Edited version of your written advice

Authorisation Number: 1013004077217

Date of advice: 29 April 2016

Ruling

Subject: Commercial parking station

Question 1

Is a car park a commercial car parking station for the purposes of applying section 39C of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

Answer

Yes.

This ruling applies for the following periods:

Year ended 30 June 2016

The scheme commences on:

1 July 2015

Relevant facts and circumstances

• The car park is located within a 1km radius of the employer's office building.

• Currently employees are parking in the basement of the office building.

• The car park offers a car parking facility which is available 24 hours a day to the public for all day parking at a flat rate.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 section 39C

Fringe Benefits Tax Assessment Act 1986 subsection 136(1)

Reasons for decision

Question 1

Summary

The car parking station is a commercial parking station as defined in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA).

Detailed reasoning

One of the methods available to calculate the taxable value of car parking fringe benefits is the "commercial parking station method" as specified in section 39C of the FBTAA.

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.

In considering the application of the definition of commercial parking station 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.

The car park provides parking facilities on an on-going basis therefore we consider that they are a permanent car parking facility.

The term 'commercial' is not defined in the FBTAA. In the Explanatory Memorandum to the Taxation Laws Amendment (Car Parking) Act 1992 (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?

Paragraph 81 of Taxation Ruling TR 96/26 Fringe benefits tax: car parking fringe benefits (TR 96/26) specifies certain parking arrangements that do not constitute commercial parking stations. Paragraph 81 of TR 96/26 states that a car park that is not run for profit or which charges a nominal fee will not be a commercial parking station. As an example of a nominal fee TR 96/26 states, than an all-day parking fee of less than two dollars is likely to be a nominal fee.

As the fees charged by the car park for all day parking is considerably higher than two dollars it is not considered to be nominal. Rather, the fee charged indicates a profit motive. Accordingly, we consider it is commercial in nature.

Where there are no restrictions to prevent members of the public from parking, car parking spaces will be available in the ordinary course of business to members of the public. The term 'public' and the phrase 'members of the public' are not further defined in the FBTAA, nor are they technical terms. Therefore the ordinary meaning of the words is to be adopted.

The car park has spaces available in the ordinary course of business to members of the public.

The term 'all-day parking' is also relevant in determining the meaning of commercial parking station. 'All-day parking' is defined in subsection 136(1) of the FBTAA. In relation to a particular day, this effectively means the parking of a single car for a continuous period of six hours or more between 7.00am and 7.00pm on that day.

The spaces at the car park are available for all-day parking as spaces are available for members of the public to park for six hours between 7am and 7pm on payment of a fee.

The car park is not a parking facility on a public street, road, lane, thoroughfare or footpath.

Consequently, we consider that the car park meets the definition of a commercial parking station under subsection 136(1) of the FBTAA. This is regardless of the fact that a purpose may be to provide convenient parking facilities to members, visitors and guests.