Edited version of your written advice

Authorisation Number: 1013100879875

Date of advice: 26 October 2016

Ruling

Subject: FBT car parking fringe benefits

Question 1

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 new car parks are able to be used for longer term parking arrangements.

The car parks can be used for extended periods of time.

Employees are provided with car parking for at least four hours at a time at one of their business premises.

The business premises are located within a one kilometre radius of the premises on which the cars are parked.

The parking station can provide members of the public with all-day parking.

Long term car parking is available.

The above rates are applied on any hour of a 24 hour period.

Payment is via the Customer Service Office, prior to exiting the car park.

Relevant legislative provisions

Fringe Benefits Assessment Act 1986 Division 10A, Section 39

Fringe Benefits Assessment Act 1986 Section 136(1)

Taxation Laws Amendment (Car Parking) Bill 1992 Explanatory Memorandum

Acts Interpretation Amendment Act 2011 Section 2B

DETAILED REASONING

For the purpose of this ruling, a determination is to be made regarding the monetary amount which can be used as the lowest fee charged, with respect to the provision of car parking benefits to employees of Company B.

CAR PARKING BENEFITS

It is agreed that a car parking benefit as defined in subsection 39A(1) of the FBTAA will arise from the parking if the relevant parking facility is a commercial parking station, located within a one kilometre radius of the business premises, which provides car parking spaces in the ordinary course of business to members of the public for all-day parking on payment of a fee.

Section 39A of the FBTAA states that a car parking fringe benefit will arise where:

39A(1) If the following conditions are satisfied…

(a) ...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 1km 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;...

COMMERCIAL PARKING STATION

A 'commercial parking station' is defined in subsection 136(1) FBTAA to mean:

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 parking facility

● is a permanent parking facility

● is a commercial parking facility

● provides car parking spaces in the ordinary course of business

● to members of the public

● for 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.

Guidance for considering each of these issues is provided in Taxation Ruling TR 96/26 Fringe benefits tax: car parking fringe benefits (TR 96/26).

'Permanent' parking facility

The Explanatory Memorandum to Taxation Laws Amendment (Car Parking) Bill 1992 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 which it stated would not be permanent.

Further examples are provided in paragraph 81 of TR 96/26 which states that the following examples are regarded as not 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 online Dictionary defines 'permanent' to mean:

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

'Commercial' parking facility

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 which provided the following example of a parking facility that would not be regarded as being commercial:

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 online Dictionary defines 'commercial' as follows:

● adjective

● of, or of the nature of, commerce.

● engaged in commerce.

● capable of returning a profit: a commercial project.

● capable of being sold in great numbers: invention is commercial

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) FBTAA provides that business operations in relation to a government body or a non-profit company includes any operations or activities carried out by that body or company.

Members of the public

The circumstances in which a parking facility will be considered to provide car spaces to members of the public was considered by the Full Federal Court in Federal Commissioner of Taxation v Qantas Airways Ltd [2014] FCAFC 168; 2014 ATC 20-477 ('Qantas').

In its submission to the court, Qantas Airways submitted that the Explanatory Memorandum to Taxation Laws Amendment (Car Parking) Bill 1992 said nothing about the meaning of the word 'public'. The submission was that this absence of a meaning for 'public' supported its contention that it should be construed in other than perhaps its ordinary meaning.

In Federal Commissioner of Taxation v Qantas Airways Ltd [2014] FCAFC 168, the Court held that the word 'public' should be given its ordinary meaning. Further, paragraph 12 stated:

¶12 … and that there was no rationale for imputing into the definition a further requirement that a commercial parking station be one that employees of the employer commuting to work by car would or could in fact use…

The Macquarie online Dictionary defines 'public' to mean:

…done, made, acting, etc., for the people or community as a whole; open to all the people; maintained at the public expense, under public control, and open to the public generally; of or provided by the state rather than an independent, commercial company…

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.

All day parking

Subsection 136(1) FBTAA defines 'all day parking' to mean:

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.

Subsection 136(1) defines 'daylight period' to mean:

In relation to a day, … so much of a period on that day as occurs:

(a) after 7:00 a.m. on that day; and

(b) before 7:00 p.m. on that day.

The Explanatory Memorandum provides the following example of a parking arrangement that will not constitute a commercial parking station as it does not provide 'all day parking':

Some car parking facilities have a primary purpose to provide short-term shopper parking. To discourage all-day parking, the operators of these facilities charge penalty rates for all-day parking. These rates are significantly greater than the rates that would be charged by a similar facility which encouraged all-day parking. For the purposes of these provisions, short-term shopper parking facilities using penalty rates for all-day parking will not be treated as a “commercial parking station”.

This example is also included in paragraph 81 of TR 96/26.

Parking facilities on a public street, road, lane, thoroughfare or footpath

A 'commercial parking station' is defined in subsection 136(1) FBTAA and does not include any parking facility on a 'public' street, road, lane, thoroughfare or footpath.

The Macquarie online Dictionary defines 'public' to mean:

…done, made, acting, etc., for the people or community as a whole; open to all the people; maintained at the public expense, under public control, and open to the public generally; of or provided by the state rather than an independent, commercial company…

ONE KILOMETRE RADIUS OF PREMISES

For the purposes of Division 10A FBTAA, a commercial parking station is taken to be located within a one kilometre radius of a particular business premises or particular associated premises if, and only if, a car entrance to the commercial parking station is situated less than one kilometre, by the shortest direct practicable route, by foot or car, from a car entrance to those premises.

FEE CHARGED BY COMMERCIAL PARKING STATIONS

Subsection 39E(1) FBTAA gives the daily rate equivalent for periodic parking arrangements as:

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:

TOTAL FEE ÷ BUSINESS DAYS IN PERIOD

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.

The Explanatory Memorandum to Taxation Laws Amendment (Car Parking) Bill 1992 also provides this formula for converting longer term car parking rates into daily rate equivalents.

The Explanatory Memorandum to Taxation Laws Amendment (FBT Cost of Compliance) Bill 1995 also provides this formula for converting longer term car parking rates into daily rate equivalents.

Paragraph 40 of TR 96/26 also provides this formula for converting longer term car parking rates into daily rate equivalents.

ATO Interpretative Decision ATO ID 2006/93 states that subsection 39E FBTAA provides a daily rate equivalent where there is a periodic parking arrangement.

CAR PARKING THRESHOLD

For the year ending 31 March 2017, Tax Determination TD 2016/7 provides that the car parking threshold is $8.48.

APPLICATION TO COMPANY B's CIRCUMSTANCES

COMMERCIAL PARKING STATION

Pursuant to the definition of a 'commercial parking station' in subsection 136(1) FBTAA and as described in the examples listed above a determination needs to be made whether the car parking facilities at Company B are considered to be a commercial parking station.

'Permanent' car parking facility

In applying the definition and examples as listed above, Company B's Car Parks are considered to be permanent as they are purpose-built, established and are operating on an ongoing basis into the foreseeable future.

'Commercial' car parking facility

In applying the definition and examples as listed above, Company B's Car Parks are considered to be commercial as they are run with a view to making a profit as the fees charged cannot be considered to be nominal and are reflective of the fees that would be charged by a car parking facility that operates on a commercial basis.

Ordinary course of business

In applying the definition as listed above, it is accepted that Company B's Car Parks are offered as part of the day to day operations or activities carried out by the car park operators.

Members of the public

In applying the definition, examples and cases as listed above, Company B's Car Parks are available to be used by the public at large.

All day parking

In applying the definition and examples as listed above, Company B's Car Parks are considered to provide all day parking as they offer car parking facilities on a basis that satisfies the legislative definition of all day parking.

Parking facilities on a public street, road, lane, thoroughfare or footpath

In applying the definitions as listed above Company B's Car Parks are considered not to be on a public street, road, lane, thoroughfare or footpath.

ONE KILOMETRE RADIUS OF PREMISES

In applying the definition as listed above, Company B's Car Parks are considered to be within a one kilometre radius of the business premises at which the employees park their car during their hours of employment.

FEE CHARGED BY COMMERCIAL PARKING STATIONS

In applying the definitions, formula and examples as listed above, Company B's Car Parks are able to utilise the daily rate equivalent of their periodic parking arrangements, derived from the rates provided for their long term arrangements.

CONCLUSION FOR QUESTION 1

In determining the fees charged by Company B for all-day parking under section 39E(1) FBTAA, and by extension for the purposes of sections 39A(1)(a)(iii), 39C and 39DA FBTAA (where relevant), the fees charged for their periodic car parking arrangements are able to be used.

Company B is able to value the car parking benefit of employees at the amount of $l.xx.

QUESTION 2

SUMMARY

In determining the fees charged by Company B for all-day parking under section 39E(1) FBTAA under Company B's Long Stay car parking arrangements, weekends and public holidays do not constitute “business days”.

DETAILED REASONING

For the purpose of this ruling, a determination is to be made as to whether Saturdays, Sundays and public holidays constitute 'business days'.

Historically, the term 'business day' was defined in section 136(1) FBTAA to mean:

… a day other than a Saturday, a Sunday or a public holiday…

The term 'business day' is no longer defined in the FBTAA.

The previous definition of 'business day' was repealed by the Acts Interpretation Amendment Act 2011 (Cth) ('AIAA'), and is defined in section 2B AIAA as:

… means a day that is not a Saturday, a Sunday or a public holiday in the place concerned…

The term 'business day' is defined in paragraph 39 of TR 96/26 to:

… mean a day other than a Saturday, Sunday or a public holiday in the place concerned…

There are more than two hundred legislative references in Australia to the term 'business day', and they all define the term 'business day' as a day other than a Saturday, a Sunday or a public holiday, i.e. any day Monday through to Friday.

CONCLUSION FOR QUESTION 2

A conventional interpretation and statutory definition of the term 'business day' should exclude Saturdays, Sundays and public holidays.

This ruling applies for the following periods:

1 April 20XX to 31 March 20YY

The scheme commences on:

1 April 20XX

Relevant legislative provisions

Fringe Benefits Assessment Act 1986 Division 10A, Section 39

Fringe Benefits Assessment Act 1986 Section 136(1)

Taxation Laws Amendment (Car Parking) Bill 1992 Explanatory Memorandum

Acts Interpretation Amendment Act 2011 Section 2B