Edited version of your written advice

Authorisation Number: 1013005800207

Date of advice: 5 May 2016

Ruling

Subject: Car parking fringe benefits

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 (FBTAA)?

Answer

Yes

This ruling applies for the following periods

Year ended 31 March 2017

The scheme commenced on

1 April 2016

Relevant facts

Within one kilometre of the premises of an employer there are approximately six car parking stations that charge for all-day parking. The car park charging the lowest rate is 900 metres from the building and charges the lowest all-day fee of $5.70.

Other car parking facilities within one kilometre of the office are charging between $9.00 and $12.00 for all-day parking.

The specified car park is located further from other government and commercial office buildings than other car parking facilities. In addition the location of the specified car park is in an area where there are less commercial offices and more housing and community facilities therefore free parking is more readily available.

The original purpose of this car park facility was to provide car parking for people visiting the adjacent facility. However, during business hours, the facility now offers paid all day parking to the public. The facility still provides car parking for visitors to the facility outside of business hours and on the weekends.

The facility's website homepage has a link to information regarding the car park facility titled 'Car Parking'. The website provides the public with the following information:

• a limited number of car spaces are normally available during business hours on a long term basis; however, there are currently no car parking spaces available for hire to the community

• there is a waiting list, with a Waiting List Request form available on the website which members of the public can download

• an access card is issued for a refundable deposit to operate a boom gate,

• anyone that is interested in a parking space can contact the facility office.

The costing for the long term car park can be paid up to a year in advance preferably by electronic funds transfer.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 Subsection 39A(1)

Fringe Benefits Tax Assessment Act 1986 Section 39C

Fringe Benefits Tax Assessment Act 1986 Subsection 136(1)

Reasons for decision

Section 39C of the FBTAA states:

Subject to this Part, the taxable value, in relation to an FBT year, of a car parking fringe benefit provided on a day in the FBT year 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 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.

The fee charged by the specified car parking facility for all-day parking is less than that charged by other car parking stations within one kilometre of the office. If the specified car parking facility is a commercial parking station, the lower fee is used to calculate the taxable value of the car parking benefit.

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 (TR 96/26).

To determine whether the specified car parking 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 members of the public for all-day parking?

Are the parking facilities a permanent parking facility?

The Explanatory Memorandum to Taxation Laws Amendment (Car Parking) Bill 1992 (Explanatory Memorandum) stated the word 'permanent' has its normal dictionary meaning. It also provided several examples including a car park set up for a short period to cater for a special function (like an Easter Show) which it stated would not be permanent.

The following examples provided in paragraph 81 of TR 96/26 are not regarded as constituting commercial parking stations:

• car parking that is established for a short period to cater for a special function;

• 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;

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

The Macquarie Dictionary, [Online], viewed May 2016, defines permanent to mean:

1. lasting or intended to last indefinitely; remaining unchanged; not temporary; enduring; abiding

The facility is an established building and property intended to be a long term structure. The car parking facility is part of the property. Payment of parking fees is offered 12 months in advance. The car park is not considered to be temporary and with parking offered on a long term basis, it has the intention to last indefinitely. Therefore, it is a permanent car park for these purposes.

Are the parking facilities commercial facilities?

The term 'commercial' is not defined in the FBTAA. The Explanatory Memorandum stated the word 'commercial' has its normal dictionary meaning. As an example of a parking facility that would not be regarded as a commercial facility it stated that 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 for that facility) would not be commercial.

This example was also provided in paragraph 81 of TR 96/26:

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 value), e.g., an all-day parking fee of less than $2.00 is likely to be a nominal fee.

The Macquarie Dictionary, [Online], viewed May 2016, defines commercial 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?

In applying this definition and the example, the specified car parking facility is considered to be commercial facilities as the fees charged cannot be considered to be nominal and we are satisfied that the car park is run with a view to making a profit.

Do the parking facilities provide car parking spaces in the ordinary course of business to members of the public for all-day parking on payment of a fee?

It is accepted that the car parking spaces are offered in the ordinary course of business of the operation of the facilities.

Are the car parking spaces provided to members of the public?

Paragraph 81 of TR 96/26 provides the following examples of parking arrangements that are not considered to be made available to members of the public:

• car parking spaces leased to a tenant by a property developer as part of an overall lease arrangement for business premises;

• parking provided by a business for its own employees and those of a nearby business, but to no other person;

• 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.

The information on the facility's website promotes the car park to members of the public for long term periods for payment of a fee. Currently, there is a waiting list.

It is accepted that car parking facilities are available to members of the public on payment of a fee.

Are spaces available for all-day parking?

All-day parking is defined in subsection 136(1) of the FBTAA to mean:

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

Subsection 136(1) of the FBTAA defines 'daylight period' to mean the period of the day that occurs after 7 a.m. and before 7 p.m. on that day.

The facility offers all-day car parking in the ordinary course of business to members of the public during business hours.

Conclusion

The specified car parking facility meets all the criteria of the definition of a commercial parking station under subsection 136(1) of the FBTAA. The fee charged by the specified car parking facility can therefore be used to calculate the taxable value of a car parking fringe benefit at the government department.