Edited version of your written advice

Authorisation Number: 1051212166818

Date of Advice: 21 April 2017

Ruling

Subject: Fringe benefits tax

Question 1

Are the car parking benefits provided by you exempt under section 58GA of the Fringe Benefits Tax Assessment Act 1986?

Answer

Yes

This ruling applies for the following period:

FBT Year ended 31 March 2016

The scheme commences on:

1 April 2015

Relevant facts and circumstances

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

You are a company limited by guarantee.

You are not a government body, a listed public company or a subsidiary of a public listed company.

You provided car parking benefits to your employees during the Fringe Benefit Tax year from 1 April 2015 to 31 March 2016. The car parking benefit is part of the employee's salary sacrifice package.

Your place of business is at tenanted offices.

The property provides parking situated in the basement of the building to its tenants and charges a monthly fee. The carpark is not available to the public. Access is restricted to Card Holders and Authorised persons only.

You pay rental on a monthly basis for the office premises and the car parking spaces.

Your total income was less than $10 million for the financial year ending 30 June 2014.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 section 39A

Fringe Benefits Tax Assessment Act 1986 section 58GA

Fringe Benefits Tax Assessment Act 1986 subsection 58GA(1)

Fringe Benefits Tax Assessment Act 1986 subsection 58GA(3)

Fringe Benefits Tax Assessment Act 1986 subsection 136(1)

Income Tax Assessment Act 1936 paragraph 103A(2)(a)

Income Tax Assessment Act 1936 paragraph 103A(2)(c)

Income Tax Assessment Act 1936 subsection 103A(4)

Income Tax Assessment Act 1997 section 6-5

Income Tax Assessment Act 1997 section 6-10

Income Tax Assessment Act 1997 section 995-1

Reasons for decision

Question 1

Summary

The car parking benefits provided by you to your employees are exempt benefits.

Detailed reasoning

Section 58GA of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) exempts from fringe benefits tax benefits connected with the provision of car parking by small business employers. The exemption will apply to a car parking benefit provided in respect of the employment of an employee if all of the conditions of subsection 58GA(1) of the FBTAA are satisfied.

Subsection 58GA(1) of the FBTAA states:

A car parking benefit provided in an FBT year in respect of the employment of an employee is an exempt benefit if:

a) the car is not parked at a commercial parking station; and

b) the employer of the employee is not a public company (see subsection (3)), or a subsidiary of a public company (see subsection (3)), in relation to the day on which the benefit is provided; and

c) the employer is not a government body; and

d) either:

i. the sum of the employer's ordinary income and statutory income for the year of income ending most recently before the start of the FBT year is less than $10 million; or

ii. the employer is a small business entity for the year of income ending most recently before the start of the FBT year.

Therefore, the exemption under subsection 58GA(1) of the FBTAA requires that the following conditions are met:

● a car parking benefit is provided,

● the car parking benefit is provided in respect of the employee's employment,

● the car is not parked at a commercial parking station,

● the employer is not a public company nor a subsidiary of a public company,

● the employer is not a government body, and

● either:

(i) the sum of the employer's ordinary income and statutory income for the year of income ending most recently before the start of the FBT year is less than $10 million; or

(ii) the employer is a small business entity for the year of income ending most recently before the start of the FBT year.

Car parking benefit is provided

The term 'car parking benefit' is defined in subsection 136(1) of the FBTAA as 'a benefit referred to in section 39A' of the FBTAA.

Paragraph 9 of Taxation ruling TR 96/26 Fringe benefits tax: car parking fringe benefits (TR 96/26) lists the criteria that must be met in order for a car parking benefit to arise under section 39A of the FBTAA.

You provide a car parking benefit to your employees. This condition is met.

Car parking benefit provided in respect of the employee's employment

The car parking benefit you provide to your employees is a part of their salary packaging arrangement. The benefit is therefore provided in respect of their employment. This condition is met.

Not parked at a commercial car parking station

The car parking spaces provided by the employer must not be provided at a commercial car parking station.

The term 'commercial parking station' is defined in subsection 136(1) of the FBTAA:

commercial parking station, 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.

One requirement of a 'commercial parking station' is that the car parking facility must be available to members of the public. This requirement is discussed at paragraph 81 of TR 96/26.

The parking facility in which you provide parking spaces for your employees is not a commercial car parking station because it is not available to the general public. This condition is met.

The employer is not a public company or a subsidiary of a public company

You are an employer that is not a public company or a subsidiary of a public company for the reasons below.

● Employer

The term 'employer' is defined in subsection 136(1) of the FBTAA. An employer includes a 'current employer'.

The term 'current employer' is also defined in subsection 136(1) of the FBTAA to include a person who pays, or is liable to pay, salary or wages.

You pay the salary or wages of your employees, therefore you are an employer.

● Public company

The term 'public company' is defined in subsection 58GA(3) of the FBTAA as '…a company covered by paragraph 103A(2)(a) of the Income Tax Assessment Act 1936…'

Subsection 58GA(3) of the FBTAA modifies the reference in section 103A of the ITAA 1936 to a year of income to a reference to the day on which the benefit is provided. Therefore, an employer will be a public company described in paragraph 103A(2)(a) of the Income Tax Assessment Act 1936 (ITAA 1936) if it is a company whose shares (other than fixed rate preference shares) are quoted on the official list of a stock exchange on the day on which the benefit is provided.

You are not a listed public company, therefore you are not a public company as defined in subsection 58GA(3) of the FBTAA.

● Subsidiary of a public company

The term 'subsidiary of a public company' is defined in subsection 58GA(3) of the FBTAA as '…a subsidiary of a public company within the meaning of subsection 103A(4) of the Income Tax Assessment Act 1936…'

Under subsection 103A(4) of the ITAA 1936 a company is a public company if at all times during the income year it is wholly owned beneficially by one or more public companies (including by a company that is itself a wholly owned public company subsidiary). A subsidiary that is not wholly publicly owned may also qualify if it is more than 50% beneficially owned directly or indirectly by one or more listed public companies, and it satisfies further specified requirements.

You are not a subsidiary of a public company as defined in subsection 58GA(3) of the FBTAA. This condition is met.

Employer is not a government body

The term 'government body' is defined in subsection 136(1) of the FBTAA:

government body means the Commonwealth, a State, a Territory or an authority of the Commonwealth or of a State or Territory.

You are not a government body. This condition is met.

For the year of income ending most recently before the start of the FBT year, the employer's ordinary and statutory income is less than $10 million or the employer is a small business entity

The terms 'ordinary income' and 'statutory income' are both defined in subsection 58GA(3) of the FBTAA to have 'the same meaning as in the Income Tax Assessment Act 1997.'

Section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997) states 'ordinary income has the meaning given by section 6-5' of the ITAA 1997. Section 6-5 states 'income according to ordinary concepts…is called ordinary income.'

Section 995-1 of the ITAA 1997 states 'statutory income has the meaning given by section 6-10' of the ITAA 1997. Section 6-10 states statutory income is those 'amounts that are not ordinary income but are included in your assessable income by provisions about assessable income'.

To satisfy this requirement, the sum of your ordinary and statutory income must be less than $10 million for the year of income ending most recently before the start of the FBT year commencing 1 April 2015.

The sum of your ordinary and statutory income for the year ended 30 June 2014 was less than $10 million. This condition is met.

Conclusion

You meet all of the conditions specified in section 58GA of the FBTAA therefore the car parking benefits provided by you are exempt.

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