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Edited version of your written advice
Authorisation Number: 1051305031253
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You cannot rely on this edited version in your tax affairs. You can only rely on the advice that we have given to you or to someone acting on your behalf.
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Date of advice: 7 November 2017
Ruling
Subject: Car parking fringe benefits
Question 1
Where a commercial parking station, on the first business day of the FBT year, charges both a daily rate and a weekly rate, is the daily rate equivalent of the weekly rate (where the result is lower than the daily rate) the lowest fee charged for all-day parking for the purposes of subparagraph 39A(1)(a)(iii) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA 1986)?
Answer
Yes
This ruling applies for the following periods:
1 April 2016 – 31 March 2017
The scheme commences on:
1 April 2016
Relevant facts and circumstances
The organisation provides car parking benefits to their employees.
There are a number of commercial car parks within a 1 km radius of the organisations premises.
One car park within the radius has the following parking options: -
1. A daily rate
2. Weekly rate
Both rates were available options on the 1 April 2016.
This car park and these options are open to the general public.
There is no limit to the number of days of continuous parking allowed.
All other commercial car parks charged a day rate below the 2017 car parking fringe benefit threshold of $8.48/day.
Relevant legislative provisions
Fringe Benefits Tax Assessment Act 1986 subparagraph 39A(1)(a)(iii)
Fringe Benefits Tax Assessment Act 1986 subsection 136(1).
Fringe Benefits Tax Assessment Act 1986 section 39C
Fringe Benefits Tax Assessment Act 1986 section 39E
Fringe Benefits Tax Assessment Act 1986 section 39A
Reasons for decision
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.
You have stated as a fact that the parking station listed is a commercial parking station which offers all day parking to members of the public during business hours for a fee. It is located within a one-kilometre radius of the premises on which the employee’s cars are parked.
The car parking fringe benefits provisions require the ascertainment of the amount of the lowest fee charged by a commercial parking station for all-day parking on a particular day. Section 39E of the FBTAA provides a daily rate equivalent where there is a periodic parking arrangement.
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.
When a customer parks their car for more than one day, the parking station is providing all-day parking on a periodic basis under section 39E of the FBTAA.
The parking station 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 (365 days).
When a commercial parking station charges a periodic fee for all-day parking, the daily rate necessary for the valuation is determined by dividing the total fee by the “business days in the period” as stated in subsection 39E(1) of the FBTAA. Subsection 136(1) states that business days exclude weekends and public holidays. We have determined that during this period there are 252 business days.
The parking station is taken to charge, on any particular day, a daily equivalent rate as explained in Taxation Ruling TR 96/36 at paragraph 40. This is calculated by use of the formula:
Total Fee/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.
Business days in period means the number of business days in that period.
Therefore, the rates as calculated using the above formula 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.
For the purposes of section 39A of the FBTAA the car parking threshold for the fringe benefits tax year commencing on 1 April 2016 is $8.48 as set out in Taxation Determination TD 2016/7.
Subsection 39A(1) of the FBTAA states that a car parking fringe benefit may arise if an employer provides car parking to an employee and all the following conditions are satisfied:
● the car is parked at premises that are owned or leased by, or otherwise under the control of, the provider (usually you as the employer)
● the car is parked for a total of more than four hours between 7.00am and 7.00pm on any day
● the car is owned by, leased to, or otherwise under the control of, an employee, or is provided by you
● the parking is provided in respect of the employee's employment
● the car is parked at or near the employee's primary place of employment on that day
● the car is used by the employee to travel between home and work (or work and home) at least once on that day
● there is a commercial parking station that charges a fee for all-day parking within a one-kilometre radius of the premises on which the car is parked and
● the commercial parking station fee for all-day parking is more than the car parking threshold
● at the beginning of the FBT year, the commercial parking station fee for all-day parking was more than the car parking threshold.
In particular we note in the last dot point that the all-day parking fee at the commercial car parking station needs to exceed the car parking threshold for a fringe benefit to arise. The facts in this case are that the daily rate charged by the commercial parking station is less than the car parking threshold of $8.48. Accordingly, as the requirements of subparagraph 39A(1)(a)(iii) of the FBTAA are not met, you have not provided a benefit to your employees in the form of car parking fringe benefits.
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