Edited version of your written advice

Authorisation Number: 1013107060601

Date of advice: 14 October 2016

Ruling

Subject: Fringe benefits tax: car parking benefits: exempt benefits

Question 1

Are the car parking benefits provided by the Company exempt under section 58GA of the Fringe Benefits Tax Assessment Act 1986?

Answer

Yes

This ruling applies for the following period:

1 April 20XY to 31 March 20YY

The scheme commences on:

1 April 20XY

Relevant facts and circumstances

The Company (the employer) leases business premises at a business park.

The business park provides car parking for both tenants and visitors.

The car parking is provided in one location.

The tenants and visitors car parking is divided into two separate and distinct areas.

You lease some car parks from the business park for a total sum per month in the separate and distinct tenant car parking area.

The car parks are available to your employees.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986

Section 39A

Section 58GA

Subsection 58GA(3)

Subparagraph 58GA(1)(d)(i)

Subsection 136(1)

Income Tax Assessment Act 1936

Paragraph 103A(2)(a)

Subsection 103A(4)

Income Tax Assessment Act 1997

Section 6-5

Section 6-10

Section 995-1

Reasons for decision

Summary

The car parking benefits provided by the employer are exempt under section 58GA of the Fringe Benefits Tax Assessment Act 1986.

Detailed reasoning

Section 58GA of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) provides the following:

(1) A car parking benefit provided in an FBT year in respect of the employment of an employee is an exempt benefit if:

(a) the car is not parked at a commercial parking station; and

(b) the employer of the employee is not a public company (see subsection (3)), or a subsidiary of a public company (see subsection (3)), in relation to the day on which the benefit is provided; and

(c) the employer is not a government body; and

(d) either:

(i) the sum of the employer's ordinary income and statutory income for the year of income ending most recently before the start of the FBT year is less than $10 million; or

(ii) the employer is a small business entity for the year of income ending most recently before the start of the FBT year.

Therefore, exemption under subsection 58GA(1) of the FBTAA requires that the following conditions are met:

(a) a car parking benefit is provided,

(b) the car parking benefit is provided in respect of the employment of the employee;

(c) the car is not parked at a commercial parking station;

(d) the employer is neither a public company nor a subsidiary of a public company;

(e) the employer is not a government body;

(f) either:

(i) the sum of the employer's ordinary income and statutory income for the year of income ending most recently before the start of the FBT year is less than $10 million; or

(ii) the employer is a small business entity for the year of income ending most recently before the start of the FBT year.

Is a car parking benefit provided?

The term 'car parking benefit' is defined in subsection 136(1) of the FBTAA as follows:

"car parking benefit " means a benefit referred to in section 39A.

Broadly speaking, a car parking benefit arises when an employer provides car parking space for their employees at premises leased or owned by the employer.

The car parking facilities provided by the employer to their employees would constitute car parking benefits for the purposes of section 39A of the FBTAA.

This condition is met.

Is the car parking benefit provided in respect of the employment of the employee?

The car parking facilities are only provided to the employees while they are working at the employer's office.

This condition is met.

Is the car not parked at a commercial car parking station?

The term 'commercial parking station' is defined in subsection 136(1) of the FBTAA as follows:

"commercial parking station”, 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.

Therefore, in considering whether the car park is a commercial parking station, the car park needs to be:

● a permanent car parking facility

● 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.

For the purposes of subsection 136(1) of the FBTAA, all of these conditions must be satisfied.

Permanent car parking facility

The leased car parks are located on a site operated by the business park. Parking facilities are provided on an on-going basis. Therefore, it is considered that it is a permanent car parking facility.

Commercial car parking facility

The FBTAA does not define what is meant by the word 'commercial' and on that basis, its ordinary meaning applies. The Macquarie Dictionary provides the following definition:

adjective

…

3. capable of returning a profit: a commercial project.

…

In considering this definition of the word commercial, the following example is provided at paragraph 81 of TR 96/26 Fringe benefits tax: car parking fringe benefits. It considers whether the fee charged by the operator is only a nominal fee.

81. We do not regard the following parking arrangements as constituting commercial parking stations:

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

You pay the business park a sum for the car parks, equating to a certain daily rate. Although this daily rate is inclusive of weekends, it is still higher than the $2.00 considered to be a nominal fee.

The business park charges the general public a daily fee of a greater amount to park at their car parking facility.

The fees charged indicate a profit motive and accordingly, are considered to be commercial in nature.

Car parking spaces in the ordinary course of business to members of the public

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 applies.

The Macquarie Dictionary provides the following definition:

adjective

…

3. open to all the people: a public meeting.

…

noun

8. Also, the general public. the people constituting a community, state, or nation.

9. a particular section of the people: the novel-reading public.

Although the business park provides one car parking facility, it is divided into two separate and distinct sections. The section in which the car parks are provided is only accessible via a separate entrance. To access the car parks, the employees must have a key card and it cannot be accessed by the general public. Access is only available to people without key cards if they are 'buzzed in' via an intercom. This will only occur for vehicles that are making deliveries to the tenants.

The car park is not available to the general public. On this basis, the car parks are not provided at a commercial car parking station.

This condition is met.

Is the employer neither a public company nor a subsidiary of a public company?

The term 'employer' is defined in subsection 136(1) of the FBTAA as follows:

"employer " means:

(a) a current employer;

(b) a future employer; or

(c) a former employer;

but does not include:

(d) the Commonwealth; or

(e) an authority of the Commonwealth that cannot, by a law of the Commonwealth, be made liable to taxation by the Commonwealth.

The term 'current employer' is defined in subsection 136(1) of the FBTAA as follows:

"current employer " means a person (including a government body) who pays, or is liable to pay, salary or wages, and includes:

(a) in the case of a partnership--each partner; and

(b) in the case of any other unincorporated association or body of persons--its manager or other principal officer.

Therefore, for the purposes of the FBTAA, the employer is the person who pays, or is liable to pay, the salary or wages of your employees. As the employer pays the salary or wages of the employee, the employer is the employer for the purposes of the FBTAA.

The term 'public company' is defined in subsection 58GA(3) of the FBTAA as follows:

"public company" means a company covered by paragraph 103A(2)(a) of the Income Tax Assessment Act 1936 , but reading the reference in that paragraph to the last day of the year of income as a reference to the day on which the benefit is provided.

The employer is not a public company for the purposes of paragraph 103A(2)(a) of the Income Tax Assessment Act 1936 (ITAA 1936).

The term 'subsidiary of a public company' is defined in subsection 58GA(3) of the FBTAA as follows:

"subsidiary of a public company" means a subsidiary of a public company within the meaning of subsection 103A(4) of the Income Tax Assessment Act 1936, but reading:

(a) a reference in section 103A of that Act to a year of income as a reference to the day on which the benefit is provided; and

(b) a reference in that section to a public company as a reference to a public company within the meaning of this section.

The employer is not a subsidiary of a public company for the purposes of subsection 103A(4) of the ITAA 1936.

This condition is met.

Is the employer not a government body?

The term 'government body' is defined in subsection 136(1) of the FBTAA as follows:

"government body " means the Commonwealth, a State, a Territory or an authority of the Commonwealth or of a State or Territory.

The employer is not a 'government body' as that term is defined in subsection 136(1) of the FBTAA.

This condition is met.

Is the sum of the employer's ordinary income and statutory income less than $10 million or is the employer a small business entity for the year of income ending most recently before the start of the FBT year?

The term 'ordinary income' is defined in subsection 58GA(3) of the FBTAA as follows:

"ordinary income " has the same meaning as in the Income Tax Assessment Act 1997.

Section 995-1of the Income Tax Assessment Act 1997 (ITAA 1997) provides the following:

"ordinary income " has the meaning given by section 6-5.

Section 6-5 of the ITAA 1997 provides the following:

Income according to ordinary concepts (ordinary income)

(1) Your assessable income includes income according to ordinary concepts, which is called ordinary income .

Note: Some of the provisions about assessable income listed in section 10-5 may affect the treatment of ordinary income.

(2) If you are an Australian resident, your assessable income includes the * ordinary income you * derived directly or indirectly from all sources, whether in or out of Australia, during the income year.

…

(4) In working out whether you have derived an amount of * ordinary income, and (if so) when you derived it, you are taken to have received the amount as soon as it is applied or dealt with in any way on your behalf or as you direct.

The term 'statutory income' is defined in subsection 58GA(3) of the FBTAA as follows:

"statutory income " has the same meaning as in the Income Tax Assessment Act 1997.

Section 995-1 of the ITAA 1997 provides the following:

"statutory income " has the meaning given by section 6-10.

Section 6-10 of the ITAA 1997 provides the following:

Other assessable income (statutory income)

(1) Your assessable income also includes some amounts that are not * ordinary income.

Note:  These are included by provisions about assessable income.
For a summary list of these provisions, see section 10-5.

(2) Amounts that are not * ordinary income, but are included in your assessable income by provisions about assessable income, are called statutory income.

Note 1: Although an amount is statutory income because it has been included in assessable income under a provision of this Act, it may be made exempt income or non-assessable non-exempt income under another provision: see sections 6-20 and 6-23.

Note 2: Many provisions in the summary list in section 10-5 contain rules about ordinary income. These rules do not change its character as ordinary income.

(3) If an amount would be * statutory income apart from the fact that you have not received it, it becomes statutory income as soon as it is applied or dealt with in any way on your behalf or as you direct.

(4) If you are an Australian resident, your assessable income includes your * statutory income from all sources, whether in or out of Australia.

…

To fall within the exemption provisions afforded by subparagraph 58GA(1)(d)(i) of the FBTAA, the sum of the employer's ordinary and statutory income must be less than $10 million for the year of income ending most recently before the start of the FBT year commencing 1 April 20XY. This would be the year ended 30 June 20XX.

The sum of the employer's ordinary and statutory income for the year ended 30 June 20XX was less than $10 million.

This condition is met.

As the employer has met all the conditions specified in section 58GA, the car parking benefits provided by the employer are exempt.