Edited version of your written advice

Authorisation Number: 1012697097524

Ruling

Subject: Fringe Benefits Tax - car Parking, vehicle benefit definition and exemption

Issue 1

Question 1a

Is car parking station 1 a "commercial parking station" as defined in subsection 136(1) of the Fringe Benefits Tax Assessment Act?

Answer

Yes

Question 1b

Is car parking station 3 a "commercial parking station" for the purposes of section 39E of the FBTAA?

Answer

Yes

Question 2

Is parking station 2 a "commercial parking station" for the purposes of section 39E of the FBTAA?

Answer

Yes

Question 3

Is the early bird parking rate of the parking station the lowest fee charged in the ordinary course of business to members of the public for all-day parking by the subject parking station on the day on which a car parking benefit is first provided in FBT year 2015 under section 39DA(3) of FBTAA?

Answer

Yes

Question 4a

Is parking station 2 a "commercial parking station" that is located within 1 km the employer under section 39(A) of FBTAA?

Answer

Yes

Question 4b

Is the parking station 1 a "commercial parking station" that is located within 1 km of the employer under section 39(A) of FBTAA?

Answer

Yes

Question 5

Is the calculated equivalent parking rate of the parking station the lowest fee charged in the ordinary course of business to members of the public for all-day parking by that parking station on the day on which a car parking benefit is first provided in the 2015 FBT year under section 39DA(3) of FBTAA?

Answer

Yes

Question 6

Is the car park a "commercial car parking station" for the purpose of section 39E of the FBTAA for the year ending 31 March 2015?

Answer

Yes

Question 7

Is the daily rate of the parking station located on the near the employer, the lowest fee charged in the ordinary course of business to members of the public for all-day parking by that parking station on the day or which a car parking benefit is first provided in the 2015 FBT year under section 39DA (3) of the FBTAA?

Answer

Yes

This ruling applies for the following periods:

Year ending 30 March 2015

Year ending 30 March 2016

Year ending 30 March 2017

Year ending 30 March 2018

Year ending 30 March 2019

Year ending 30 March 2020

The scheme commences on:

1 April 2014

Relevant facts and circumstances

Issue 1 - Car Parking

The Tax Office Fringe Benefits Tax guide for Employers states that "a commercial car parking station commences to operate on the first business day of the FBT year" which should be 1 April 2014 for the 2015 FBT year.

Hence the employer is currently reviewing the commercial car parking stations within one 1 KM of every employer location. Please provide a private ruling for the period from 1 April 2014 to 31 March 2015 in respect of the following different commercial car parking stations.

Location A

The employer has a station at location A. The employer has included the car parking spaces in this location in the 2014 car parking Fringe Benefits tax calculations. Please review the following information from our April Internet searches for the commercial car parking stations near Location A.

There are 3 Commercial car parking stations within one km of this employer.

• Car Park 1.

• Car park 2. However please review attached copy of the conditions of parking at car park 2. Parking infringements will be issued for vehicles that are illegally parked. The attached printout from Location A's local council lists car park 2 in a list of car parking in location A's CBD.

• Car park 3 - charges different monthly rates at different levels.

Location B

The employer has a location at Location B. In early April, there are 2 commercial car parking stations within one kilometre of this location.

The first is car park 1 near Location B. This car parking station charges a fee less than ATO 2015 threshold.

The second commercial car parking station near this employer is car park 2.

TD 96/16 states that commercial car parking station does not include 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).

Please review attached copy of the car parking rates charged by car park 2

Location C:

The employer is located at location C. Car Park 1 is located within a 1 km radius of this employer.

Please review attached a copy of the internet search of Car park 1.

Under section 136(1) of FBTAA "all day parking" is defined to mean, in relation to a particular day:

"Parking of a single car for a continuous period of 6 hours or more during a daylight period on that day..."

"Daylight period" is further defined to mean, "in relation to day: so much of a period on that day that occurs:

(a) after 7am on that day; and (b) before 7 pm on that day…"

Car park 1 has an early bird rate for cars which enter between 6:00 am - 10:00 am which fall within the tax definition of the daylight period.

Location D

There are 2 car parking stations near the employer including car park 1 and car park 2.

Please review attached copy of Internet printout detailing the distance between the employer and car park 2.

Please confirm whether car park 2 commercial parking station that is located within 1 km of the employer station under section 39(A) of FBTAA. It is because the area of car park 2 is large.

Please review attached a copy of the Internet printout of car park 1. Please confirm whether it is a commercial parking station under section 39(A) of FBTAA. Furthermore please advise whether it is a station that is located within 1 kilometre of the employer under Section 39(A) of FBTAA.

Location E

Car park 1 has recently released new parking rates. Car park 1 has a yearly fee for parking from Monday to Friday. Hence its daily fee is calculated to an equivalent daily rate.

Please confirm whether the equivalent daily rate of this parking station can be the lowest fee charged in the ordinary course of business to members of the public for all-day parking by any operator of a commercial parking station on the day on which a car parking benefit is first provided in the 201 FBT year under section 39DA(3) of FBTAA.

Location F

In year 2014 the ATO informed the employer that car park 1 was not a commercial car parking station under subparagraph 39A(1)(a)(ii).

In the 2014 FBT year, we informed you the following:

1. Due to privatisation, car park at Location F was sold to a private company.

2. The employer has an office located within one km of car park 1.

Please review attached a copy of recent internet searches for this parking station. Please confirm that car park 1 is a commercial car parking station for the purpose of section 39E of the FBTAA for the year ending 31 March 2015.

Location G

The employer now has a special unit located in location G. The nearest commercial car parking station is located in at close range. The employer has 1 or 2 car parking spaces for the employees working at this location.

Please review the attached internet research.

This car parking station has a special roof top early bird rate. Furthermore, it has an unreserved car parking monthly rate which has a daily equivalent rate.

Please confirm whether the equivalent daily rate for unreserved parking this station can be the lowest fee charged in the ordinary course of business to members of the public for all-day parking by any operator of a commercial parking station on the day or which a car parking benefit is first provided in the 2015 FBT year under section 39DA(3) of the FBTAA.

Issue 2 - Vehicle

The employer provides services and use a vehicle for work purposes.

Under employer policy, employees can use vehicles for journeys between work site locations and other workplaces, and home for on-call purposes.

Please confirm that the vehicle does not fall within the tax definition of a car under subsection 136 (1) as the vehicle can carry more than 9 passengers.

Accordingly, the eligible exemption under subsection 8(2) of the FBTAA 1986 can apply to this vehicle if it is only used for journeys between home and workstation and workstation and other workplaces.

Issue 3 - business percentage of vehicle use

Please provide a private ruling in respect of the following scenario for the period from 1 April 2014 to 31 March 2020.

The employer requires employees to transport bulky equipment to different work locations. It is in the nature of this type of work that equipment must be on hand at all times, and they transport to different locations on short notice. Equipment may be over 90kg. Due to on-call arrangements, the vehicle is garaged at the employee's home.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 subsection 10(2)

Fringe Benefits Tax Assessment Act 1986 section 39A

Fringe Benefits Tax Assessment Act 1986 section 39B of the FBTAA

Fringe Benefits Tax Assessment Act 1986 section 39DA(3) of FBTAA.

Fringe Benefits Tax Assessment Act 1986 section 39E of the FBTAA

Fringe Benefits Tax Assessment Act 1986 section 45 of the FBTAA

Fringe Benefits Tax Assessment Act 1986 Subsection 47(6) of the FBTAA

Fringe Benefits Tax Assessment Act 1986 subsection 136(1)

Income Tax Assessment Act 1997 section 8-1

Reasons for decision

Issue 1 Question 1a

Summary

Car parking station 1 is a 'commercial parking station' as it fits within the definition of this term in subsection 136(1) of the FBTAA and does not charge penalty rates to discourage all-day parking.

Detailed reasoning

The criteria for what constitutes a car parking benefit are detailed in section 39A of the FBTAA.

Subsection 39A(1) states:

If the following conditions are satisfied in relation to a daylight period, or a combination of 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.

Subsection 136(1) of the FBTAA defines a commercial parking station as follows:

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.

For the purposes of section 39A, a parking facility will be a commercial parking station where it meets this definition.

For the purposes of Division 10A of the FBTAA 'all-day parking' and 'daylight period' are defined in subsection 136(1) of the FBTAA as follows:

All-day parking

…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.

Daylight period

… in relation to a day, means so much of a period on that day as occurs:

(a) after 7a.m. on that day, and

(b) before 7p.m. on that day.

Permanent car parking facility

The term 'permanent' is not defined in the FBTAA and therefore takes it normal dictionary meaning.

Commercial car parking facility

The term 'commercial' is not defined in the FBTAA. In the EM, the term 'commercial parking station' is addressed as part of the explanation of proposed amendments. According to the explanation:

• the word 'commercial' has its normal dictionary meaning

• a car parking facility that is not run with a view to making a profit (usually reflected in significantly lower car parking rates charged compared with normal market value for that facility) would not be commercial, and

• short term shopper parking facilities that charge penalty rates to discourage all-day parking are not treated as commercial parking stations.

As is relevant, commercial is defined in the Macquarie Dictionary as follows:

adjective

1. 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?

The Macquarie Dictionary defines commercial as capable of returning a profit. In applying this definition the examples in paragraph 81 of TR 96/26 also consider whether the fee charged is only a nominal fee. As an example of a nominal fee the ruling states that an all-day parking fee of less than two dollars is likely to be a nominal fee.

Car parking spaces are available in the ordinary course of business to members of the public for all-day parking

Where there are no restrictions to prevent members of the public from parking in the relevant car park, car parking spaces will be available in the ordinary course of business to members of the public.

The Explanatory Memorandum (EM) to the Taxation Laws Amendment (Car Parking) Bill 1992 states that 'some car parking facilities have a primary purpose of providing short term shopper parking', the EM went on to discuss that such facilities use penalty rates to discourage all-day parking. Penalty rates were said to be rates 'significantly greater than the rates that would be charged by a similar facility that encouraged all-day parking'.

Paragraph 81 of TR 96/26 states that car parking facilities, with a primary purpose other than providing all-day parking, that usually charge penalty rates significantly higher than the rates charged for all-day parking (emphasis added) at commercial all-day facilities (such as parking provided for short term shoppers or hotel guests) are excluded from the definition of commercial parking station.

Division 10A of the FBTAA does not refer to the term 'penalty rates'.

In considering the application of the definition of commercial parking station it is necessary to determine whether the relevant car parking facility:

• is a permanent car parking facility

• is a commercial car parking facility

• provides car parking spaces in the ordinary course of business to members of the public

• provides all-day parking on payment of a fee, and

• is not a parking facility on a public street, road, lane, thoroughfare or footpath paid by inserting money in a meter or obtaining a voucher.

Guidance on the application of the definition of commercial parking station is provided by paragraphs 80 and 81 of Taxation Ruling TR 96/26 which state:

80. A vacant lot, utilised commercially as a car park, could be considered to be a permanent commercial car park even where it is intended that a building will be erected on the site in due course.

81. We do not regard the following parking arrangements as constituting commercial parking stations:

• 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), e.g., 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;

• parking facilities provided by a sporting venue to persons associated with the venue where:

(a) parking facilities are usually available only after 5 pm to coincide with night events; or

(b) parking is available only for a specific event, and the event is a daytime event; or

(c) parking is available to all members of the public only during sporting events; and

provided that, when there is no such event, the parking facilities are not usually available to members of the public;

• parking provided by a business for its own employees and those of a nearby business, but to no other person, if there is no commercial car park within 1 km;

• in an area without a commercial parking station and where street parking is not permitted, arrangements made by a business for its employees to park during business hours in yards and driveways of surrounding houses;

• a kerb side parking meter, from the FBT year commencing 1 April 1994, even where it is possible to purchase all-day parking at the meter in a single transaction.

Car parking station has spaces available to the public. There are no restrictions on the publically available spaces preventing general members of the public from using the facility. The parking station falls within the definition of commercial parking station in subsection 136(1) of the FBTAA as all the requirements in the definition are satisfied.

Issue 1 Question 1b

Summary

Car park 3's weekly unreserved parking monthly rate equates to less than the car parking threshold in accordance with section 39E of the FBTAA, resulting in no car parking fringe benefit for the purposes of section 39A of the FBTAA.

Detailed reasoning

For a parking station to meet the definition of subsection 136(1) of the FBTAA, all elements discussed in and where the car park offers periodic parking arrangements for a discounted fee, it must be determined if the discounted rate for the period equates to a daily rate higher than the Car Parking threshold.

Section 39E of the FBTAA states:

For the purposes of this Division, if the operator of a commercial parking station provides all-day parking in the ordinary course of business to members of the public on a weekly, monthly, yearly or other periodic basis, the operator is taken to charge a fee for all-day parking on a particular day during the period equal to the amount worked out using the formula:

where:

Total fee is the total fee charged by the operator in respect of all-day parking on days in that period;

Business days in period means the number of business days in that period.

Parking station 3 offers unreserved monthly parking at a rate of $x. The fee for all day parking is $y per day as per April 2014.

TD 2014/11 contains the car parking threshold for the 2014/2015 FBT year. The threshold is $8.26. Please note, each year a new TD is released containing the threshold and is subject to change with the threshold being indexed annually in line with changes in the All Groups Consumer Price Index. Parking station 3's rates and conditions are subject to change.

Issue 1 Question 2

Summary

Parking station 2 is a 'commercial parking station' as it fits within the definition of this term in subsection 136(1) of the FBTAA and does not charge penalty rates to discourage all-day parking.

Detailed reasoning

The explanation of the relevant law and definitions referred to in our reasons for decision to in question 1a above are equally applicable to our reasons for decision to this question.

Before considering the definition of commercial parking station, it is necessary to consider the shopping centre exclusion from the definition.

The parking station would be considered as not having a primary purpose of providing short term parking, as its website provides parking rates for building users and separate rates for non-building users.

Therefore, this car park does not fit into the shopping centre exclusion provided in the Explanatory Memorandum to the Taxation Laws Amendment (Car Parking) Bill 1992 and accepted at paragraph 81 of the Taxation Ruling TR 96/26.

In considering the application of the definition of commercial parking station to this question it is necessary to determine whether the parking station:

• is a permanent car parking facility

• is a commercial car parking facility

• provides car parking spaces in the ordinary course of business to members of the public

• provides all-day parking on payment of a fee, and

• is not a parking facility on a public street, road, lane, thoroughfare or footpath paid by inserting money in a meter or obtaining a voucher.

In accordance with Section 39E of the FBTAA, in line with the detailed reasoning for question 1(b), the monthly parking must be considered for the lowest fee charged for all day parking.

The car park offers monthly parking at a rate of $x. The fee for all day parking is $y per day.

We have decided that the car parking station is a commercial parking station as defined in subsection 136(1) of the FBTAA as all the requirements of the definition are met.

This conclusion is supported by the fact that the car park offers members of the public a long stay rate of $z

Further, we have concluded that the all-day rate charged of $xx is not a penalty rate to discourage all-day parking. This is supported by the fact that no additional amounts are charged for parking more than 6 hours.

Issue 1 Question 3

Summary

Based on the information provided, the early bird parking rate of $z of 'parking station 1' is the lowest fee charged in the ordinary course of business to members of the public for all-day parking by any operator that parking station on the day on which a car parking benefit is first provided in FBT year 2015 under section 39DA(3) of FBTAA.

Detailed reasoning

The parking station is a commercial parking station in accordance with subsection 136(1) of the FBTAA. The 'car park offers a range of parking options. The early bird rate of $x is available if the parking spot is booked online.

The average cost is:

A + B 2

where:

A is the lowest fee charged in the ordinary course of business to members of the public for all-day parking by any operator of a commercial parking station located within a 1 km radius of any of the relevant parking premises on the day on which a car parking benefit is first provided in that FBT year in relation to the employer in connection with any of those premises.

B is the lowest fee charged in the ordinary course of business to members of the public for all-day parking by any operator of a commercial parking station located within a 1 km radius of any of the relevant parking premises on the day on which a car parking benefit is last provided in that FBT year in relation to the employer in connection with any of those premises.

The focus here is on the 'A' in the above equation.

Under section 136(1) of FBTAA "all day parking" is defined to mean, in relation to a particular day:

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.

"Daylight period" is further defined to mean

in relation to a day, means so much of a period on that day as occurs:

(a) after 7 a.m. on that day; and

(b) before 7 p.m. on that day.

The parking station has an early bird rate of $xx for cars which enter between 6 am and 10 am, and the requirements of this parking price require a user to exit between 3pm and 7pm.

The "daylight period" requirement is satisfied, however the "all day parking" requirement needs to be met on a case-by-case basis, as it is possible the vehicle may enter the car park at 9:59am and leave the car park at 3:01pm, thus not parking for a period of 6 hours or more (and thus, no FBT payable as the conditions of a car parking fringe benefit are not met).

If booked online, the early bird rate of $x applies. For the purposes of calculating the average cost method, the early bird rate of $x, is the lowest rate charged for all day parking and can be used as the lowest fee charged for the purposes of section 39DA(3) of the FBTAA.

Issue 1 Question 4a

Summary

Parking station 2 is located within 1 km of the employer and therefore satisfies the requirements under section 39(A) of FBTAA.

Detailed reasoning

TR 96/26 provides guidelines for measurement of the 1 km radius between a commercial parking station and car parking premises - section 39B

82. A commercial car parking station is taken to be located within a 1 km radius of business or associated premises, if and only if, a car entrance to the commercial parking station is situated less than 1 km, by the shortest practicable route, from a car entrance to those premises. This route can be travelled by foot, car, train, boat, etc., whichever produces the shortest practicable route.

83. Where the shortest route can be travelled on foot, we expect that public thoroughfares such as arcades through shopping centres will be utilised in determining the distance. However, illegal or impractical shortcuts through, e.g., private property, will not be considered to be part of a practicable route.

84. The 1 km radius may be measured by using an odometer reading, a street directory, information available from a public transport authority or by measurement on a scale map or any other method that will give a correct indication.

The car park entrance is at Street A. The internet website Whereis.com search provided with the ruling does not show the shortest practical route from this car park entry to the employer's location. It shows a 1 km distance, which does not fall within the 1 km radius as described in paragraph 84 of the TR 96/26 ruling.

A search on Whereis.com from the car park access to the employer's address shows a driving distance of less than 1 km.

Furthermore, there are shorter practical routes by travelling on foot between the locations, as evidenced by Google Maps Satellite view.

Issue 1 Question 4b

Summary

Parking station 1 is a "commercial parking station" located within 1 km of the employer in line with section 39(A) of FBTAA 1986.

Detailed reasoning

The explanation of the relevant law and definitions referred to in our reasons for decision to question 1(a) above are equally applicable to our reasons for decision in this question.

In considering the application of the definition of commercial parking station to this question it is necessary to determine whether the car park:

• Is a permanent car parking facility

• Is a commercial car parking facility

• Provides car parking spaces in the ordinary course of business to members of the public

• Provides all-day parking on payment of a fee, and

• Is not a parking facility on a public street, road, lane, thoroughfare, or footpath paid by inserting money in a meter or obtaining a voucher.

Parking station 1 is a commercial parking facility which is open 24 hours per day and offers a range of parking options to members of the public.

Parking station 1 charges a flat rate of $x from the time of entry, and is valid to 6am the following day. The car park also offers parking at an hourly rate of $xx per hour, to a maximum of $xxx. Evening and weekend rates are $y per hour and capped at $yyy, valid to 6am the following day.

We have determined that the car park is a commercial parking station as defined in subsection 136(1) of the FBTAA as all the requirements of the definition are met.

According to Whereis.com, a route established by road from the employer to the car park is less than 1km.

The explanation of the relevant law and definitions referred to in our reasons for decision to question 4(a) above are equally applicable to our reasons for decision regarding the car park being located within 1km of the car park. Section 39B of the FBTAA states that for the purposes of this Division, a commercial parking station is taken to be located within a 1 km radius of particular business premises or particular associated premises if, and only if, a car entrance to the commercial parking station is situated less than 1 km, by the shortest practicable route, from a car entrance to those premises.

A satellite view of Google Maps indicates shorter routes by foot, but considering the 1km test is satisfied, the car park is located within a 1km radius from the employer and thus, the requirements of section 39B are satisfied.

In conclusion, the car park satisfies all elements as a Commercial Parking Station, offering all day parking to members of the public during daylight hours, and is located within a 1km radius from the employer.

Issue 1 Question 5

Summary

Based on the information provided, the equivalent parking rate of $x of the parking station is the lowest fee charged in the ordinary course of business to members of the public for all-day parking by the commercial parking station on the day on which a car parking benefit is first provided in FBT year 2015 under section 39DA(3) of FBTAA.

Detailed reasoning

The parking station is a commercial parking station in accordance with subsection 136(1) of the FBTAA. The car park is open 24 hours every day, with xxx car parking spaces.

The average cost is:

A + B 2

where:

A is the lowest fee charged in the ordinary course of business to members of the public for all-day parking by any operator of a commercial parking station located within a 1 km radius of any of the relevant parking premises on the day on which a car parking benefit is first provided in that FBT year in relation to the employer in connection with any of those premises.

B is the lowest fee charged in the ordinary course of business to members of the public for all-day parking by any operator of a commercial parking station located within a 1 km radius of any of the relevant parking premises on the day on which a car parking benefit is last provided in that FBT year in relation to the employer in connection with any of those premises.

The focus here is on the 'A' in the above equation.

Under section 136(1) of FBTAA "all day parking" is defined to mean, in relation to a particular day:

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.

"Daylight period" is further defined to mean

in relation to a day, means so much of a period on that day as occurs:

(a) after 7 a.m. on that day; and

(b) before 7 p.m. on that day.

As stated in the ruling application, car park has a yearly fee of $y for parking from Monday to Friday. The fee covers the period of 7am to 7pm.

The principles of ATO ID 2006/93 - Fringe Benefits Tax - Car parking fringe benefits: fee charged by a parking station for all-day parking - daily rate equivalent for periodic parking arrangements may be applied to identify the daily rate equivalent for the annual car parking charge. Section 39E of the FBTAA applies if the commercial parking station provides all-day parking in the ordinary course of business to members of the public on a weekly, monthly, yearly or other periodic basis.

The facts in this case state the parking station has no limit to the number of days of continuous parking. Under this arrangement, it is accepted that customers could park their car on a longer term periodic basis and as a practical general rule for a continuous period of up to one year. In order to determine the lowest rate charged for all-day parking by the car park, on a particular day, the formula in section 39E of the FBTAA would be applied on the basis that a car had been parked for a continuous period of one year (365 days).

The parking station is taken to charge, on any particular day, a daily rate equivalent. This is calculated by use of the formula:

Total Fee/Number of business days in period

Total fee is the total fee charged by the operator in respect of all-day parking for the total days in that period.

A Business day is a day other than a Saturday, Sunday or a public holiday in the place concerned.

Total Fee/Number of business days in period = xxx/246 = $x

Therefore the lowest rate charged the parking station park for all-day parking on a particular day would therefore be $x.

Issue 1 Question 6

Summary

Parking station 1 is a "commercial car parking station" for the purpose of section 39E of the FBTAA for the year ending 31 March 2015.

Detailed reasoning

The parking station in question has been privatised and is now known as Parking station 1.

The explanation of the relevant law and definitions referred to in our reasons for decision to question 1(a) above are equally applicable to our reasons for decision in this question.

In considering the application of the definition of commercial parking station to this question it is necessary to determine whether the parking station:

• Is a permanent car parking facility

• Is a commercial car parking facility

• Provides car parking spaces in the ordinary course of business to members of the public

• Provides all-day parking on payment of a fee, and

• Is not a parking facility on a public street, road, lane, thoroughfare, or footpath paid by inserting money in a meter or obtaining a voucher.

The parking station is a commercial parking facility which is open 24 hours per day and offers a range of parking options to members of the public. Rates as per internet searches reveal hourly rates from $w per hour to a maximum of $ww for a 12 hour period. The facility offers an early bird rate of $x with entry between 5am and 9:30am, and exit by 8pm.

The maximum daily rate of $yy for 12 hours is not a penalty rate to discourage all day parking. This is supported by the fact that the parking facility offers all day parking through early bird rate offers and periodic terms.

The terms and conditions of the car park are valid for the period commencing 1 April 2014 to 30 March 2015.

We have concluded that Parking station 1 is a commercial parking station as defined in subsection 136(1) of the FBTAA as all the requirements of the definition are met.

Issue 1 Question 7

Summary

The $z daily rate is considered the lowest fee charged in the ordinary course of business to members of the public for all-day parking by the parking station on the day or which a car parking benefit is first provided in the 2015 FBT year according to section 39DA (3) of the FBTAA 1986.

Detailed reasoning

Section 39DA deals with the taxable value of car parking fringe benefits using the average cost method.

The parking station offers rates ranging from $p for up to 30 minutes to $pp for parking exceeding 4 hours. Other parking rates are available for periodic parking, weekend and evening rates.

The principles of ATO ID 2006/93 - Fringe Benefits Tax - Car parking fringe benefits: fee charged by a parking station for all-day parking - daily rate equivalent for periodic parking arrangements may be applied to identify the daily rate equivalent for the annual car parking charge. Section 39E of the FBTAA applies if the commercial parking station provides all-day parking in the ordinary course of business to members of the public on a weekly, monthly, yearly or other periodic basis.

The parking station offers unreserved monthly car parking is for $xx per month.

Under this arrangement, it is accepted that customers could park their car on a longer term periodic basis and as a practical general rule for a continuous period of up to one year. In order to determine the lowest rate charged for all-day parking by the car park, on a particular day, the formula in section 39E of the FBTAA would be applied on the basis that a car had been parked for a continuous period of one year (365 days).

The parking station is taken to charge, on any particular day, a daily rate equivalent. This is calculated by use of the formula:

Total Fee/Number of business days in period

Total fee is the total fee charged by the operator in respect of all-day parking for the total days in that period.

A Business day is a day other than a Saturday, Sunday or a public holiday in the place concerned.

Total Fee/Number of business days in period = xx/19 = $x

The parking facility also offers early bird parking, where users may enter between 6:00 AM - 9:30 AM and exit between 3:00 PM - 7:00 PM at a flat rate of $z.

The early bird flat rate of $z covers all day parking during daylight hours. Considering this rate is less than the equivalent rate of $x from the monthly option, it is considered the lowest fee charged in the ordinary course of business to members of the public for all-day parking by the parking station on the day which a car parking benefit is first provided in the 2015 FBT year under section 39DA (3) of the FBTAA.

Issue 2 Question 1

Summary

The vehicle is not considered a 'car' in line with the definition of a car in subsection 136(1) of the FBTAA 1986 because it is designed to carry more than 9 passengers.

Detailed reasoning

Subsection 136(1) of the FBTAA defines car as having the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. In relation to the term 'car' this subsection states:

motor vehicle (except a motor cycle or similar vehicle) designed to carry a load of less than one tonne and fewer than 9 passengers.

The vehicle under consideration has a payload of 960kg, less than one tonne, and the seating capacity of the vehicle is 11.

As the seating capacity of the vehicle is more than 8, the vehicle does not satisfy the definition of a car. Therefore, the vehicle is not a car as defined in subsection 136(1) of the FBTAA.

Issue 2 Question 2

Summary

Not applicable as the vehicle is not a car.

Detailed reasoning

Subsection 47(6) of the FBTAA applies to vehicles other than cars.

Issue 2 Question 3

Summary

The residual benefit, of the use of the vehicle in question is an exempt benefit under subsection 47(6) of the FBTAA, as the vehicle is not a taxi or a car and the private use restriction is satisfied.

Detailed reasoning

It has been established that the vehicle in question is not a car, as defined in subsection 436(1) of the FBTAA.

Therefore, the use of the vehicle by employees will not give rise to a car benefit. It will however, give rise to a residual benefit under section 45 of the FBTAA.

Section 47 of the FBTAA provides an exemption for certain residual benefits. In particular a residual benefit arising from the use of a vehicle may be exempt if the provisions of subsection 47(6) of the FBTAA re satisfied.

Section 47(6) of the FBTAA states:

Where:

(a) a residual benefit consisting of the provision or use of a motor vehicle is provided in a year of tax in respect of the employment of a current employee;

(aa) the motor vehicle is not:

(i) a taxi let on hire to the provider; or

(ii) a car, not being:

(A) a panel van or utility truck; or

(B) any other road vehicle designed to carry a load of less than 1 tonne (other than a vehicle designed for the principal purpose of carrying passengers); and

(b) there was no private use of the motor vehicle during the year of tax and at a time when the benefit was provided other than:

(i) work-related travel of the employee; and

(ii) other private use of the motor vehicle by the employee or an associate of the employee, being other use that was minor, infrequent and irregular;

the benefit is an exempt benefit in relation to the year of tax.

Based on the facts provided in the ruling request, the vehicle is not a taxi or a car. Hence paragraph (a) of subsection 47(6) of the FBTAA is satisfied. Therefore, it needs to be determined if the use of the vehicle satisfies paragraph (b) of subsection 47(6). The employees of the applicant can use the organisation's vehicles for journeys between workplaces and home for on-call purposes. The use of the vehicle satisfies the definition of work related travel under subsection 136(1) of the FBTAA. As the employee cannot use the vehicle for any other purpose, the use of the vehicle in question falls within the boundaries of Section 47(6) of the FBTAA.

Therefore the residual benefit arising from the use of the vehicle is an exempt residual benefit under subsection 47(6) of the FBTAA.

Issue 3 Question 1

Summary

The journeys are business journeys on the basis that the employees are required to carry bulky equipment in the course of performing their duties of employment

Detailed reasoning

Taxation Rulings TR 95/34, it 112 and Miscellaneous Taxation Ruling MT 2027 set out the administrative guidelines and the Commissioner's views on 'Private use of cars' and 'Home to work travel' and the deductibility of travelling expenses between home and work. In particular, these taxation rulings cover travel by employees carrying out itinerant work and travel incorporating the transport of equipment.

Private use is defined in subsection 136(1) of the FBTAA and basically means the use of a motor vehicle by an employee that is not exclusively in the course of producing assessable income.

In essence, the test for determining business or private use for FBT purposes is the same as that under income tax law. If the expenditure incurred in travelling by car is deductible under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997), then the travel would be business use. Subsection 8-1(1) of the ITAA 1997 allows a deduction for expenditure that was incurred in gaining or producing assessable income.

Generally expenditure incurred in travelling between home and a person's regular place of employment or business is private in nature and is not an allowable deduction, as the expenditure is a pre-requisite to the earning of assessable income as opposed to expenditure which is incurred in the actual course of gaining or producing income. Put as its simplest, travel to work is private, travel on work is business. This position is confirmed in paragraph 14 of MT 2027.

Where an employee is required to take a car between home and work as a condition of employment (for example, because it may be needed for out of hours calls) the Commissioner would still regard the home/work travel as private use. Home/work travel by employees on a stand by duty roster system would also normally be regarded as private, unless one of the specific exceptions referred to in MT 2027 applies.

The Commissioner will allow an exception and regard home to work travel as business travel in the following circumstances as provided in MT 2027:

1. Employment duties of an itinerant nature

2. Business trip on way to and from work

3. Travel incorporating the transport of bulky equipment.

The relevant exception in this instance is where the transport costs can be attributed to the transportation of bulky, cumbersome equipment. Guidelines for the application of this principle are discussed in Income Tax Ruling IT 112 in the context of the decision ion FCT V Vogt ATC 4073; 5 ATR 274.

Broadly, such claims should be allowed where the employee performs duties at a number of places requiring the transport and use of equipment of substantial bulk such as to justify the need for a motor vehicle to transport it and where there are sound reasons for keeping the equipment at home.

In the AAT Case 94 ATC 140; 27 ATR 1127 the tribunal considered the deductibility of travel for a medical practitioner carrying heavy, bulky equipment when travelling between his home and the various locations at which he saw his patients. The taxpayer carried various items of equipment on a daily basis, one of which - an EMG machine weighed 15 kilograms.

The tribunal found that the necessity to carry the bulky equipment to and from the taxpayer's home each day was sufficient to bring him within the principle established in Vogt's case and allowed the claim.

Merely having to transport items of equipment will not alter the essential character of the home to work travel expenditure.

The essence of MT 2027 and TR 95/34 and the court cases in relation to the carriage of bulky equipment is in the first instance a deduction is allowed if the transportation is attributable to bulky equipment. However, the deduction will be denied where the transport occurs as a matter of convenience or of personal choice.

In this instance, the employees are on call and required to carry equipment with a total weight of approximately 90kg. This is considered cumbersome and bulky. The employees are on call and the equipment is with them at all times to enable them to respond to perform their duties and to respond to call outs. With the necessity to travel to various work places, it would not be possible for the employees to store this equipment at one particular place. Consequently, where the employees carry this equipment in the cars and use the cars for travel between home and work, the journey would be considered to be business journeys as it is in respect to the carriage of the bulky equipment.

Issue 3 Question 2

Summary

The journeys are business journeys on the basis that the employees are required to carry bulky equipment in the course of performing their duties of employment.

Detailed reasoning

Refer to the reasons for decision applicable to our answer to issue 3, question 1 above. These reasons are equally applicable to our answer to this question.

Issue 3 Question 3

Summary

The journeys are business journeys on the basis that the employees are required to carry bulky equipment in the course of performing their duties of employment.

Detailed reasoning

Refer to the reasons for decision applicable to our answer to issue 3, question 1 above. These reasons are equally applicable to our answer to this question.

Issue 3 Question 4

Summary

The journeys are business journeys on the basis that the employees are required to carry bulky equipment in the course of performing their duties of employment.

Detailed reasoning

Refer to the reasons for decision applicable to our answer to issue 3, question 1 above. These reasons are equally applicable to our answer to this question.