Edited version of your private ruling

Authorisation Number: 1012456436274

Ruling

Subject: Fringe benefits tax: exempt benefits

Question 1

Where an authority provides car parking benefits and eligible car parking expense payment benefits to its employees who are also employed by, or connected with public education institutions, will subsection 58G(3) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) apply to make these benefits exempt benefits?

Answer

No

This ruling applies for the following periods:

1 April 2012 to 31 March 2013

The scheme commences on:

1 April 2012

Relevant facts and circumstances

The authority

1. The authority is a statutory authority of a state government established under an Act.

2. A key function of the authority is to provide various services which support the state's education system.

The employees

3. The authority employs, on a casual basis, registered school teachers to undertake duties which do not include teaching duties.

4. The employees are also employed at public educational institutions.

Car parking

5. Employees may park their cars at a specific parking venue. The authority pays for hire of the venue but does not pass on the cost of hire to its employees.

6. Where employees are required to attend other venues they may be required to pay for parking. In those instances, the authority reimburses the employee the full cost of parking.

7. On each occasion the employee's car is parked at or near the primary place of employment for more than four hours between 7.00am and 7.00pm and they are travelling between home and work on that day.

8. A commercial parking station is located within X km of the parking venue provided by the authority, and the lowest fee charged by the commercial parking station for all day parking exceeds the car parking threshold for the year ended 31 March 20YY.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 section 20, section 39A, subsection 58G(3) and subsection 136(1)

Reasons for decision

Car parking fringe benefits - free parking at adjoining venue

Section 39A of the FBTAA lists the criteria which must be met before a car parking fringe benefit will arise.

Taxation Ruling TR 96/26 fringe benefit tax: car parking benefits states at paragraph 9:

Section 39A of the FBTAA lists the following criteria, all of which must be met before a car parking fringe benefit will arise;

a)  a car is parked at premises that are owned or leased by or otherwise under the control of the provider (usually the employer);

b)  a commercial parking station is located within 1 km of the employer-provided parking facility;

c)  the lowest fee charged in the ordinary course of business, to members of the public, for all-day parking by a commercial parking station, exceeds the car parking threshold figure;

d)  the car is parked for a total of more than 4 hours between the hours of 7 am and 7 pm on the day. The 4 hour period need not be continuous, but may be made up of several parking periods;

e)  the car is owned by, leased to, or otherwise under the control of, an employee or associate, or it is provided by the employer or associate of the employer;

f)  the parking is provided in respect of the employee's employment;

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

h)  the car is used by the employee to travel between place of residence and primary place of employment at least once on that day; and

i) the day is on or after 1 July 1993.

On the facts of this case:

· the employees' cars are parked at a venue which is leased or otherwise under the control of the authority;

· a commercial parking station is located within X km of the venue, and the lowest fee charged by it for all day parking exceeds the car parking threshold figure;

· the employees' cars are parked for a total of more than 4 hours between the hours of 7am and 7pm on the day;

· the parking is provided in respect of the employers' employment, and they have a primary place of employment at an adjoining venue;

· the cars are used by the employees to travel between their residence and primary place of employment.

In this case, the provision of free parking by the authority to their employees is considered to be the provision of car parking benefits.

The car parking benefits will be fringe benefits unless the exemption in subsection 58G(3) of the FBTAA applies (see below)¹

Car parking expense payment fringe benefits - re-imbursement of car parking costs

Where the employer reimburses or pays for an employee's car parking costs, this is not a car parking benefit, but may be a car parking expense payment benefit.

The ATO publication Fringe Benefits Tax - a guide for employers (NO NAT 1054) sets out when a car parking expense payment benefit under section 20 of FBTAA 1986 may arise (see section 9.9):

…a car parking expense payment benefit may arise if an employee incurs expenditure on car parking, and:

· you subsequently reimburse the employee or you pay for the car parking expenses on behalf of the employee, and

· the car is parked at or near the employee's primary place of employment for more than four hours between 7.00am and 7.00pm on the day the expenses are incurred, and the car is used by the employee to travel between home and work on that day.

On the facts of this case:

(a) the authority reimburses its employees for car parking expenses;

(b) the employees' cars are parked at or near their primary place of employment for more than four hours between 7am and 7pm on the day the expenses are incurred and the car is used by the employees to travel between home and work on that day.

In this case, the reimbursement by the authority of car parking expenses to its employees is considered to be the provision of car parking expense payment benefits.

The car parking expense payment benefits will be fringe benefits unless the exemption in subsection 58G(3) of the FBTAA applies (see below).

There has been no consideration of whether another exemption in the FBTAA 1986 may apply to the car parking benefits. This is outside the scope of this ruling and not ascertainable on the facts supplied.

There has been no consideration of whether another exemption in the FBTAA 1986 may apply to the carp parking expense payment benefits. This is outside the scope of this ruling and not ascertainable on the facts supplied.

Exemption - subsection 58G(3)

A car parking fringe benefit or an eligible car parking expense payment fringe benefit will not arise if the exemption is subsection 58G(3) of the FBTAA applies.

Subsection 58(3) of the FBTAA 1986 states:

58G(3) [Employees of government public educational institutions]

If:

(a) the employer of an employee is a government body; and

(b) the employee is exclusively employed in, or in connection with, a public educational institution;

the following benefits provided in respect of the employment of the employee are exempt benefits:

(c) an eligible car parking expense payment benefit;

(d) a car parking benefit.

Eligible car parking expense payment benefit

The term 'eligible car parking expense payment benefit' is defined in subsection 136(1) of the FBTAA. 'Eligible car parking expense payment benefit' means an expense payment benefit where:

(a) the recipient is an employee or an associate of an employee,

(b) the recipients expenditure is in respect of the provision of par parking facilities for a car on one or more days and

(c) the following conditions are satisfied in relation to any of those days:

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

(ii) on that day, the car was parked for one or more daylight periods exceeding four hours in total at, or in the vicinity of, that primary place of employment;

(iii) the whole or a part of the recipients expenditure is in respect of the provision of the parking facilities to which that parking relates;

(iv) on that day, the car was used in connection with travel by the employee between the place of residence of the employee and that primary place of employment;

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

(vi) the day is on or after 1 July 1993.

It is accepted in this case that the car parking expense payment benefits satisfy the definition of eligible car parking expense payment benefits.

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.

ATO ID 2012/94 sets out the Commissioner's interpretation of the term 'authority of the state'. Generally, whether a particular entity is an authority of the state will be a question of fact and degree dependent on all the circumstances of the case. One relevant circumstance is where the authority is set up to exercise control or execute a function in the public interest.

In the circumstances of this case it is accepted that the authority is an authority of the state. The authority is therefore a government body.

Government public educational institution

It is the Commissioner's view that the exemption in subsection 58G(3) of the FBTAA only applies to employers which are government public educational institutions. TR 96/26 states at paragraph 86:

Car parking benefits will be exempt if the employer is a non profit scientific institution, a religious institution or a Commonwealth, State or Territory government educational institution. (Emphasis added)

The heading to subsection 58G(3) of the FBTAA, 'Employees of government public educational institutions', is consistent with the this view. (Under section 13 of the Acts Interpretation Act 19019 (Cth) this heading forms part of the FBTAA 1986).

The Commissioner's view is also consistent with the Senate Explanatory Memorandum to the Tax Laws Amendment (FBT Cost of Compliance) Bill 1995 (EM) which explains why subsection 58G(3) was introduced. The EM states:

3.65 A car parking benefit is provided, broadly, if commercial car parking is available and an employee is given car parking at the place of employment for a car used for travel to and from work.

3.66 Car parking benefits provided by certain employers, including public educational institutions, are exempt from tax under section 58G. On the other hand, government-provided benefits, including car parking benefits, are generally taxable.

3.67 The exemption provided by s.58G does not cover car parking benefits provided by a Commonwealth, State or Territory government educational institution because the employer is the Commonwealth, State or Territory government, not the public educational institution. This unintended outcome is contrary to the original intention of the provision, and will be corrected by this amendment.

In this case, the authority is a government body. However, the authority must be a government public educational institution in order for the exemption in subsection 58G(3) of the FBTAA to apply.

What is a public educational institution?

The term 'public educational institution' is not defined in the FBTAA.

Taxation ruling TR 2000/10 Income tax: public libraries, public museums and public art galleries, states at paragraph 18:

A public educational institution is generally a school, college or university operated on a non-profit basis.

The ATO publication Income Tax Guide for Non-Profit Organisations (NO NAT 7967) sets out the Commissioner's view on what constitutions a 'public educational institution', as follows:

A public educational institution is an institution that is available or open to the public or a section of the public and whose sole purpose is providing education. Any other purpose of the organisation must be incidental or ancillary to providing public education. Education in this context does not extend to merely providing information or lobbying.

Public educational institutions include:

· universities or colleges managed by public bodies

· grammar schools

· primary and secondary schools run by churches or religious bodies

· non-profit business colleges.

Organisations that are not public educational institutions include:

· colleges run for the profit of the private owners

· associations operated for their members' professional benefit

· promotional and lobbying bodies.

Many other organisations connected with education are not public educational institutions. Examples are a parents and friends committee and a scholarship provider.

· In this case, the key functions of the authority are to provide various services which support the state's education system.

It is considered that the key functions of the authority are not for the sole purpose of providing education to the public or a section of the public. In these circumstances the authority is not a public educational institution. It follows that the authority is not a government public educational institution.

In circumstances where the authority is not a government public educational institution, the exemption in subsection 58G(3) does not apply to exempt the car parking benefits and the car parking expense payment benefits from being taxable under the FBTAA.