Edited version of your written advice

Authorisation Number: 1012843517042

Date of advice: 11 August 2015

Ruling

Subject: Fringe benefit tax: exempt benefit - motor vehicle parking

Question

Will the payment for fees incurred to park the employee's car at a garaging facility constitute an exempt benefit under paragraph 58G(1)(a) of the Fringe Benefit Tax Assessment Act 1986 (FBTAA)?

Answer

Yes.

This ruling applies for the following periods:

Fringe tax benefit period ended 31 March 2015

The scheme commences on:

1 April 2014

Relevant facts and circumstances

One of your employees wishes park a motor vehicle in a garaging facility.

The garaging facility is located about X kilometres from their place of work.

The vehicle is parked and may be driven monthly on public roads, or alternatively, the vehicle may be unregistered and only be driven on private roads.

The vehicle may be parked for a long period of time.

Relevant legislative provisions

Fringe Benefit Tax Assessment Act 1986 Section 58G(1)

Fringe Benefit Tax Assessment Act 1986 Section 136(1)

Reasons for decision

Will the payment of the fees incurred by an employee to park their car in the garaging facility be an exempt benefit under paragraph 58G(1)(a) of the Fringe Benefit Tax Assessment Act 1986 (FBTAA)?

The payment of the fees incurred by an employee in parking their car in the garaging facility will be an expense payment benefit under section 20 of the FBTAA.

Paragraph 58G(1)(a) of the FBTAA provides that an expense payment benefit will be an exempt benefit when it is in respect of the provision of motor vehicle parking facilities and is not an eligible car parking expense payment benefit.

Paragraph 58G(1)(a) states:

Each of the following benefits is an exempt benefit:

(a) an expense payment benefit, where:

(i) the recipients expenditure is in respect of the provision of motor vehicle parking facilities; and

(ii) the benefit is not an eligible car parking expense payment benefit

Is the recipients expenditure in respect of the provision of motor vehicle parking expenses?

The application of this paragraph is considered in ATO Interpretative Decision ATO ID 2012/18 Fringe Benefit Tax Exempt benefits: reimbursement of parking fees - remote area employees.

In considering whether the reimbursement of parking fees incurred to park the employee's car at the local airport whilst the employee is working interstate at a remote location ATO ID 2012/18 states:

'Motor vehicle parking facilities' is not a defined term in the FBTAA. It is considered that any defined area which may be utilised for the purposes of parking motor vehicles would qualify as a 'motor vehicle parking facility'.

Where the employee has incurred fees for parking a car at the airport car park, the employee has incurred expenditure in respect of the provision of motor vehicle parking facilities. In so doing the requirement of subparagraph 58G(1)(a)(i) of the FBTAA has been satisfied.

In accordance with this decision it is accepted that the garaging facility is a motor vehicle parking facility and the expenditure incurred by the employee in parking the carat the facility is expenditure in respect of the provision of motor vehicle parking facilities. Therefore, the requirement of subparagraph 58G(1)(a)(i) is met.

Is the benefit an eligible car parking expense payment benefit?

The term 'eligible car parking expense payment benefit' is defined in section 136(1) of the FBTAA to mean:

an expense payment benefit where:

(a) the recipient is an employee or an associate of an employee; and

(b) the recipients expenditure is in respect of the provision of car 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 4 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.

In applying this definition, for the expense payment benefit to be an eligible car parking expense payment benefit:

• the car must be parked for one or more daylight periods exceeding four hours at, or in the vicinity of the primary place of employment; and

• it must be used on the relevant day in connection with travel by the employee between the residence of the employee and the primary place of employment.

The meaning of 'in the vicinity of' was considered by the Full Federal Court in Virgin Blue Airlines Pty Ltd v. Federal Commissioner of Taxation 2010 FCAFC 137; 2010 ATC 20-226; 81 ATR 85 (Virgin Blue). The Full Federal Court held that, while the expression "in the vicinity of" is capable of wide application, its meaning must be considered in the statutory context before application to the facts. The statutory context concerns the imposition of tax upon car parking benefits provided to employees who use their cars to commute to and from work. The criteria for imposition of the tax (including the vicinity requirement) operates as a carve-out from the general FBT exemption for car parking benefits provided by employers to employees.

The expression 'in the vicinity of' refers to places which are near, meaning in close spatial proximity, to each other. In this context, vicinity could not accommodate the concept of "same functional space" or neighbourhood which otherwise might allow the meaning of vicinity to expand or contract according to the circumstances of individual cases. The circumstances of the individual case may be relevant to the application, as opposed to the meaning, of the 'vicinity' test to the extent that physical features or obstacles might render the car park and primary place of employment close to each other as the crow flies but not by the shortest practical route between them.

The Court considered that the application of this meaning of 'vicinity' is ultimately a matter of evaluative judgment, and held that a car park which was approximately 2 kilometres away from the primary place of employment was not near, proximate or close to that place.

In the situation being considered, the garaging facility is X kilometres from the place of work. In applying the Virgin Blue decision, it is agreed that this is not in the vicinity of the primary place of employment.

As this is not in the vicinity of the primary place of employment, paragraph (ii) of the definition has not been satisfied.

Further, paragraph (iv) is not satisfied as the car is not used in connection with travel between the place of residence of the employee and the primary place of employment on that day.

Conclusion

The expense payment benefit that arises from the payment of the fees incurred by an employee to park their car in the garaging facility will be an exempt benefit under paragraph 58G(1)(a) of the FBTAA as the recipient's expenditure is in respect of the provision of motor vehicle parking facilities and the benefit is not an eligible car parking expense payment benefit.