Edited version of your written advice

Authorisation Number: 1013047824732

Date of advice: 11 August 2016

Ruling

Subject: Commercial parking station

Question 1

Answer

Is the specified car parking facility a commercial parking station for the purposes of section 39A of the Fringe Benefits Tax Assessment Act 1986 (FBTAA 1986)?

This ruling applies for the following periods:

Year ended 31 March 2017

The scheme commences on:

1 April 2016

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

The Fringe Benefits Tax (FBT) car parking threshold for the FBT year ended 31 March 2017 is $8.48.

Within one kilometre of the specified car park all day car parking is offered in several locations. The lowest rate charged at one of the locations is greater than the FBT car parking threshold.

You have identified the specified car park as the cheapest within one kilometre of your premises, offering all day parking to all members of the public for a price per day.

Relevant legislative provisions

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

Fringe Benefits Tax Assessment Act 1986 Subsection 136(1)

Reasons for decision

While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.

Summary

The specified car park is a commercial parking station for the purposes of section 39A of the FBTAA.

Detailed reasoning

Section 39A of the FBTAA provides that car parking benefits arise when several conditions are satisfied. These conditions, in relation to daylight or a combination of periods on a particular day can be summarised as follows:

• A car must be parked on the premises of the provider where the following conditions are satisfied:

• the premises are business premises

• a commercial parking station is located within a 1 kilometre radius of the premises on which the car is parked

• the lowest fee charged by any commercial parking station is more than the car parking threshold

• the total duration of the period exceeds 4 hours

• a car benefit is provided or leased to, or a car is owned by, an employee (or associate)

• the provision of parking facilities is in respect of the employment of the employee

• during the period or periods, the car is parked at or in the vicinity of the primary place of employment

the car is used for the employee's travel between his or her place of residence and primary place of employment.

'Commercial parking station' is defined in section 136(1) of the FBTAA as:

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.

For the purposes of section 39A, a parking facility will be a commercial parking station where it meets this definition.

The terms 'all-day parking' and 'daylight period' are defined in subsection 136(1) of the FBTAA as follows:

all-day parking , in relation to a particular day, means parking of a single car for a continuous period of 6 hours or more during a daylight period on that day.

daylight period , in relation to a day, means so much of a period on that day as occurs:

(a) after 7 a.m. on that day; and

(b) before 7 p.m. on that day.

The term 'permanent' is not defined in the FBTAA and therefore takes its normal dictionary meaning.

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 park 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

This is an established property which provides car parking facilities that have the characteristics of an established long term car park. Therefore, it is a permanent car park for the 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 parking facilities at the car park are considered to be commercial facilities and the fees charged cannot be considered to be nominal as they are charged at a commercial rate for the area. Furthermore given the rate charged 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?

The specified parking facilities provide car parking spaces that can be used on payment of a fee upon entry.

Are the car parking spaces provided in the ordinary course of business?

In considering whether these spaces are provided in the ordinary course of business, the definition of 'business operations' in subsection 136(1) of the FBTAA provides that business operations in relation to a government body or a non-profit company include any operations or activities carried out by that body or company.

The business on the premises is a non-profit company. Part of its operations is a car parking facility. In applying this definition it is accepted that the car parking spaces are offered as part of the day to day operations or activities carried out by the business.

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.

It is accepted that the specified 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 specified car park offers all-day car parking in the ordinary course of business to members of the public during business hours.

Conclusion

The specified car park meets all the criteria of the definition of a commercial parking station under subsection 136(1) of the FBTAA. Thus, the parking station is a commercial parking station for the purposes of section 39A of FBTAA.