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Ruling

Subject: Fringe benefits: car parking benefits

Question 1

Will the provision of car parking to an employee based in a regional office who attends a meeting at your CBD office in a car parking space that you lease be a car parking benefit as defined in section 39A of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) if the employee on that day uses a fleet or allocated car to travel to the car parking space from their residence and/or from the car parking space to their residence?

Answer

Yes

Question 2

Will the provision of car parking to an employee based in a regional office who attends a meeting at your CBD office in a car parking space that you lease be a car parking benefit as defined in section 39A of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) if the employee uses a fleet car to travel to the car parking space from the regional office and from the car parking space to the regional office?

Answer

No

This ruling applies for the following periods:

Year ended 31 March 2013

Year ended 31 March 2014

Year ended 31 March 2015

Year ended 31 March 2016

The scheme commences on:

1 April 2012

Relevant facts and circumstances

You have a number of different offices within the State including an office located in the Central Business District (CBD). The other offices are referred to as regional offices.

During the year certain employees located in the regional offices are required to attend a meeting at your CBD office. The meetings usually run between 8am and 5pm.

To reduce business parking costs you provide regional staff with a visitor parking space on the days that they are required to attend a meeting at your CBD office.

Four different scenarios apply in relation to the means of travel for your employees travelling to a meeting in the CBD office, namely;

(1) (i) employee travels from home to the regional office;

(ii) employee picks up a fleet car and drives to the CBD parking space;

(iii) employee attends a meeting at your CBD office;

(iv) employee drives back to the regional office and returns the fleet car;

(v) employee travels home from the regional office.

(2) (i) employee garages a fleet car at their residence to enable him or her to travel to the CBD office the following day;

(ii) employee drives the fleet car from their residence to the CBD parking space;

(iii) employee attends a meeting at your CBD office;

employee drives back in the fleet car to their residence and garages the fleet car at their residence;

the next morning the employee drives from their residence to the regional office and returns the fleet car.

(3) (i)employee garages a fleet car at their residence to enable him or her to travel to the CBD office the following day;

(ii) employee drives the fleet car from their residence to the CBD parking space;

(iii) employee attends a meeting at your CBD office;

(iv)employee drives back in the fleet car to the regional office and returns the fleet car;

(v) employee travels home from the regional office.

(4) (i) an Executive officer is provided with an allocated car which is garaged at their residence;

(ii) the Executive officer drives the allocated car from their residence to the CBD parking space;

(iii) the Executive officer attends a meeting at your CBD office;

(iv) the Executive officer drives back in the allocated car to their residence and garages the car.

You lease the visitor parking spaces.

Relevant legislative provisions

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

Fringe Benefits Tax Assessment Act 1986 Subsection 136(1)

Reasons for decision

Will the provision of car parking to an employee based in a regional office who attends a meeting at your CBD office in a car parking space that you lease be a car parking benefit as defined in section 39A of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

Under the arrangement you are providing parking to employees from your regional offices who are required to attend a meeting in your CBD office. Subsection 39A(1) of the FBTAA sets out the circumstances in which a car parking benefit will arise from this parking.

Subsection 39A(1) states:

If the following conditions are satisfied in relation to a daylight period, or a combination of daylight periods, on a particular day:

(a) during the period or periods, a car is parked on one or more premises of a person (the ``provider''), where:

(i) the premises, or each of the premises, on which the car is parked are business premises, or associated premises, of the provider; and

(ii) a commercial parking station is located within a 1 km radius of the premises, or each of the premises, on which the car is parked; and

(iii) the lowest fee charged by the operator of any such commercial parking station in the ordinary course of business to members of the public for all-day parking on the first business day of the FBT year is more than the car parking threshold;

(b) the total duration of the period or periods exceeds 4 hours;

(c) any of the following applies:

(i) a car benefit relating to the car is provided on that day to an employee or an associate of an employee in respect of the employment of the employee;

(ii) the car is owned by, or leased to, an employee or an associate of an employee at any time during the period or periods;

(iii) the car is made available to an employee or an associate of an employee at any time during the period or periods by another person, where:

(A) the other person is neither the employer of the employee nor an associate of the employer of the employee; and

(B) the other person did not make the car available under an arrangement to which the employer of the employee, or an associate of the employer of the employee, is a party;

(d) the provision of parking facilities for the car during the period or periods is in respect of the employment of the employee;

(e) on that day, the employee has a primary place of employment;

(f) during the period or periods, the car is parked at, or in the vicinity of, that primary place of employment;

(g) on that day, the car is used in connection with travel by the employee between:

(i) the place of residence of the employee; and

(ii) that primary place of employment;

(h) the provision of parking facilities for the car during the period or periods is not taken, under the regulations, to be excluded from this section;

(i) the day is on or after 1 July 1993;

the provision of parking facilities for the car during the period or periods is taken to constitute a benefit provided by the provider to the employee or the associate of the employee in respect of the employment of the employee.

In considering these requirements it is agreed that:

· the requirements in paragraph (a) are met as:

o the premises on which the car is parked are premises of the provider;

o a commercial parking station is located within a one kilometre radius of the premises on which the car is parked; and

o the lowest fee charged by the operator of the commercial parking station is more than the car parking threshold;

· the requirements in paragraph (b) are met as the car is parked in the car parking space for more than four hours on the particular day;

· the requirements in paragraph (d) are met as the parking is provided in respect of the employment of the employee;

· the requirements in paragraph (h) are met as the provision of the car parking facilities is not taken under the regulations to be excluded from the operation of the section; and

· the requirements of paragraph (i) are met as the day is on or after 1 July 1993.

Therefore, the relevant requirements to consider are those contained in paragraphs (c), (e), (f) and (g). These paragraphs need to be considered in the context of the following three scenarios:

i. the employee drives a fleet car between the regional office and the parking space;

ii. the employee drives a fleet car between their place of residence and the parking space. This scenario includes both the scenario where the employee having driven the fleet car from their residence in the morning returns the car to the regional office in the afternoon and the scenario where the employee drives the fleet car to their residence in the afternoon; and

iii. the employee has an allocated car which they drive between their residence and the parking space.

Employee drives a fleet car between the regional office and the parking space

Are the requirements of paragraph (c) met?

Paragraph (c) contains three alternative requirements; one of which must be met. The three alternate requirements are:

1. a car benefit relating to the car is provided on the particular day to an employee or an associate of an employee;

2. the car is owned by, or leased to an employee or an associate of an employee during the relevant period; or

3. the car is made available to an employee or an associate of an employee during the relevant period by a person who is not the employer nor an associate of the employer.

1. Does a car benefit arise?

In this first scenario the employee will drive a fleet car between the regional office and the CBD office. Subsection 7(1) provides that a car benefit will arise from this use if the car is either:

· applied to a 'private use' by the employer or an associate of the employee; or

· the car is taken to be available for the private use of the employee or an associate of the employee.

'Private use' is defined in subsection 136(1) to mean:

… any use of the motor vehicle by the employee or associate, as the case may be, that is not exclusively in the course of producing assessable income of the employee

Guidance as to the circumstances in which the use of a car will constitute 'private use' is provided in Taxation Ruling MT 2027 Fringe benefits tax: private use of cars: home to work travel. Paragraph 23 of MT 2027 in discussing the treatment of travel between two places of employment states:

The treatment of travel between two places of employment or business is canvassed in Taxation Ruling IT 2199. The major elements of that ruling for present purposes may be summarised as follows -

· Travel directly between two places of employment, two places of business or a place of employment and a place of business, will generally be accepted as business travel where the person does not live at either of the places and the travel has been undertaken for the purpose of enabling the person to engage in income-producing activities.

In accordance with this ruling the travel between the regional office and the CBD office will be business travel. Therefore, the journeys between the regional office and the parking space will not constitute the private use of the car.

Alternatively, subsections 7(2) and 7(3) set out the circumstances in which a car will be taken to be available for the private use of an employee.

Under subsection 7(2) a car will be taken to be available for the private use of an employee when it is garaged or kept near a place of residence of the employee or an associate. This subsection will not apply in the first scenario as the car is not garaged at the employee's residence.

Under subsection 7(3) a car will taken to be available for the private use of an employee when the car is not at the business premises of the employer or an associate and one of the following conditions is satisfied:

· the employee is entitled to apply the car to a private use;

· the employee is not performing duties of employment and has custody or control of the car; or

· an associate of the employee is entitled to use or has custody or control of the car.

Under your motor vehicle policy fleet cars can only be used for business travel. Therefore, the employee is not entitled to apply the car to a private use. Further, as the employee is performing duties of employment when he or she has custody or control of the car and an associate is not entitled to use or have custody of the car subsection 7(3) will not apply when a fleet car is driven between a regional office and the parking space.

Therefore, as the journeys between the regional office and the parking space will not constitute the private use of the car and neither subsection 7(2) nor subsection 7(3) deem the car to be available for the private use of the employee a car benefit will not arise from the use of the car.

2. Is the car owned or leased by the employee or an associate of the employee?

The car is a fleet car which you own or lease. It is not owned or leased by the employee or an associate of the employee.

3. Is the car made available to the employee by a person who is not the employer or an associate of the employer?

As you make the car available to the employee this third requirement will not apply.

Therefore, as none of the three alternative requirements are met the requirements of paragraph 39A(1)(c) will not be met when an employee drives a fleet car between a regional office and the parking space.

Are the requirements of paragraph (e) met?

Paragraph (e) requires the employee on the relevant day to have a primary place of employment.

The definition of 'primary place of employment' in subsection 136(1) of the FBTAA is stated as follows:

primary place of employment, in relation to an employee in relation to a day, means business premises, or associated premises, of the employer of the employee, or of an associate of the employer, where:

(a) if the employee performed duties of his or her employment on that day - on that day; or

(b) in any other case - on the most recent day before that day on which the employee performed duties of his or her employment;

those premises are or were:

(c) the sole or primary place of employment of the employee; or

(d) otherwise the sole or primary place from which or at which the employee performs duties of his or her employment.

Guidance as to the meaning of this definition is contained in Taxation Ruling TR 96/26 Fringe benefits tax: car parking fringe benefits. Paragraph 12 of TR 96/26 states:

Does employer-provided parking for vehicles used for work-related purposes, which are parked next to temporary places of work (e.g., electricity substations), constitute a car parking benefit?

Answer

An employee's primary place of employment is the business or associated premises of the employer where, on a day, duties of work are performed. A substation can constitute a place of employment on that day. A car parking fringe benefit may therefore arise where employer-provided parking is made available at these work sites.

In accordance with this response the CBD office is considered to be the primary place of employment on the day the employee attends a meeting in the CBD Office.

Therefore, on that day the employee has a primary place of employment.

Are the requirements of paragraph (f) met?

Paragraph (f) requires the car to be parked at or in the vicinity of the primary place of employment. As the parking space is located at the same address as your CBD office this requirement is met.

Are the requirements of paragraph (g) met?

Paragraph (g) requires the car on the relevant day to be used in connection with travel by the employee between the residence of the employee and the primary place of employment.

This requirement will not be met as the car is used to travel between the regional office and the CBD office, rather than between the residence of the employee and the primary place of employment.

Conclusion

A car parking benefit will not arise when the employee uses a fleet car to travel between the regional office and the parking space as the requirements of paragraphs 39A(1)(c) and (g) are not met. As a car parking benefit does not arise, the provision of parking will be an exempt benefit under paragraph 58G(1)(b) of the FBTAA.

Employee drives a fleet car between their place of residence and the parking space

Are the requirements of paragraph (c) met?

As discussed above, paragraph (c) requires one of three alternative requirements to be met. The three alternate requirements are:

1. a car benefit relating to the car is provided on the particular day to an employee or an associate of an employee;

2. the car is owned by, or leased to an employee or an associate of an employee during the relevant period; or

3. the car is made available to an employee or an associate of an employee during the relevant period by a person who is not the employer nor an associate of the employer.

1. Does a car benefit arise?

In this second scenario the employee will drive a fleet car between their residence and the CBD office. At some point during the day the car will be garaged at the employee's residence. This may be in the morning before the employee drives to the CBD, or it may be after the employee has returned from the CBD.

As the car will be garaged at the employee's residence the car will be taken to be available for the private use of the employee under subsection 7(2) of the FBTAA. Therefore, on that day a car benefit will arise under subsection 7(1) of the FBTAA.

As a car benefit arises on the particular day when the car is parked in the parking space the requirements of paragraph (c) are met.

Are the requirements of paragraph (e) met?

Paragraph (e) requires the employee on the relevant day to have a primary place of employment.

As discussed above, the employee has a primary place of employment on that day which is the CBD office.

Therefore, the requirements of paragraph (e) are met.

Are the requirements of paragraph (f) met?

Paragraph (f) requires the car to be parked at or in the vicinity of the primary place of employment. As the parking space is located at the same address as your CBD office this requirement is met.

Are the requirements of paragraph (g) met?

Paragraph (g) requires the car on the relevant day to be used in connection with travel by the employee between the residence of the employee and the primary place of employment.

This requirement will be met as the car is used to travel between the employee's residence and the CBD office.

Conclusion

As each of the requirements are met a car parking benefit will arise when the employee uses a fleet car to travel between their place of residence and the parking space.

Employee drives an allocated car between their place of residence and the parking space

The conclusions reached above in relation to an employee driving a fleet car between their place of residence and the parking space apply equally to the scenario where an employee drives an allocated car between their place of residence and the parking space. Therefore, for the reasons set out above, a car parking benefit will arise when the employee drives an allocated car between their place of residence and the parking space.