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Edited version of private advice
Authorisation Number: 1012619953398
Ruling
Subject: FBT - Car Parking - Commercial Parking station
Question 1
Is the specified car park a commercial parking station for the purposes of applying section 39C of the Fringe Benefits Tax Assessment Act 1986?
Answer
Yes
This ruling applies for the following period:
FBT Year ended 31 March 2015
Relevant facts and circumstances
Within one kilometre of your office building there are three all day car parking stations available to the public.
The third car parking station charges the lowest all day fee rate to the general public.
The third car parking station is located further from the main commercial buildings than other car parking facilities. Additionally, the location of the third car park facility is in an area where there are less commercial offices and more housing and community facilities therefore free parking is more readily available.
The third car park facility provides the following information regarding the car parking on the website:
• a limited number of car spaces are available during business hours on a long term basis,
• there is currently a waiting list
• An access card is issued
• anyone that is interested in a parking space can contact the office
• casual car parking is no longer offered as at mm/yyyy
As the third car parking facility charges the lowest of the fees in the area, you would like to use that rate to calculate the value of the car parking fringe benefits under the commercial parking station method in section 39C of the FBTAA
Relevant legislative provisions
Fringe Benefits Tax Assessment Act 1986 Section 39C
Fringe Benefits Tax Assessment Act 1986 Subsection 136(1)
Reasons for decision
Section 39C of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) states that the taxable value of a car parking fringe benefit provided on a day in connection with one or more premises is equal to:
… (b) if, on that day, there are 2 or more commercial parking stations located within a 1 km radius of any of those premises - the lowest fee charged by any of the operators of those parking stations in the ordinary course of business to members of the public for all-day parking on that day;
reduced by the amount of the recipients contribution.
You would like to use the lowest day rate of the third car park facility to calculate the value of your car parking fringe benefits under the commercial parking station method in section 39C of the FBTAA. In order to do this you need to satisfy that the car park is a commercial parking station.
A commercial parking station, in relation to a particular day, is defined under subsection 136(1) of the FBTAA as:
…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.
Further guidance as to what is a commercial parking station is provided by paragraphs 77 to 81 of Taxation Ruling TR 96/26 - Fringe benefits tax: car parking fringe benefits.
To determine whether the third car park facility is a commercial parking station it is necessary to consider the following:
• Is the car parking facility a permanent commercial car parking facility?
• Are any of the car parking spaces in the car parking facility available in the ordinary course of business to the members of the public?
Is the car parking facility a permanent commercial car parking facility?
The word permanent is not defined in the FBTAA; however the ordinary meaning in The Macquarie Dictionary, October 2013, Sixth Edition defines the word 'permanent' as meaning:
lasting or intended to last indefinitely; remaining unchanged; not temporary; enduring; abiding.
During business hours, the car park offers permit and casual car parking to the public. The paid car parks are offered on a long term basis with payment taken in advance up to one year and a waitlist is currently applicable.
The car park is considered to be not temporary and with parking offered on a long term basis, it has intention to last indefinitely, therefore, it is a permanent car park for these purposes.
The term commercial is also not defined in the FBTAA, however The Macquarie Dictionary, 2013 states that it is:
of, or of the nature of, commerce.
2. engaged in commerce.
3. capable of returning a profit: a commercial project.
4. capable of being sold in great numbers: is the invention commercial?
5. …
6. preoccupied with profits or immediate gains.
The third car park charges the lowest all day fee in comparison to other car parking near your office. However, the car park is located further away from the majority of commercial offices. In addition, the location of the car park facility is closer to housing and community facilities where there is greater availability of free parking. Therefore, the lowest all day fee is not considered to be a nominal fee and is charged with the intention to make a profit for the car park facility.
Additionally, providing information on their website is viewed as a method of promoting the car parking to the public.
It is considered that the car parking facility is operated with a view to making a profit and therefore considered commercial.
Are any of the car parking spaces in the car parking facility available in the ordinary course of business to members of the public for all day parking?
Subsection 136(1) of the FBTAA defines all day parking to mean as:
in relation to a particular day, means parking of a single car for a continuous period of 6 hours or more during a daylight period on that day.
A daylight period is defined in subsection 136(1) of the FBTAA to mean the period between 7am and 7pm.
As mentioned previously, in the ordinary course of business the car parking facility offers all day car parking to members of the public during business hours. It is accepted that the car parking is offered for a continuous period of more than six hours and during a daylight period for the payment of a fee.
Consequently, the car parking facility meets the definition of a commercial parking station under subsection 136(1) of the FBTAA. For that reason, it can be used for the purposes of applying section 39C of the FBTAA as the lowest fee charged by a parking station within a 1km radius of your office.