Edited version of private advice

Authorisation Number: 5010072312373

Date of advice: 28 April 2021

Ruling

Subject: Small business car parking exemption - commercial parking station

Question

Will the lower level of the car park at the premises used by the employer be considered to be a commercial parking station in accordance with section 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA 1986)?

Answer

No, the lower level of the car park at the premises used by the employer is not considered to be a commercial parking station.

This ruling applies for the following periods:

FBT year ending 31 March 20XX

FBT year ending 31 March 20XX

FBT year ending 31 March 20XX

FBT year ending 31 March 20XX

FBT year ending 31 March 20XX

FBT year ending 31 March 20XX

FBT year ending 31 March 20XX

FBT year ending 31 March 20XX

The scheme commenced on:

1 April 20XX

Relevant facts and circumstances

The employer is a small business entity for the purposes of section 58GA of the FBTAA 1986.

The employer is not a government body.

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

The employer leases the premises from which it operates its business in Australia.

There is a multi-level under cover car park located at the premises.

The employer has a written licence agreement with the landlord of the property. The agreement provides exclusive licence to park cars in the bays identified in the agreement. The agreement entitles the employer to several secure, undercover, reserved car bays. The licence agreement is for X years.

The carpark comprises commercial and private tenant parking, divided into two separate and distinct areas.

The tenant parking is located on the lower level of the carpark. Access is obtained at the boom gate with an approved tenant pass. No unauthorised access is permitted.

Lift and stair access from the tenant parking level to the ground floor of the premises is restricted by security pass. This restricts public access to the tenant floors of the car park.

The tenant level car park does not meet Australian Building Standards because:

•                     Structural pillars encroach into marked bays whereas the Standards provide that pillars should be excluded from the marked bays, so that appropriate spacing is provided. This is illustrated by the differences in tenant parking and public parking.

•                     The ceiling height did not meet the minimum requirements of the Standards.

Employees of the employer have used the provided car park throughout the FBT year.

In the event the tenant car bays are not utilised by a tenant on any given day, they are not made available to the general public for their use.

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 136(1)

Reasons for decision

Summary

The lower level of the car park at the premises used by the employer is not considered to be a commercial parking station.

Detailed reasoning

The small business car parking exemption in subsection 58GA(1) of the FBTAA 1986 provides that 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, or a subsidiary of a public company, 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 following conditions must be met for the provision of a car parking benefit to be an exempt benefit under section 58GA of the FBTAA 1986:

a.)           a car parking benefit is provided;

b.)           the car parking benefit is provided in respect of the employment of the employee;

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

d.)           the employer is neither a public company nor a subsidiary of a public company;

e.)           the employer is not a government body; and

f.)            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.

Is the tenant car park a commercial parking station?

'Commercial parking station' is defined in subsection 136(1) of the FBTAA 1986 as follows:

'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.

Paragraph 12 of Draft Taxation Ruling TR 2019/D5 provides that a car park is a commercial parking station as defined where the car park:

•                     is permanent;

•                     is a commercial car parking facility;

•                     makes all-day parking available to the public on payment of a fee;

•                     is not on-street parking; and

•                     does this in the ordinary course of business.

For the purposes of subsection 136(1) of the FBTAA 1986, all of these conditions must be satisfied.

Permanent

We are satisfied that the car parking facilities on which the leased car parking facilities are located is permanent, as they are located in a car park built in the premises, and the parking facilities are also provided on an on-going basis. The car parking facilities are permanent as they are enduring or lasting as such and not temporary or transient in nature (paragraph 14 of Draft Taxation Ruling TR 2019/D5).

This element of the definition of commercial parking station is satisfied.

Commercial parking facility

We are also satisfied that the car parking facilities on which the leased car parking facilities are located is a commercial car parking facility, as the car parking facilities on the premises:

•                     is a purpose-built parking facility (being parking provided as part of an office building);

•                     offers parking to members of the public, with the exception of the leased car parking facilities, as discussed in the next element (paragraphs 15 and 16 of Draft Taxation Ruling TR 2019/D5).

This element of the definition of commercial parking satisfied is satisfied.

Makes all-day parking available to the public on payment of a fee;

Paragraph 17 of Draft Taxation Ruling TR 2019/D5 states:

17. The term 'public' takes its ordinary meaning. A car park is offered to the public where car spaces are available to any member of the public. Contractual terms may restrict who may use the car park, for instance, an airport car park may be restricted to passengers and meters and greeters of passengers. Such restrictions do not prevent the car park from being available to the public, provided any member of the public that accepts these restrictions can use the car park.

Although the landlord of the premises provides one car parking facility, we consider that it is divided into two separate and distinct sections.

The car park is accessible via one entrance; however, the general public is prohibited from parking on the lower-level tenant allocated parking bays. Access to these parking bays is granted via a tenant pass. No unauthorised access is permitted.

Lift and stair access from the tenant parking level to the ground floor of the premises is also restricted by tenant pass. This then restricts public access to the tenant parking level.

Moreover, the employer and other tenants have a contractual and exclusive right to usage of the bays on the tenant level. This further reinforces the physical segregation argument that these bays are not accessible to the general public.

We also consider that the tenant level car park could not be used by the general public as that level of the car park does not meet the Australian Building Standards for a public car park because:

•                     Structural pillars encroach into marked bays whereas the Standards provide that pillars should be excluded from the marked bays, so that appropriate spacing is provided.

•                     The ceiling height did not meet the minimum requirements of the Standards.

Due to these factors, the landlord could not charge the general public for these bays.

Based on these circumstances, we consider that all-day parking is not made available to the public on payment of a fee in respect of the leased car parking facilities provided by the employer to its employees on the lower level of the premises, as access to the lower level is restricted to tenant car parking and it is distinct and separate to the commercial parking provided on the other levels of the car park.

This specific element of the definition of commercial parking station is not satisfied.

Not on-street parking

This element of the definition of commercial parking station is met.

Offers car parking in the ordinary course of business

This element of the definition of commercial parking station is met.

All the elements of the definition of commercial parking station have not been satisfied in this instance.

The cars of the employer's employees who park on the premises will not be parked at a commercial parking station when considering the application of the small business car parking exemption in section 58GA of the FBTAA 1986.

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