Edited version of your written advice

Authorisation Number: 1012928938365

Date of advice: 7 January 2016

Ruling

Subject: Commercial Car Parking Station and Car Parking Fringe Benefits

Question 1

Is the car parking facility located within Shopping Centre A a commercial parking station as defined under subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA 1986)?

Answer

Yes

Question 2

Does the provision by the Employer of car parking facilities to its employees give rise to car parking fringe benefits under section 39A of the FBTAA 1986?

Answer

No

This ruling applies for the following period

FBT year ended 31 March 2015

The scheme commences on

1 April 2014

Relevant facts and circumstances

1. The Employer provides car parking to its employees. There are a number of parking facilities located within a 1km radius of the premises on which the car parking facilities are provided.

2. The Fringe Benefits Tax (FBT) car parking threshold for the year ended 31 March 2015 was $8.26.

3. The all-day rates charged by the above car parking facilities for the year ended 31 March 2015 have been provided by the Employer.

4. There are no car parking facilities within a 1km radius of the premises of the employee car parking facilities in the FBT year ended 31 March 2015 which charged a lowest all day rate higher than $8.26 per day.

5. Shopping Centre A offered monthly parking to members of the public within its car parking facilities.

6. Shopping Centre A also offered an early bird rate to members of the public that is lower than the FBT car parking threshold of $8.26 for the year ended 31 March 2015 on Mon to Sun for a continuous period of 7 hours within its car parking facilities with validation on 1 April 2014.

Relevant legislative provisions

Fringe Benefit Tax Assessment Act 1986 section 39A

Fringe Benefit Tax Assessment Act 1986 section 39E

Fringe Benefit Tax Assessment Act 1986 section 136

Reasons for decision

Issue 1

Question 1

Summary

The car parking facility at Shopping Centre A is a commercial parking station as defined under subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA 1986) .

Detailed reasoning

Subsection 136(1) of the FBTAA 1986 defines a commercial parking station to be:

"…in relation to a particular day… 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 term "all day parking", as used above, is a defined term and means:

"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 defined to be the period between 7am and 7pm.

The definition of 'commercial parking station' in subsection 136(1) only requires one of the parking spaces in the facility to be available in the ordinary course of business to members of the public for all-day parking. In considering whether a space is available for all day parking it is not necessary to consider what the primary purpose of the parking facility is.

In order to determine whether the car parking facility at Shopping Centre A is a commercial parking station it is necessary to consider whether Shopping Centre A is one parking station. In considering this question, we need to take into account a number of factors. Some of these factors include:

• Whether the car parks are the same building

• Whether cars can drive between the car parking facilities

• Whether the car parking facilities are run by the same car park operator

• Whether the car parking facilities are marketed as part of one facility

• Whether the car parking facilities are on the same land title and part of the one complex

In Shopping Centre A's case, the car parking facilities are situated in separate buildings positioned adjacent to each other. Each car parking facility has separate entries and exits. Whilst there are passageways that connect the buildings and allowing people to access the three buildings by foot, there are no roads connecting the car parking stations to allow cars to access from one car parking station to another.

The car parking facilities are currently being managed and marketed by one commercial car park operator as two car parks (one express car park and one main car park). The buildings which comprise Shopping Centre A are currently being managed and marketed by one commercial shopping centre operator as one shopping complex. Previously, the buildings were marketed as separate shopping centres by different operators with their own car parks within the building.

Although these car parking facilities are being marketed separately, it is mainly due to their locations and not because they are operating separately. The express car park is located in the basement level and allows easy and quick access to the entry and exit of the car parking facilities. Although monthly parking is available at different rates within the car parking facilities at Shopping Centre A, this is likely due to their locations (higher price due to the better and more convenient location for office workers) rather than being separate car parking facilities.

An early bird daily rate is available in some levels within the car parking facilities. However, if a member of the public was unable to take advantage of the early bird daily rate or the monthly rates (outlined above), it would cost that person an equivalent daily rate to park for 7 continuous hours in each of the P1, P2 and P3 car parking facilities. Hence, the Shopping Centre A Car Park consists of one car parking station and not three car parking stations.

In the case of Shopping Centre A, all car parking facilities in the car parking station are available for all-day parking by members of the public. Therefore, as it has spaces that are available for all-day parking it is a commercial parking station. It is not necessary to consider whether the parking facility was constructed to provide parking to shoppers.

Question 2

Summary

The provision by the Employer of car parking facilities to its employees does not give rise to car parking fringe benefits under section 39A of the Fringe Benefits Tax Assessment Act 1986 (FBTAA 1986) for the FBT year ended 31 March, 2015.

Detailed reasoning

Subsection 39A (1) of the FBTAA 1986 is provided below in full.

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

Here, the employer provides car parking to its employees.

Whether subsection 39A(1) of the FBTAA 1986 has been satisfied to crystallise a car parking fringe benefit requires an examination of paragraphs 39A(1)(ii) and (iii) of the FBTAA 1986 in the Employer's case (the existence of a commercial car parking station charging a lowest daily rate higher than the FBT car parking threshold..

Section 39E of the FBTAA 1986 is provided in full below:

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.

Hence, to calculate the lowest fee charged by a commercial car parking station in paragraph 39A(1)(a)(iii) of the FBTAA 1986 requires looking at all of a car parking operator's rates including weekly, monthly, yearly or other periodic basis and working out the daily rate equivalent.

Taxation Ruling TR 96/26 Fringe Benefits Tax: Car parking Fringe Benefits discusses the calculation and interpretation of the lowest daily fee charged in a commercial car parking station in paragraphs 40 and 43 to 45 below:

40. If all-day parking is provided by a commercial car park on a weekly, monthly, yearly or other periodic basis, the operator 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.

43. The lowest all-day fee may include a fee which a commercial parking station charges for bona fide early bird parking or 'carpooling' arrangements where a reasonable number of parking spaces are set aside for those purposes.

44. A nil fee is not a fee charged and therefore cannot be used as the lowest all-day fee - see Case 27/95 95 ATC 275; AAT Case 10128 (1995) 30 ATR 1297.

45. Example 6

Apex Parking is a 24 hour commercial car-park. It charges $3.00 a day for early-bird parking (for cars parked before 7.30 am), $1.50 hourly from 6.30 am to 6 pm with a maximum fee of $6.00 for all day parking and 20 cents per hour for cars parked between 6 pm and midnight.

The fee to be used for valuation purposes is $3.00, which is the lowest fee charged for all-day parking.

The commercial car parking stations located within 1km of the premises on which the cars in the employer's case is parked and the lowest daily fee charged in the FBT year ended 31 March, 2015 were provided by the Employer.

The FBT car parking threshold for the year ended 31 March 2015 was $8.26 as per Taxation Determination TD 2014/11 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 2014

Hence, there are no commercial car parking stations which are within a 1 km radius of the premises which the Employer's employee car parking facilities in the FBT year ended 31 March 2015 which charged a lowest all day rate higher than $8.26 per day.

Therefore, the provision by the Employer of car parking facilities to its employees does not give rise to car parking fringe benefits under section 39A of the Fringe Benefits Tax Assessment Act 1986 for the FBT year ended 31 March, 2015.