cab Pick-Up 3.2L - Location 1.

● Vehicle 2 Double Cab Pick-Up 3.2L - Location 1

● Vehicle 3 4 x 4 Crew Cab LS AT (Pick-Up) - Location 1

● Vehicle 4 Styleside Box - Location 1 and Location 2

● Vehicle 5 4 x 4 Double Cab Pick-Up 2.8L - Location 1 and Location 3

Summary

The parking of the above vehicles at the noted sites does not give rise to a car parking fringe benefit.

Detailed reasoning

It has been determined in issue 3, question 1 that the following vehicles are not 'cars' for the purposes of the FBTAA.

● Vehicle 1 Double Cab Pick-Up 3.2L

● Vehicle 3 4 x 4 Crew Cab LS AT (Pick-Up)

● Vehicle 4 Styleside Box

Car parking fringe benefit' is defined in subsection 136(1) of the FBTAA 1986 as meaning a benefit referred to in subsection 7 of the FBTAA 1986 in respect of a car either being applied to a private use by an employee or an associate or taken to be available for the private use by an employee or by an associate.

Section 39A of the FBTAA 1986 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.

Despite the fact that there may be in this case a commercial car parking station located within a 1 km radius of the employer provided car park and also that the lowest fee charged by the operator of that car park is more than the car parking threshold, these factors alone do not affect the prime underlying requirement of paragraph 39A(1)(a) of the FBTAA 1986 (and also, for example, that of subparagraph 39A(1)(c)(i) of the FBTAA 1986 in relation to car benefits) that the relevant vehicle being parked must firstly be a 'car' for the purposes of the FBTAA 1986.

Taxation Ruling 96/26 Fringe benefits tax: car parking fringe benefits (TR 96/26) explains the following:

6. For the purposes of Division 10A of the FBTAA, a 'car' means a motor vehicle being;

*  motor car, station wagon, panel van or utility;

* any other goods-carrying vehicle (including a four wheel drive vehicle) with a designed carrying capacity of less than one tonne;

* any other passenger-carrying vehicle with designed carrying capacity of fewer than nine occupants.

7. Excluded from the definition are panel vans and utilities designed to carry a load of one tonne or more.

8. Parking provided for vehicles other than cars will not give rise to a car parking benefit.

For the three cars listed above, paragraph 39A(1)(a) of the FBTAA 1986 (and, consequently, car parking benefits overall under section 39A of the FBTAA 1986) cannot apply in this case as all of the these cars are not 'cars' for the purposes of FBTAA 1986.

For completeness of this question it is important that we consider if the car parking gives rise to any other sort of fringe benefit.

Paragraph 58G(1)(b) of the FBTAA 1986 deals with exemption for certain motor vehicle parking facilities and states:

58G(1) [Motor vehicle parking facilities]

Each of the following benefits is an exempt benefit:

(a) ...

(b) a residual benefit where the recipients benefit consists of motor vehicle parking facilities.

A residual benefit under section 45 of the FBTAA 1986 is a benefit that does not fall within one of the other more specific benefit types contained in the FBTAA 1986.

'Recipients benefit' is defined in subsection 136(1) of the FBTAA 1986 as meaning, simply, 'the benefit to which the residual benefit relates'.

The relevant motor vehicles are listed above and are parked at locations in the Location 1 and Location 2.

It has been determined above that these vehicles when parked at, or in the vicinity of, the relevant employee's primary place of employment will not give rise to car parking benefits under section 39A of the FBTAA 1986.

It is also considered that no other type of benefits will arise under any of the other provisions of Subdivision A of Divisions 2 to 11 inclusive of the FBTAA 1986 by virtue of the vehicle being parked at these sites.

Therefore, the benefits that may arise will constitute residual benefits under section 45 of the FBTAA 1986.

The ATO guide Fringe benefits tax: a guide for employers provides the following relevant guidance:

16.1 What is a car parking fringe benefit?

Very broadly, a car parking fringe benefit may arise for each day on which you (the employer) provide a car parking space for the use of an employee.

Specifically, a car parking fringe benefit arises only if all of the following conditions are satisfied:

● ...

16.9 Exempt benefits - motor vehicle parking

The following car parking benefits provided to employees are exempt from FBT:

● residual benefits

● ...

● ...

● ...

Residual benefits

Parking you provide that does not satisfy all of the criteria set out in 16.1 is a residual benefit that is exempt from FBT.

...

20.2 Transport exemptions

...

Motor vehicle parking (section 58G)

The following car parking benefits are exempt from FBT:

● residual benefits

● ...

● ...

● ...

Residual benefits

Employer-provided parking that is not a car parking fringe benefit is a residual benefit that is exempt from FBT.

It is, therefore, concluded that as the benefits that may arise will constitute residual benefits the requirements of paragraph 58G(1)(b) of the FBTAA 1986 are met and such parking will be exempt under that paragraph.

It has been determined in issue 3, question one that the following cars do meet the definition of a 'car' for FBT purposes:-

● Vehicle 2 Double Cab Pick-Up 3.2L

● Vehicle 5 4 x 4 Double Cab Pick-Up 2.8L

Generally speaking, a liability for FBT arises where an employer's motor vehicle is used by an employee for private purposes or is available for the private use of an employee.

However the private use of a motor vehicle is exempt from FBT if all of the following conditions are satisfied:

● the vehicle is a panel van, utility or other commercial vehicle (that is, one not designed principally to carry passengers)

● the employee's private use of such a vehicle is limited to  

● travel between home and work

● travel that is incidental to travel in the course of duties of employment

● non-work related use that is minor, infrequent and irregular (for example, occasional use of the vehicle to remove domestic rubbish).

These conditions have previously been discussed at issue 3, question 2.

It is well stated that the employer allows no private use of the vehicles given to on-call staff who use these vehicles in the course of performing their duties.

As the requirements of subsection 8(2) are met, these vehicles are exempt from car parking fringe benefits.

Question 5

Is the use of the following vehicles from home to work by an employee who is on-call an exempt benefit under section 47(6) of the FBTAA 1986?

● Vehicle 3 4 x 4 Crew Cab LS AT (Pick-Up) - Yes

● Vehicle 4 Styleside Box - Yes

Summary

For the exemption to apply the private use of the vehicle must be restricted to work related travel. As the private use is restricted the exemption will apply.

Detailed reasoning

The Vehicle 3 4 x 4 Crew Cab LS AT (Pick-Up) and Vehicle 4 Styleside Box are not 'cars' for the purposes of FBT.

The relevant legislation has been discussed at issue 3, question 3.

In this case these vehicles are used for day-to-day travel by the employees due to the on-call nature of their job and the necessity to carry heavy and specialised equipment at all times.

Any travel by the employee in these vehicles from home to work would be work-related travel however there are restrictions on the use of the vehicles outside of that home to work travel. No private use of the vehicles is allowed.

For the exemption to apply the 'other' private use must be limited to use that is minor, infrequent and irregular. The employer has a very strict policy on private use of the vehicles it can be accepted that the 'other' private use will be limited to travel that is minor, infrequent and irregular.

Therefore the exemption under subsection 47(6) of the FBTAA 1986 will apply to both of these vehicles.

Question 6

Is the use of the following vehicle from home to work by an employee who is on-call an exempt benefit under section 8 of FBTAA 1986?

● Vehicle 5 4 x 4 Double Cab Pick-Up 2.8L

Summary

For the exemption to apply the private use of the vehicle must be restricted to work related travel. As the private use is restricted the exemption will apply.

Detailed reasoning

The relevant legislation has been discussed at issue 3, question two.

The use of the Vehicle 5 4 x 4 Double Cab Pick-Up 2.8L by the employees in the manner described meets all the requirements in subsection 8(2) of the FBTAA 1986 and consequently the car benefits provided are exempt benefits pursuant to this subsection.

Issue 4

Question 1

Can the taxable value for the reimbursement by the employer on a cents-per-kilometre basis for relocation transport expenses incurred by the employee's spouse be reduced to nil pursuant to section 61B of the FBTAA 1986?

Summary

The relocation expenses reimbursed to the employee has been examined in detail below and can be reduced to nil.

Detailed reasoning

FBT is a tax payable by employers on the value of certain benefits that have been provided to their employee's or to associates of those employees in respect of their employment.

Section 58F of the FTAA 1986 exempts from fringe benefits tax 'benefits in respect of relocation transport'. To qualify for the exemption the following conditions must be satisfied:

(1) A car, expense payment, property or residual benefit is provided.

(2) The benefit is in respect of relocation transport.

(3) Where an expense payment benefit is provided:

(a) transport costs are not in respect of car expenses reimbursed on a cents per kilometre basis, and

(b) documentary evidence is provided to the employer.

Expense payment benefit

In this case, the employer will reimburse the expenses incurred by the employee's spouse on motor vehicle expenses incurred between the employee's former residence and the new residence.

The reimbursement is an expense payment benefit under section 20 of the FBTAA 1986.

Relocation transport

The requirements for a benefit to be treated as a benefit in 'respect of relocation transport' are specified in section 143A of the FBTAA 1986. In summary the requirements are:

(1) The benefit is a car, expense payment, property or residual benefit.

(2) Transport, accommodation or meals for family members is provided.

(3) The transport is provided solely because the employee is required to live away from his or her usual place of residence to perform employment duties.

(4) The transport is provided to enable a family member to take up residence at the new or former usual place of residence.

(5) Where the transport is in respect of a spouse or child of the employee this must not be concurrent with a business trip of the employee if the family member's travel would have been deductible.

(6) The transport must not be for an employee undertaking travel in the course of performing employment duties.

(7) Where the employee changes his or her usual place of residence the benefit is provided under an arm's length arrangement.

In this case, the above conditions are satisfied as the transport expenses are reimbursed by the employee to enable the employee and their family to take up residence in a new locality. The sole reason for the transport was so the employee could undertake her or his new employment duties, there is no indication that the employee moved for any other reason.

Transport costs

The employer has advised they will reimburse motor vehicle costs for relocation to the new residence.

Exemption under section 58F of the FBTAA 1986 only relates to expense payment benefits not calculated under a cents-per-kilometre basis. In this case, employer will reimburse the employee on a cents-per-kilometre basis.

However, paragraph 58F(c)(i) of the FBTAA 1986 specifically prescribes that in the case of an expense payment benefit a necessary condition is that the benefit is not a reimbursement calculated by reference to the distance travelled by the car.

Yet in this scenario that is precisely how the payment is made. Accordingly this means that the payment cannot be exempt in terms of section 58F of the FBTAA 1986.

Further the payment does not qualify as an exempt car expense payment benefit in terms of section 22 of the FBTAA 1986 because subsection 22(c) excludes a benefit in respect of relocation expenses.

Nor does section 24 of the FBTAA 1986 apply. Section 24 of the FBTAA 1986 provides for the reduction of the taxable value of an expense payment fringe benefit where the expenditure is an allowable deduction to the employee. Yet, the expenditure for car expenses incurred in visiting the new location as part of a search for a new house is not an allowable deduction to the employee.

Therefore, it is necessary to consider section 61B in Division 14 of the FBTAA 1986 which provides for the reduction of the taxable value of certain expense payment fringe benefits in respect of relocation transport.

The conditions which need to be satisfied in order for section 61B of the FBTAA 196 to apply are:

Where:

● an expense payment fringe benefit in respect of relocation transport is provided to an employee or an associate of the employee in respect of the employment of the employee -subsection 61B(a) ;

● the fringe benefit is the reimbursement of the recipient in respect of a Division 28 car expense incurred by the recipient in relation to the recipient's car being a reimbursement calculated by reference to the distance travelled by the car - subsection 61B(b); and

● the recipient gives to the employer, before the declaration date, a declaration, in a form approved by the Commissioner setting out the particulars of the car and the number of whole kilometres travelled by the car in providing a transport benefit that is in respect of relocation transport - paragraphs 61B(c)(i) and (ii);

The above conditions have been met.

Accordingly, the amount that would be the taxable value of the fringe benefit in respect of relocation transport shall be reduced by so much of the amount of the reimbursement as does not exceed the reimbursement that would have been paid if it had been calculated on the basis of the sum of the basic car rate and the supplementary car rate (where two or more family members travelled in the car in respect of the relocation transport).

If the reimbursement does not exceed the relevant sum, the benefit (being a payment for relocation transport) has a nil taxable value in terms of subsection 61B of the FBTAA 1986.

Question 2

If the answer to question 1 is no, please confirm whether the employer's payment on a cents-per-kilometre basis of the relocation transport expenses incurred by the employee's spouse is a minor exempt benefit under section 58(P) of the FBTAA?

Summary

Not applicable

Detailed reasoning

Not applicable

Question 3

Is a valid relocation transport declaration form required by the Commissioner?

Summary

Documentary evidence must satisfy subdivision 900-E in the Income Tax Assessment Act 1997 (ITAA 1997) for the exemption to apply.

Detailed reasoning

'Documentary evidence' is defined in subsection 136(1) of the FBTAA 1986 to mean a document that would be written evidence of the expense as prescribed in Subdivision 900-E of the ITAA 1997 if the expense were a work expense and Division 900 applied to the person.

Practice Statement Law Administration PS LA 2005/7 Substantiation of deductions claimed by individual taxpayers for work and car expenses incurred in the course of earning non-business and non-investment income (PS LA 2005/7) provides further guidance on what needs to be included in documentary evidence and states at paragraph 10:

Subsections 900-115(2) and 900-120(2) of Subdivision 900-E of the ITAA 1997 require a taxpayer to obtain a document from the supplier of the relevant goods or services, except in special circumstance referred to elsewhere in Subdivision 900-E of the ITAA 1997. These subsections specify that the document must set out:

a) the name or business name of the supplier

b) the amount of the expense, expressed in the currency in which it was incurred - or the cost of the asset

c) the nature of the goods or services - or asset

d) the day the expense was incurred - or asset was acquired, and

e) the day it is made out.

Where the details of (c) and (d) are missing from the document, subsection 900-115(3) of the ITAA 1997 operates to allow the taxpayer to write the missing details regarding the nature of the goods or services on the document before they lodge their tax return. It also provides for the taxpayer to use alternate reasonable evidence, such as a bank statement, to show when the amount was paid. Separately relief may be available under Subdivision 900-H of the ITAA 1997 where the requirements of Subdivision 900-E of the ITAA 1997 have not been met.

An example of when a taxpayer uses a bank or credit card statement as documentary evidence is provided for in paragraph 20-21 of PS LA 2005/7:

20. Daniel, who is employed by a large firm of solicitors, receives a bill for his annual professional subscription fees, which he pays using his credit card. His credit card statement bears the date of the transaction, the name of the professional association and the amount paid. Before he lodges his income tax return, Daniel makes a note on his credit card statement to the effect that the transaction related to his professional subscription fees.

21. The Tax Office will accept the credit card statement as sufficient evidence to substantiate Daniel's claim for a deduction for the fees.

In this case, the expense payment benefit will be for the reimbursement of cents-per-km travelled. The employee is required to provide the employer a completed employee relocation transport declaration before the specified date. From the information provided, it is evident that the employer will seek to ensure appropriate documentary evidence is collected to substantiate the expense.

It is not necessary for the employer to send employee declarations to the Tax Office however they should be kept by the employer as part of their tax records. These declarations are required to be in a form approved by the Commissioner. The approved wording and information to be contained in these employee declarations are included throughout the publication Fringe Benefits Tax: a guide for employers and in particular, transport relocation declarations can be found at paragraph 19.4.

In consideration of the above, the reimbursement of the relocation transport costs that were incurred while the employee was relocating is an exempt benefit, when supported by the relevant declaration as discussed above.

Question 4

Can the relocation transport declaration be stored in electronic form?

Summary

It is allowable for paper documentation to be scanned and stored electronically.

Detailed reasoning

The Commissioner has not ruled on the nature of FBT records required to be maintained; however, the general income tax record keeping requirements in section 262A of the ITAA 1936 are considered to apply. Taxation Ruling TR 2005/9 Income tax: record keeping - electronic records (TR 2005/9) contains the Commissioner's view on what constitutes sufficient electronic records to be retained for income tax purposes, including records relating to electronic commerce. Also, ATO Practice Statement PS LA 2005/2: Penalty for failure to keep or retain records (PS LA 2005/2) provides guidelines on record-keeping obligations and the remission of administrative penalties for a failure to keep records.

Chapter 4 of the Fringe Benefits Tax: a guide for employers states the following:

there is a general requirement that you must keep records that are adequate to enable your fringe benefits tax (FBT) liability to be assessed. Your records must be written in English or, if in electronic form (for example, on computer), made readily accessible and convertible into written English. For record keeping purposes, electronic records (including encrypted records) are subject to the same record keeping requirements as paper records.

The employer has specifically asked if paper records can be scanned and stored in that manner. You are permitted to store paper records electronically provided they are a true and clear representation of the original paper record and are in a manner that the ATO can access and understand.

Paragraph 4.5 of the Guide for Employers states the following:

Where paper records are scanned and stored electronically, record keeping requirements are satisfied if the electronic records are:

● not altered or manipulated once stored

● retained for the statutory period of five years

● capable of being retrieved and read at all times by tax officers. You are expected to provide appropriate facilities for viewing electronic records kept in that format and, where necessary, for printing a paper copy or providing an electronic copy.

Paper records that can be scanned and stored include:

● invoices, purchase orders, receipts, vouchers, credit notes, delivery dockets and other such records

● bank statements and other bank records and documents

● any other paper source documents produced or received in the course of carrying on a business.

You don't have to keep original paper records once they have been scanned onto an electronic storage medium.

You must keep records if you want to take advantage of various exemptions or concessions that reduce your FBT liability.

Issue 5

Question 1

If an ineffective SSA is in place, is the money forgone considered salary and wages?

Summary

If there is an ineffective salary sacrifice arrangement in place the benefits are assessable income and are subject to PAYG.

Detailed reasoning

A SSA is also commonly referred to as salary packaging or total remuneration packaging. Taxation Ruling TR 2001/10 Income Tax: fringe benefits tax and superannuation guarantee: salary sacrifice arrangements (TR 2001/10) at paragraph 19 states that it means an arrangement under which an employee agrees to forego part of his or her total remuneration, that he or she would otherwise expect to receive as salary or wages, in return for the employer or someone associated with the employer providing benefits of a similar value.

Paragraph 19 goes on to say that the main assumption made by the parties is that the employee is then taxed under the income tax laws only on the reduced salary or wages and that the employer is liable to pay FBT, if any, on the benefits provided.

For salary sacrificing to be beneficial you need to have an 'effective salary sacrifice arrangement' in place.

The Commissioner states in TR 2001/10 that a SSA will be effective where the benefit is negotiated before the employee has earned the entitlement to receive the relevant amount as salary or wages. That is, if the remuneration that is forgone is that which the employee has already earned, the SSA is ineffective. A summary of the tax consequences is set out below.

Benefits provided to an employee under an effective SSA:

● are not assessable to the employee

● are not subject to PAYG withholding

● are subject to FBT (with some exceptions)

● where the benefits are employer superannuation contributions to complying superannuation funds, they qualify as employer contributions for superannuation guarantee (SG) purposes, and the employer may be entitled to a tax deduction for the contributions.

The distinction between an effective and ineffective SSA is based on whether the cash being sacrificed has already been 'earned'. If the employee has already 'earned' the entitlement to be paid the salary or wages, any subsequent provision of the benefit through a SSA will still retain the character of salary and wages. To be an effective SSA, the employee must forego an expected entitlement before the entitlement to the salary or wages has been 'earned', i.e. when the salary or wage amount is yet to be derived.

In this case you have told us that the SSA is ineffective. As this is the case the sacrificed amounts are considered salary and wages and should be included in assessable income of the employee and taxed at the applicable marginal tax rate.

Issue 6

Question 1

Using the facts in the scenario, is the 1/3 reduction in the base value of the vehicle allowable under paragraph 9(2)(a) of the FBTAA 1986?

Summary

As outlined below the 1/3 reduction in the base value of the vehicle would be allowable.

Detailed reasoning

The taxable value of a car fringe benefit can be determined in one of two ways - by the statutory formula method or by the operating cost method. You have chosen to use the statutory formula method.

When using the statutory formula method to determine the taxable value of car fringe benefits, the taxable value is calculated by reference to the base value of the car.

In determining the base value of the car which you own is as follows and as set out in Fringe benefits tax: a guide for employers at paragraph 7.4

● The original purchase price you paid (excluding registration and stamp duty)

● The cost of any fitted accessories not required for business use of the car and

● Dealer delivery charges

All costs include GST and luxury car tax where appropriate.

Any non-business accessories added after you purchase the car increase the base value of the car for the year in which they are added and for subsequent years.

The base value of the car remains the same and is not adjusted to take account of annual depreciation. However, the base value may be reduced by one third at the beginning of the first year of tax, following the fourth anniversary of the date on which the car was first owned or leased by the employer. The reduction is applicable only once in respect of a particular car and does not apply to non-business accessories that are added after the acquisition of the car.

Under subparagraph 9(2)(a)(i) of the FBTAA 1986, there is provision to reduce the base value component, where a car is owned or leased (under subparagraph 9(2)(a)(ii)). Whether the car is owned or leased is not relevant, it merely needs to be 'held'.

ATO ID 2004/527 states that:-

1/3 reduction in base value is allowable where the commencement of the year of tax is later than the fourth anniversary of the earliest holding time. The reduction is determined on the length of time between the first time the car is held and the current time. If the difference is four years, the a 1/3 reduction is the base value may be made at the commencement of the next FBT year. The car does not need to be held continuously for the entire 4 year period for the reduction to be made.

Applying the facts to the description above, we can conclude that the 1/3 reduction in the cost base would be allowable.

Question 2

Are the repairs to the taps, as outlined in the scenario, and paid for by the employee considered to be the recipients payment under section 9(2)(e) of the FBTAA 1986?

Summary

The tap repairs paid for by the employee will be regarded as a recipient's payment.

Detailed reasoning

The recipients payment in the formula in section 9(1) of the FBTAA 1986 for determining the value of a car fringe benefit is determined under subsection 9(2)(e) of the FBTAA 1986. A recipient in this context is a person to whom a car benefit from the car is provided in terms of section 7(1) of the FBTAA 1986.

A recipient's payment may be a payment by a recipient to the employer in consideration for provision of the car benefit, or it may be car expenses directly incurred by a recipient.

Where the provider of the car is not the employer, a payment of consideration to either the employer or the provider may qualify as a recipient's payment.

For a payment to a provider or employer to qualify as a recipient's payment it must meet these conditions as detailed in subsection 9(2)(e) of the FBTAA 1986:-

● the expense must be a "car expense"

● it must be incurred by a recipient

● it must be incurred during the holding period - that is, during the year concerned at a time when the provider held the car

● the person incurring the expense (other than car expenses in respect of fuel or oil for the car) must obtain "documentary evidence" of the expense and must give that evidence to the employer by the "declaration date"

● the person incurring the car expense in respect of fuel or oil for the car must obtain either "documentary evidence" of the expense, or a declaration in respect of the expense in a form approved by the Commissioner and must give that evidence or declaration to the employer before the "declaration date"

● the amount claimed as a recipient's payment must be reduced by the amount of any reimbursement paid or payable to the recipient (by anyone) in respect of the car expense.

A "car expense" is defined in section 136(1) of the FBTAA 1986 to mean an expense incurred on:

● registration or insurance for the car

● repairs to or maintenance of the car

● fuel for the car.

The Tax Office accepts that membership fees which give rise to a road service entitlement are car expenses for the purposes of the definition of car expenses in section 136(1) of the FBTAA 1986 (see minutes of NTLG FBT Subcommittee meeting on 1December 1994).

Certain car cleaning/detailing costs may give rise to recipient's payments and the ATO will accept diary records of the expenses, for the purposes of the concession from substantiation in subparagraph 9(2)(e)(ii)(B) of the FBTAA 1986 (Minutes of NTLG FBT Subcommittee meeting, 20 November 2003).

You have informed us for the purposes of this question, that the vehicle satisfies the definition of a car for tax purposes. Therefore any maintenance or repairs to the vehicle whilst being held and paid for by the employee can be considered a recipients payment.

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