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Edited version of your written advice
Authorisation Number: 1051198815023
Date of advice: 10 March 2017
Ruling
Subject: FBT commercial parking station
Question 1
Is the car park at the specified location a commercial car 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 period:
1 April 2017 - 31 March 2018
The scheme commenced on
1 April 2017
Relevant facts and circumstances:
There are three all day car parking stations available to the public within one kilometre of your premises:
● the first parking facility is approximately X metres from your office, and the lowest all day fee that is offered to the public is $X per day;
● the second parking facility is approximately X metres from your office, and the lowest all day fee that is offered to the public is $X per day; and
● the third parking facility at the specified location is approximately X metres from your office. The lowest all day fee that is offered to the public at the specified location is lower than the above amounts.
The original purpose of the car park facility was to provide car parking for people visiting the location, however, during business hours, the facility now offers all day parking to the public. The facility still provides car parking for visitors outside of business hours and on weekends.
The facility has a website which provides the public with the following information:
● there are no available car parking spaces until further notice;
● there is currently a waiting list; and
● anyone that is interested in a parking space can contact the office.
The office has advised the current rates for parking.
Relevant legislative provisions
Fringe Benefits Tax Assessment Act 1986 section 39C
Fringe Benefits Tax Assessment Act 1986 subsection 136(1).
Reasons for decision
Question 1
Is the car park located at the specified location a commercial car parking station for the purposes of applying section 39C of the FBTAA?
Detailed reasoning
Section 39C of the FBTAA states that the taxable value of a car parking fringe benefit provided on a day 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 the operators 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.
You would prefer to use the lowest day rate charged by the car park, to calculate the value of your car parking fringe benefits using the commercial parking station method in section 39C of the FBTAA. To do this, the car parking facility must be a commercial parking station.
A commercial parking station, in relation to a particular day, is defined in 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 in paragraphs 77 to 81 of Taxation Ruling TR 96/26 - fringe benefits tax: car parking fringe benefits (TR 96/26).
In summary paragraphs 77 to 81 of TR 96/26 provide that, in determining whether a car park is a commercial parking station, it is necessary to consider the following:
● is the car parking facility permanent?
● is the car parking facility commercial?
● 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?
Is the car parking facility a permanent facility?
The word permanent is not defined in the FBTAA, however, the ordinary meaning in The Macquarie Dictionary, [Multimedia], version 5.0.0, 1 October 2001, states that 'permanent' means:
1. lasting or intended to last indefinitely; remaining unchanged; not temporary; enduring; abiding.
The car park is located at the specified location. During business hours, the facility offers permit and casual parking to the public. After business hours and on weekends the car park is available for visitors. Paid car parks are offered on a long term basis, with payment made up to one year in advance, with a current waiting list.
The car parking is not considered to be temporary as the facility provides long term parking with payment made up to one year in advance. Further there is a waiting list as there are no spaces available. The car parking facility provided is therefore considered to be permanent.
Is the car parking facility commercial?
The word 'commercial' is also not defined in the FBTAA, however, the ordinary meaning in The Macquarie Dictionary, [Multimedia], version 5.0.0, 1 October 2001, states:
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?
5. …
6. preoccupied with profits or immediate gains.
The specified location charges the lowest all day fee charged by any of the car parking stations near your office. However, the car park is located further away from the majority of government and commercial premises. The location is closer to housing and community facilities, where there is greater availability of free parking. Therefore the lowest all day fee is not considered to be a nominal fee and is charged with the intention of making a profit. By the facility providing information regarding their car parking facility on their website, it can be viewed as a method of promoting car parking to the public.
It is considered that the car parking facility operates with a view to making a profit and is therefore a 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?
Subsection 136(1) of the FBTAA defines all day parking to mean:
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' is also defined in subsection 136(1) of the FBTAA to mean the period between 7am and 7pm.
The facility offers all day car parking to members of the public during business hours. It is accepted that the car park is offered for a continuous period of more than six hours and during a daylight period for the payment of a fee.
Consequently, the car parking facility meets the definition of a commercial parking station under subsection 136(1) of the FBTAA.
Therefore, the car parking facility is a commercial car parking station for the purposes of applying section 39C of the FBTAA?