Edited version of your private ruling

Authorisation Number: 1012511358693

Ruling

Subject: Fringe Benefits Tax

Question 1

Does home to office travel undertaken by X employee's constitute business journeys for the purposes of section 10 of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

Answer

Yes

Question 2

Does travel from home to a work related incident undertaken by X employee's constitute business journeys for the purposes of section 10 of the FBTAA?

Answer

Yes

Question 3:

Are cars garaged at a X employee's home between 12am and 11:59pm for two days per week 'available for private use' for the purposes of paragraph 7(2)(b) of the FBTAA?

Answer

No

Question 4:

Under regulation 3E of the Fringe Benefits Tax Regulations 1992, is home to work travel for X employees reportable on the employee's payment summary?

Answer

No

This ruling applies for the following periods:

1 April 2013 to 31 March 2019

The scheme commences on:

1 April 2013

Issue 2

Question 1:

Is the Employer entitled to a 50% concession under subsection 59(1) of the FBTAA for the taxable value of residential fuel used in relation to a remote housing benefit provided to employees residing in Y?

Answer

Yes

Question 2: I

Is the Employer entitled to a 50% concession under subsection 59(1) of the FBTAA for the taxable value of residential fuel used in relation to a remote housing benefit provided to employees residing in Z?

Answer

Yes

This ruling applies for the following periods:

1 April 2013 to 31 March 2019

The scheme commences on:

1 April 2013

Issue 3

Question 1:

Is car park A a commercial parking station for the purposes of section 39E of the FBTAA?

Answer

No

Question 2:

Is car parking provided by the carpark B a commercial parking station for the purposes of section 39E of the FBTAA?

Answer

Yes

This ruling applies for the following period:

1 April 2013 to 31 March 2014

The scheme commences on:

1 April 2013

Relevant facts and circumstances

Issue 1

The Employer has a special unit.

This unit provides expertise in certain activities in Metropolitan and Rural areas.

The total area of coverage is approx 15 kilometres.

Employees are on-call and may be called out from home during these hours.

Employees are responsible for certain activities which meet certain criteria.

When these criteria are met, investigators must follow an in-depth and rigorous procedures which includes travel.

The employees work on a 9.5 hour roster and provide an on call commitment for 24 hours a day, 7 days a week.

The employees are required to carry equipment used in the course of their activities which includes the equipment being transported to their home in a vehicle.

The approximate weight of the equipment is in excess of 80kg.

Issue 2

Locality Y did not have a population recorded in the 1981 census. Y is approximately 80km from Metropolitan area.

Locality Z had a population of less than 1500 recorded in the 1981 census. Z is approximately 160km from a Metropolitan area.

Issue 3

The Employer has an office in a metro area. Several parking spaces are provided to certain employees. The office is near a car parking station.

The car park charges different rates.

· $x for x business days

· Standard rate of $x for each business day

· A special 'early bird' rate of $x for each business day.

Both standard rates and the 'early bird' rates are provided to members of the public on ordinary commercial terms.

The Employer has leased a few spaces from another carpark for certain employees' cars which are available for a certain period of time. These parking spaces have been leased as part of a property managing agreement.

The carpark offers parking at the following rates:

· First half hour $x

· Half and hour to 1 hour $x

· 1 hour to 3 hours $x

· Over 3 hours $x

· Maximum daily rate $x

Relevant legislative provisions

Section5E of the Fringe Benefits Tax Assessment Act 1986

Subsection 5E(2) of the Fringe Benefits Tax Assessment Act 1986

Subsection 5E(3) of the Fringe Benefits Tax Assessment Act 1986

Section 7 of the Fringe Benefits Tax Assessment Act 1986

Subsection 7(1) of the Fringe Benefits Tax Assessment Act 1986

Subsection 7(2) of the Fringe Benefits Tax Assessment Act 1986

Subsection 7(2A) of the Fringe Benefits Tax Assessment Act 1986

Section 10 of the Fringe Benefits Tax Assessment Act 1986

Section 10A of the Fringe Benefits Tax Assessment Act 1986

Section 10B of the Fringe Benefits Tax Assessment Act 1986

Section 39A of the Fringe Benefits Tax Assessment Act 1986

Section 58ZC of the Fringe Benefits Tax Assessment Act 1986

Subsection 58ZC(1) of the Fringe Benefits Tax Assessment Act 1986

Section 59 of the Fringe Benefits Tax Assessment Act 1986

Subsection 59(1) of the Fringe Benefits Tax Assessment Act 1986

Subsection 58ZC(2) of the Fringe Benefits Tax Assessment Act 1986

Section 136 of the Fringe Benefits Tax Assessment Act 1986

Subsection 140(1) of the Fringe Benefits Tax Assessment Act 1986

Subsection 140(1A) of the Fringe Benefits Tax Assessment Act 1986

Subsection 140(1D) of the Fringe Benefits Tax Assessment Act 1986

Section 135P of the Fringe Benefits Tax Assessment Act 1986

Subsection 135P(2) of the Fringe Benefits Tax Assessment Act 1986

Regulation 7 of the Fringe Benefits Tax Regulations 1992

Sub regulation 7(1) of the Fringe Benefits Tax Regulations 1992

Section 16-155 of the Tax Administration Act 1953

Subsection 16-155(2) of the Tax Administration Act 1953

Reasons for decision

Issue 1 Question 1

Detailed reasoning

Relevant Law

Section 7 of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) provides that the use of a car will be a taxable fringe benefit in specified circumstances. This taxable fringe benefit may be valued either by the statutory formula under section 9 of the FBTAA, or the 'alternative operating cost method' under section 10 of the FBTAA.

It is unnecessary to discuss the operation of the 'alternative operating cost' method in detail. For present purposes, it is sufficient to state that the operating cost of the car may be reduced by the number of 'business journeys' travelled by the car under sections 10, 10A and 10B of the FBTAA.

'Business journeys,' in the context of car fringe benefits, is defined in section 136 of the FBTAA as a journey undertaken in a car otherwise than in the application of the car to a private use. Private use is described within this definition as an application of the car that results in the provision of a fringe benefit.

The Commissioner's view on the interpretation of 'business journeys' for the purposes of the alternative operating cost method is set out in Taxation Ruling No. MT 2027: Fringe Benefits Tax: private use of cars: home to work travel (MT 2027).

Paragraphs 8 to 11 of MT 2027 explain that in order to distinguish 'private' and 'business' journeys, it is necessary to consider whether the car is being used in the course of producing assessable income of the employee. Therefore, a journey will be regarded as a 'business journey,' if associated transport costs would be deductible to the employee under section 8-1 of the ITAA 1997.

Lunney and Hayley v FCT (1958) 100 CLR 478 confirmed the general rule that travel between home and an employee's usual place of work or business is not deductible, because it is regarded as private travel rather than business travel. For similar reasons, travel between home and work would not usually be regarded as 'business journeys' for FBT purposes.

However, subsequent case law has established several exceptions to the general rule that home to work travel is regarded as private, rather than business travel.

MT 2027 and Taxation Ruling No IT 112: The deductibility of travelling expenses between residence and place of employment or business (IT 112) classify these exceptions into several categories, including:

A - Transport of equipment

B - Employment duties of an itinerant nature

C- Travel between places of employment or business

D- Travel while on stand-by duty

E- Business trips on the way to or from work

Exception A- Transport of Equipment - Relevant Law

Paragraph 37 of MT 2027 and subparagraph 21(b) of IT 112 explain that home to work travel may be characterised as business travel where the use of a car is attributed to the need to transport equipment.

In the case of FCT v Vogt 75 ATC 4073, Waddell J held that travelling expenses incurred in transporting several musical instruments to and from various places of rehearsal, performance and recording were deductible to a musician. Paragraph 37 of MT 2027 and subparagraph 21(b) of IT 112 explain that home to work travel will be accepted as business travel in circumstances analogous to Vogt, such as where:

· income is earned by performing duties at several places which require the employee to transport equipment to the place of work

· the equipment is of such value and bulk that it can only be conveniently transported by motor vehicle

· there are justifiable reasons for the taxpayer to keep the equipment at home

· there is no other practical way of transporting equipment to the places of work

· the expenditure may be attributed to the carriage of the equipment rather than the travel of the employee to the place of work

Exception A- transport of equipment - application to your circumstances

Employees are supplied with a large number of items of equipment, which may be used in the course of conducting business. The approximate weight of this equipment is 80kg. Employees are on-call and may be called out from home during these hours.

Employees are in a situation analogous to Vogt. Their income earning activities require them to transport equipment to conduct investigations. This equipment weighs approximately 80kg. This equipment can only be conveniently transported by motor vehicle, and there is no other practical way of transporting equipment to these sites. This is because employees may be required to transport the equipment to anywhere within a 14,000km area.

There are justifiable reasons to keep the equipment at home.

Home to office travel for employees falls within the exception laid out in FCT v Vogt for the transport of equipment. Since car travel can be attributed to the need to transport equipment, it is not characterised as personal or private travel. Therefore, home to office travel will be regarded as 'business journeys' for FBT purposes.

Since these journeys are regarded as business journeys, it is unnecessary to determine whether employees fall under any of the other categories listed in MT 2027 and IT 112.

Issue 1 Question 2

Detailed reasoning

As discussed in Question 1 above, the Commissioner's view on the interpretation of 'business journeys' for FBT purposes is set out in MT 2027.

As explained in Question 1 above, case law has established several exceptions to the general rule that home to work travel is regarded as private, rather than business travel.

MT 2027 and IT 112 classify these exceptions into several categories, including:

A - Transport of equipment

B - Employment duties of an itinerant nature

C- Travel between places of employment or business

D- Travel while on stand-by duty

E- Business trips on the way to or from work

In Question 1, it was concluded that the employees home to office travel can be considered 'business journeys' for FBT purposes. For similar reasons travel from home to a work related incident is characterised as 'business journeys' for FBT purposes.

Since this travel is characterised as 'business journeys,' it is unnecessary to address the other categories listed in MT 2027 and IT 112.

Issue 1 Question 3

Summary

Cars garaged at a X employees home between 12am and 11:59pm for two days per week are not 'available for private use' for fringe benefits tax purposes.

Detailed reasoning

Subsection 7(2) of the FBTAA provides that a car shall be taken to be available for the private use of an employee (or associate) where the car satisfies the following conditions:

· it is held by the employee or associate

· it is garaged or kept at or near a place of residence of the employee (or associate).

However, subsection 7(2A) of the FBTAA states that subsection 7(2) of the FBTAA does not apply to a car that:

· is used by an ambulance service, firefighting service or police service

· is visibly marked on its exterior for use in one of these emergency services

· is fitted with a flashing warning light, and a horn, bell or alarm.

Application to your circumstances

You have stated that the car meets the definition of subsection 7(2A) of the FBTAA. Therefore, subsection 7(2) of the FBTAA will not apply.

Cars garaged at a X employee's home between 12am and 11:59pm for two days per week are not 'available for private use' for fringe benefits tax purposes.

Issue 1 Question 4

Detailed reasoning

Section 16-155 of the Tax Administration Act 1953 (TAA) provides that a payer is required to give a payment summary to a recipient in certain prescribed circumstances. Subsection 16-155(1)(c) states that these circumstances include where the recipient is an individual with a reportable fringe benefits amount. Subsection 16-155(2)(b) explains that the payment summary must include the employee's reportable fringe benefits amount.

Subsection 135P(1) of the FBTAA provides that an employee has a reportable fringe benefits amount for a year of income if the employee's individual fringe benefits amount for an FBT year provided in respect of the employee's employment by the employer is more than $2,000.

Subsection 5E(2) of the FBTAA provides that an employee's individual fringe benefits amount does not include an excluded fringe benefit.

Excluded fringe benefits are fringe benefits listed in subsection 5E(3) of the FBTAA. This list includes benefits prescribed by the fringe benefits regulations, at paragraph 5E(3)(i) of the FBTAA.

Subsection 7(1) of the FBTAA provides that the application or availability of a car will be taken to constitute a benefit provided by a provider to an employee (or associate) in respect of the employment of the employee when the following conditions apply:

· at any time on a day, a car held by a provider, is applied to a private use by the employee (or associate), or taken to be available for the private use of the employee (or associate) and

· either the provider is the employer (or associate), or the car is applied or made available under an arrangement between the employer (or associate) and the provider

Application to your circumstances

For the reasons discussed in Questions 1 and 2 above, home to work travel for X employee's will not taken to be applied to a private use. For the reasons discussed in Questions 3 above, cars garaged at or near an employee's residence will not be taken to be available for private use.

However, if these cars applied to private use, then they would constitute a fringe benefit for the purposes of subsection 7(1) of the FBTAA. As a result, the application of the car to private use would be taken to constitute a benefit within the meaning of subsection 7(1) of the FBTAA, as required by sub-regulation 7(1) of the FBT regulations. It is not necessary for the car to actually have been applied for these regulations to take effect.

Therefore, the provision of X employees cars are an excluded benefit under regulation 3E of the FBT regulations. Since this is considered an excluded benefit, there is no requirement to report home to work travel on payment summaries.

Issue 2 Question 1

Detailed reasoning

Residential fuel for use in relation to a 'remote housing benefit' may be eligible for a 50% reduction in the taxable value of the benefit under 59(1) of the FBTAA, provided that certain specified conditions are satisfied.

'Remote housing benefit' is defined in section 58ZC(2) as a benefit provided to an employee (or associate) in respect of the employee's employment, which satisfies a number of conditions, including the following:

· during the whole tenancy period, the unit of accommodation was in a State or internal Territory, and was not in, or adjacent to, an eligible urban area

· during the whole tenancy period, the recipient was a current employee, and the usual place of employment was not in, or adjacent to, and eligible urban area

'Eligible urban area' is defined in subsection 140(1) of the FBTAA as:

· An area in Schedule 2 of the ITAA 1936, which is an urban centre with a census population of not less than 28,000

· An area not in Schedule 2 of the ITAA, which is an urban centre with a census population of not less than 14,000

An area adjacent to an eligible urban area is defined in section 140(1)(b) as:

· An area situated less than 40 kilometres by the shortest practicable surface route from the centre point of an eligible urban area with a census population of less than 130,000 or

· An area situated less than 100 kilometres by the shortest practicable surface route from the centre point of an eligible urban area with a census population of not less than 130,000

Subsection 140(1A) of the FBTAA provides that the definition of an 'eligible urban area' will be modified for employers specified in subsections 140(1B), 140(1C) and 140(1D) of the FBTAA.

Application to your circumstances

Y does not have a census population recorded in the 1981 census.¹ Therefore, Y is not an eligible urban area.

The closest eligible urban area to Y is A. A had a 1981 census population of greater than 14,000. A is located within the area defined by Schedule 2 of the ITAA 1936. Therefore, a location will be considered 'adjacent to an eligible urban area' if it is within 40 km of A.

Y is approximately 80km from A. Since this is more than 40 kilometers from A, Y is not an area adjacent to an eligible urban area for the purposes of section 140(1) of the FBTAA.

Y is not in, or adjacent to, and eligible urban area. Therefore, the employee's are entitled to a 50% concession for the taxable value of residential fuel provided in relation to a housing benefit provided to employees residing in Y.

Issue 2 Question 2

Detailed reasoning

As discussed in Question 1 above, residential fuel for use in relation to a 'remote area housing benefit' may be eligible for a 50% reduction in the taxable value of the benefit under subsection 59(1) of the. Therefore, it is necessary to consider whether Z is either an eligible urban area, or adjacent to an eligible urban area, for the purposes of the standard remote area exemption under subsection 140(1) of the FBTAA.

Z has a census population of less than 1,500 recorded at the 1981 census.² Therefore, Z is not an eligible urban area. Z is approximately 160km from A. Since this is more than 40 km from A, Z is not an area adjacent to an eligible urban area.

Z is not in, or adjacent to, and eligible urban area. Therefore, the employee's are entitled to a 50% concession for the taxable value of residential fuel provided in relation to a housing benefit provided to employees residing in Z.

Issue 3 Question 1

Detailed reasoning

Section 39A of the FBTAA provides that car parking benefits arise when several conditions are satisfied. These conditions can be summarised as follows:

· A car must be parked on the premises of the provider where the following conditions are satisfied:

o the premises are business premises

o a commercial parking station is located within a 1km radius of the premises on which the car is parked

o the lowest fee charged by any commercial parking station is more than the car parking threshold

· the total duration of the period exceeds 4 hours

· a car benefit is provided or leased to, or a car is owned by, an employee (or associate)

· the provision of parking facilities is in respect of the employment of the employee

· during the period or periods, the car is parked at or in the vicinity of the primary place of employment

· the car is used for the employee's travel between his or her place of residence and primary place of employment

'Commercial parking station' is a defined term in section 136 of the FBTAA:

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.

The car parking threshold is set by the Commissioner via the publication of Taxation Determinations. The Commissioner's determination for the FBT year ending 31 March 2014 is set out in Taxation Determination 2013/9: Fringe benefits tax: for the purposes of section 39A of the Fringe Benefits Tax Assessment Act 1986 what is the car parking threshold for the fringe benefits tax year commencing on 1 April 2013 (TD 2013/9).

Paragraph 1 of TD 2013/9 states that the car parking threshold for the FBT year ended 31 March 2014 is $8.03.

Section 39E of the FBTAA provides a formula for determining the daily fee for commercial parking stations charging weekly, monthly, or yearly rates. The formula requires the total fee to be divided by the number of business days in the period.

Application to your circumstances

The car park provides parking spaces in the ordinary course of business to members of the public for all day parking. Therefore, it is a 'commercial parking station' for the purposes of the FBTAA.

Having determined that the car park is a commercial parking station, it is necessary to determine whether it charges more than the car parking threshold.

As stated above, a car parking benefit will only arises when the conditions in section 39A of the FBTAA. One condition, listed in subparagraph 39A(1)(a)(iii) of the FBTAA, is that the 'lowest fee' charged by the operator of a 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 must be more than the car parking threshold.

The threshold for the year commencing 1 April 2013 and ending 31 March 2014 was $8.03. The car park's standard rate of $x exceeds the threshold. However, the car park's 'early bird' rate of $x does not exceed the threshold.

The lowest fee charged is $x, which does not exceed the relevant threshold.

Therefore, provided that the 'early bird' rate is charged in the ordinary course of business to members of the public for all-day parking, the is not a commercial parking station which charges a 'lowest fee' which is more than the car parking threshold, as required by subparagraph 39A(1)(a)(iii) of the FBTAA.

The car park satisfies the definition of a 'commercial parking station.' While its standard fee exceeds the car parking threshold, the 'early bird' rate does not. The 'lowest fee charged' by the car park does not exceed the relevant threshold. Therefore, the car park is not a commercial parking station which charges more than the car parking threshold for the FBT year ended 31 March 2014.

Issue 3 Question 2

Detailed reasoning

'Commercial parking station' is a defined term in section 136 of the FBTAA:

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.

Taxation Ruling 96/26: Fringe benefits tax: car parking fringe benefits (TR 96/26) provides guidelines for determining whether a car park is a 'commercial parking station' for the purposes of the FBTAA.

Paragraph 81 states that the Commissioner does not regard a number of specified parking arrangements as commercial parking stations, including:

· car parking facilities, with a primary purpose other than providing all-day parking, that usually charge penalty rates significantly higher than the rates chargeable for all-day parking at commercial all-day parking facilities (such as parking provided for short term shoppers or hotel guests);

· a car park that is not run with a view to making a profit or which charges a nominal fee (usually a significantly lower rate than the current market value), eg, an all-day parking fee of less than $2.00 is likely to be a nominal fee;

· car parking that is established for a short period to cater for a special function

· car parking spaces leased to a tenant by a property developer as part of an overall lease agreement for business premises

Application to your circumstances

The employer has leased a few spaces from the carpark for which are available until December 2013. These parking spaces have been leased as part of a property managing agreement.

The employer has entered into a property management lease agreement with the carpark. The carpark does not charge fees to the employer in respect of these fees, because the fees are taken into account in the broader property management agreement.

Therefore, the employers arrangement with the carpark is analogous to the circumstance outlined in the fourth bullet point in paragraph 81 of TR 96/26. Therefore, the Commissioner dos not consider this to be a commercial car parking station.

However, this ruling does not consider whether any other car parking facilities that may be provided by the carpark may constitute a commercial parking station for FBT purposes.

The parking spaces leased by the carpark to the employer are not regarded as a commercial parking station for FBT purposes. This is because the parking arrangement is part of a broader property management or lease agreement.

¹ Australian Statistician, Census of Population and Housing, "Persons and Dwellings in Local Government Areas and Urban Centres - NSW," 30 June 1981, p.43.

² Australian Statistician, Census of Population and Housing, "Persons and Dwellings in Local Government Areas and Urban Centres - NSW," 30 June 1981, p.42.