Edited version of private ruling

Authorisation Number: 1011653493867

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Ruling

Subject: Fringe benefits tax liability on exempt car parking benefits

Question 1

For the purposes of satisfying the condition in paragraph 58GA(1)(b) of the FBTAA, is the taxpayer a "subsidiary of a public company"?

Answer

Yes

Question 2

Are the car parking fringe benefits provided by the taxpayer, exempt benefits under section 58GA of the FBTAA?

Answer

Yes

The ruling applies for the following period:

April 1 2009 to 31 March 2010

The Scheme commenced on:

April 1 2009

Relevant Facts and Circumstances

The company had two shareholders during the 2010 FBT year. 75% of interest is owned by a public company while the remaining 25% is owned by an individual shareholder. For the financial years ended 2008 and 2009, the sum of the company's ordinary income and statutory income was less than ten million dollars in each of the financial years.

The company is an employer and provided car parking fringe benefit during the 2010 FBT year to employees which was not at a commercial parking station.

The company provided car parking benefits during the 2010 FBT year to employees.

The car is not parked at commercial parking station; and

The company is not a government body; and

The company is a small business entity with ordinary income and statutory income less than 10 million.

Relevant Legislative Provisions

Section 58GA Fringe Benefits Tax Assessment Act 1986

Sub-section 58GA(3) Fringe Benefits Tax Assessment Act 1986

Paragraph 58GA(1)(b) Fringe Benefits Tax Assessment Act 1986

Subsection 39A(1) Fringe Benefits Tax Assessment Act 1986

Section 103A Income Tax Assessment Act 1936

Sub-section 103A(4) Income Tax Assessment Act 1936

Reasons for Decision

Question 1

Summary

Section 58GA(1)(b) FBTAA states that a requirement for an exempt benefit is that the employer of the employee is not a subsidiary of a public company within the meaning of sub-section 103A(4) ITAA (1936). The company is not a subsidiary of a public company within the meaning of the aforementioned subsection.

Detailed Reasoning

For the purposes of section 58GA of the FBTAA, public company is defined in sub-section 3 as:

…a company covered by paragraph 103A(2)(a) of the Income Tax Assessment Act 1936, but reading the reference in that paragraph to the last day of the year of income as a reference to the day on which the benefit is provided.

For the purposes of section 58GA of the FBTAA, a "subsidiary of a public company" is defined in sub-section 3 as:

a subsidiary of a public company within the meaning of subsection 103A(4) of the Income Tax Assessment Act 1936, but reading:

(a) a reference in section 103A of that Act to a year of income as a reference to the day on which the benefit is provided; and

(b) a reference in that section to a public company as a reference to a public company within the meaning of this section.

Section.58GA of the FBTAA states: "subsidiary of a public company" means a subsidiary of public company within the meaning of subsection 103A(4) of the ITAA 1936.

We accept your analysis that:

Section 103A provides two tests, 100% ownership test (103A(4) [100% Public company subsidiary]) and controlling voting power test (103A(4b) [Non-wholly-owned public company subsidiary]). An entity is tested against subsection 103A(4), and if it fails, is then tested against subsection 103A(4B).

Reading s.103A(4B), the Act states:

Subject to subsection (4D), a company that is not, by virtue of subsection (4), a subsidiary of a public company for the purpose of this section in relation to the year of income is, for the purpose of this section (meaning: section s.103A), a subsidiary of a public company in relation to the year of income....

S.103A(4B) provides an alternative test once a company fails the 100% ownership test (s.103A(4)).

Subsection (4B) defines subsidiary which has been excluded by the subsidiary definition of subsection (4). Two subsections defined two different types of subsidiaries, [100% owned public company subsidiary] and [non-wholly-owned public company subsidiary] which are both "subsidiary of a public company within section s.103A. However, a subsidiary of public company by the meaning of subsection 103A(4B), cannot be a subsidiary of public company by virtue of subsection (4), at the same time.

75% interest of the Company is owned by public company - Fairfax Digital Ltd, the company failed the subsection 103A(4) test, therefore, has to move on to subsection (4B) for further test to determine if the Company is a "subsidiary of a public company" for the purpose of section 103A.

However, FBTAA s.58GA merely refers to subsection 103A(4) of ITAA 1936 for definition, not the broader meaning within the whole section 103A, in other words, once the Company failed the 100% ownership tested outlined in s.103A(4), the Company is not a "subsidiary of a public company" for the purpose of FBTAA s.58GA. Whether or not the Company passes the other test (s.103A(4B)) outlined in the rest of section 103A is not relevant for the purpose of FBTAA s.58GA.

Therefore, it is considered that the company is not a public company or a subsidiary of a public company.

Question 2

Summary

The car parking fringe benefits provided by the taxpayer are exempt benefits under section 58GA of the FBTAA as the requirements for the exemption are satisfied.

Detailed Reasoning

Subsection 58GA(1) of the FBTAA states 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 (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 employers 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.

Do your employees park in a commercial parking station?

Your employees park their cars in a non-commercial parking station. They are parked in a car park close to the business premises of the employer.

Are you a public company or a subsidiary public company?

You state that you are not a public company or a subsidiary of a public company. This has been confirmed in determining question one.

Are you a government body?

You are not a government body.

Is your ordinary income and statutory income for the year of income ending most recently before the start of the FBT year less than $10 million?

You have stated that your income, both ordinary and statutory for the financial year ended 30 June 2008 was less than $10 million.

Therefore you meet the criteria making you eligible for the small business car parking fringe benefits tax exemption, as we have determined in question one that you are not a public company or a subsidiary of a public company and all the other requirements of section 58GA of the FBTAA are met.