Edited version of your written advice

Authorisation Number: 1013040558671

Date of advice: 28 June 2016

Ruling

Subject: Fringe benefits tax - car parking benefits - car parking facilities

Question

Will a car parking fringe benefit arise under Division 10A of the Fringe Benefits Tax Assessment Act 1986 (FBTAA 1986) when an employee parks their car at a Council owned car park which is located within 1 kilometre of a shopping centre car park?

Answer

No.

This ruling applies for the following periods:

1 April 2016 to 31 March 2017

Relevant facts and circumstances

Staff employed by a Council are able to park their car at a car park owned by the Council which is close to the office building. The car park is offered to the general public for a limit of 2 hours. Council staff are entitled to park all day providing a parking permit is displayed on the car.

This car park is located within a 1 kilometre radius to a car park provided for shoppers of The Shopping Centre and the local shopping precinct. The parking structure of The Shopping Centre car park is as follows:

Lower Basement: 0-2 hours - Free (no ticket needed), 2-3 hours $6, 3-4 hours $9, All day $12.

Upper Car Park: 0-2 hours - Free (no ticket needed), 2-3 hours $5, 3-4 hours $8, All day $12.

The nearest parking station is at a tertiary institution which is located approximately 2.5 kilometres from the Council offices.

The campus has three car parks which operate from 7.00am - 10.30pm, Monday to Friday. Outside of these hours the multi-deck car park closes and other car parks are open to the public.

The fee charges are:

$3.50 for up to two hours during the day

$4.50 for up to three hours during the day

$5.00 after 4.00pm

$7.50 for full day (including evening)

$156.00 per month paid directly to multi-deck car park.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986

Division 10A

Section 39A

Subsection 136(1)

Reasons for decision

Very broadly, a car parking fringe benefit may arise for each day on which you (the employer) provide a car parking space for the use of an employee. Section 39A of the FBTAA 1986 sets out a number of conditions that must be met before car parking facilities provided by an employer to an employee will be subject to fringe benefits tax (FBT).

Specifically, a car parking fringe benefit arises during a FBT year only if all of the following conditions are satisfied:

• a car is parked at premises that are owned or leased by, the employer

• within a one-kilometre radius of the premises on which the car is parked, there is a commercial parking station that charges a fee for all-day parking, which is more than the car parking threshold

• the car is parked for a total of more than four hours between 7.00am and 7.00pm on the day

• the car is owned by, leased to, or otherwise under the control of, an employee, or is provided by you

• the parking is provided in respect of the employee's employment

• the car is parked at or near the employee's primary place of employment on that day

• the car is used by the employee to travel between home and work (or work and home) at least once on that day

• the commercial parking station referred to above must also, on the first business day of the FBT year, charge a representative fee for all-day parking that is more than the car parking threshold.

One of the conditions mentioned above is that a commercial car parking station must be located within a 1 kilometre radius of the employer provided car park and that the lowest fee charged by the operator of that car park for all-day parking is more than the car parking threshold.

Taxation Determination TD 2016/7 states that the car parking threshold for the FBT year commencing 1 April 2016 is $8.48. The car park at The Shopping Centre charges a fee of $12 for all-day parking. As this fee is greater than the car parking threshold amount, this car park could be considered to be a commercial parking station.

"Commercial parking station" is defined in subjection 136(1) of the FBTAA 1986 to mean:

"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."

However Taxation Ruling TR 96/26 states at paragraph 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);"

(emphasis added)

Car parking facilities provided for short-term shoppers or hotel guests are excluded from the definition of 'commercial parking station' not just because their primary purpose is not the provision of all-day parking, but because they also charge penalty rates to discourage all-day parking. The meaning of 'all-day parking' is defined in subsection 136(1) of the FBTAA 1986.

The car park at The Shopping Centre provides all day parking for a fee of $12, which is significantly higher than the fee of $7.50 charged by a nearby tertiary institution.

It is noted that the car park does not charge for the first 2 hours of parking, whereas a commercial parking station will charge a fee for the first hour (or part thereof).

It is considered that this car park is not a commercial parking station as its primary purpose is to provide short term parking for shoppers who come to The Shopping Centre and the nearby shopping precinct.

The Shopping Centre car park is not a commercial parking station for the purposes of Division 10A of the FBTAA 1986. Therefore a car parking fringe benefit will not arise when an employee is permitted to park their vehicle at a council owned car park.