Edited version of your written advice

Authorisation Number: 1051334688653

Date of advice: 8 February 2018

Ruling

Subject: FBT

Question 1

Does a car parking fringe benefit arise under section 39A of the Fringe Benefits Tax Assessment Act (FBTAA) when an employee who has garaged an employer’s vehicle at their residence (as per the employer’s policy) returns the car to the employer’s car park, where:

● it is parked for more than 4 hours between 7am and 7pm,

● the car is available for use by all employees during that time, and

● the car is not driven home by any employee on that day?

Answer

No.

Question 2

Does a car parking fringe benefit arise under section 39A of the FBTAA when an employee who has garaged an employer’s vehicle at their residence (as per the employer’s policy) returns the car to the employer’s car park, where:

● it is parked for more than 4 hours between 7am and 7pm,

● the car is available for use by all employees during that time, and

● the car is driven home by a different employee on that day?

Answer

No.

Question 3

Does a car parking fringe benefit arise under section 39A of the FBTAA when an employee who has garaged an employer’s vehicle at their residence (as per the employer’s policy) returns the car to the employer’s car park, where:

● it is parked for more than 4 hours between 7am and 7pm,

● the car is available for use by all employees during that time, and

● the car is driven home by the same employee on that day?

Answer

No.

This ruling applies for the following period:

1 April 2017 to 31 March 2018

The scheme commences on:

1 April 2017

Relevant facts and circumstances

The employer and employees

The employer employs more than 3,500 staff, who work across more than 80 locations.

Motor Vehicles

In order to provide services to the community and deliver the programs they are accountable for, the employer maintains a large fleet of vehicles.

The size of the fleet fluctuates depending upon requirements of the business.

The employer’s fleet can be broadly classified as pool vehicles, operational vehicles or executive vehicles.

Operational and pool vehicles are assigned to various groups of users to effect the employer’s business functions.

The pool vehicles are essentially a fleet of vehicles that are available to employees, via a vehicle booking system, to use for travel where a business need arises.

The operational vehicles are used in the field by specific business units. These vehicles can be used via the vehicle booking system if they are not permanently allocated vehicles. These cars are used for many different business activities.

The permanent allocation of an operational vehicle is not an allocation to a person as such, rather than an allocation of a vehicle to specific position. This allocation of an operational vehicle is based upon the responsibilities of the role and is essentially allocated to that role in order for the incumbent to be able to perform the functions of the role. If a person vacates the role, the vehicle does not follow them; it stays as a “tool of trade” for the particular role. In no way would the incumbent in such a role see the use of the allocated operational vehicle as part of their remuneration.

Executives are remunerated under the executive remuneration contract. The vehicles provided to them have full private use.

Vehicle Policy

The employer has a vehicle use policy which provides a framework for managing its fleet of vehicles, and to outline driver’s responsibilities when using the employer’s or private vehicles for work purposes. The policy specifies matters including: when a vehicle is to be used for work travel, how to book a vehicle, driver responsibilities when using employer vehicles, logbooks, management and fleet responsibilities, and executive vehicles. The ‘Additional guidance’ attached to the policy provides explanation of the policy.

Clause X of the policy states that vehicles should only be used for official purposes; however executive vehicles may be used for personal use.

The use of a car to commute between home and work on occasion is very limited. The policy states that occasional commuting in an employer vehicle (other than an Executive Officer’s car) is prohibited unless;

● an employee has worked beyond normal working hours and public transport is not considered practical, safe or cost effective

● an employee is required to complete official duties after normal work hours away from their base location

● an employee is required to proceed directly the next morning from their residence to a different site to where they are normally located and a saving to the employer can be demonstrated through permitting commuting

● an employee needs to complete official business on a weekend or public holiday

● an employee is required to assist with service delivery, or

● an emergency occurs.

There are also strict procedures in place for the allocation of an operational vehicle to an employee on a permanent basis. The policy states that employees requiring the permanent allocation of a vehicle need good reason. They are required to complete an application approval and forward a copy of all approved and signed off requests to the Fleet Manager.

The policy states that when not in use, permanently allocated vehicles are to be made available for use by others, unless an exemption has been granted.

Clause XX of the policy outlines how Executive Officer vehicles are available for full private use, the Executive Officer’s liability for tolled roads and the option to keep logbooks.

Car Parking

Given the fact that the employer’s operations span the state, there are numerous sites where car parking facilities are provided for its vehicles. The majority of these car parking facilities are not within a 1km radius of a commercial car parking station and as such car parking fringe benefits do not arise. There are however many vehicles that are parked at numerous car parking facilities within the CBD and a few metropolitan areas, which are within a 1 km radius of a commercial car parking station.

The car parking facilities which are utilised for the employer’s vehicles are the business premises of the employer as they have control over the car parking space by way of the fact that they lease the car parking spaces.

Additionally, within a 1 kilometre radius of the location where car parking facilities are provided within the CBD and some metropolitan areas, commercial car parking stations exist. These commercial car parking stations charge members of the public rates that are in excess of the car parking threshold as set within the FBT legislation/ruling/regulations.

There are a number of instances where the employer’s vehicles are parked for more than 4 hours between the hours of 7am and 7pm.

A car fringe benefit arises where a vehicle, defined as a ‘car’ in the FBTAA, is taken home by an employee (where not excluded under the FBTAA).

Where the use of the employer’s car arises under the Executive Officer’s employment contract the parking of this vehicle gives rise to a car parking fringe benefit because the car parking space provided to the executive officer vehicle is in respect of their employment. The benefits of this arrangement for an executive include car parking at work.

The vehicle use policy’ provided with the Application for private ruling forms part of the facts.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act section 39A

Fringe Benefits Tax Assessment Act paragraph 39A(1)(d)

Fringe Benefits Tax Assessment Act subsection 136(1)

Reasons for decision

Question 1

Summary

A car parking fringe benefit will not arise when an employee who has garaged their employer’s vehicle at their residence returns the car to the employer’s car park and it is not driven home by any employee on that day.

Detailed reasoning

‘Car parking fringe benefit’ is defined in subsection 136(1) of the Fringe Benefits Tax Assessment Act (FBTAA) to mean ‘a fringe benefit that is a car parking benefit’. Subsection 136(1) also defines ‘Car parking benefit’ as a benefit referred to in section 39A of the FBTAA.

Section 39A of the FBTAA specifies the requirements for the provision of car parking facilities to constitute a car parking benefit. Subsection 39A(1) of the FBTAA states:

If the following conditions are satisfied in relation to a daylight period, or a combination of daylight periods, on a particular day:

(a) during the period or periods, 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 1 km 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;

(b) the total duration of the period or periods exceeds 4 hours;

(c) any of the following applies:

(i) a car benefit relating to the car is provided on that day to an employee or an associate pf an employee in respect of the employment of the employee;

(ii) the car is owned by, or leased to, an employee or an associate of an employee at any time during the period or periods;

(iii) the car is made available to an employee or an associate of an employee at any time during the period or periods by another person, where:

(A) the other person is neither the employer of the employee or an associate of the employer of the employee; and

the other person did not make the car available under an arrangement to which the employer of the employee, or an associate of the employer of the employee, is a party;

(d) the provision of parking facilities for the car during the period or periods is in respect of the employment of the employee;

(e) on that day, the employee has a primary place of employment;

(f) during the period or period, the car is parked at, or in the vicinity of, that primary place of employment;

(g) on that day, the car is used in connection with travel by the employee between:

(i) the place of residence of the employee; and

(ii) that primary place of employment;

(h) the provision of parking facilities for the car during the period or periods is not taken, under the regulations, to be excluded from this section;

(i) the day is on or after 1 July 1993;

the provision of parking facilities for the car during the period or periods is taken to constitute a benefit provided by the provided to the employee or the associate of the employee in respect of the employment of the employee.

All of the above conditions must be satisfied for a car parking benefit to be provided.

Most relevantly, for determining whether a car parking benefit will arise from the car parking provided for the employer’s cars, is the requirement specified in paragraph 39A(1)(d) of the FBTAA which requires that the parking facilities provided for the car is ‘in respect of the employment of the employee’.

The expression 'in respect of' is defined in subsection 136(1) of the FBTAA which states 'in relation to the employment of an employee, [it] includes by reason of, by virtue of, or for or in relation directly or indirectly to that employment'.

The term 'in respect of employment' has been considered by the courts on numerous occasions. In J & G Knowles & Associates Pty Limited v. Federal Commissioner of Taxation (2000) 96 FCR 402; 2000 ATC 4151; (2000) 44 ATR 22 it was noted that the term 'in respect of employment' includes benefits where ‘there is a sufficient or material, rather than a causal connection or relationship between the benefit and the employment’. Similarly, in FC of T v Indooroopilly Children Services (Qld) Pty Ltd [2007] 158 FCR 325; 2007 ATC 4236; 65 ATR 369 the court determined that the words 'in respect of' requires a sufficient or material link such that the particular employee to whom the relevant benefit is provided must be identified.

It is therefore necessary that there is a particular employee to whom the car parking benefit relates and the benefit must be provided in respect of the employment of that particular employee.

In the given circumstances, the employer’s employee has been using and is merely returning a car, which is a part of the employer’s fleet of vehicles, to the car parking facilities utilised by the employer for the parking of its vehicles. The requirement specified in paragraph 39A(1)(d) of the FBTAA which requires that the parking facilities provided for the car are ‘in respect of the employment of the employee’ does not exist. The employee ceases to receive a benefit once the car is parked. From that point, the car is available for use by other employees and it is the employer which receives the benefit of having its car parked in the car parking facilities available for use by other employees. The employee is not provided a car parking benefit in respect of their employment.

Whilst the car is garaged overnight at the employee’s home and is used to drive between home and work, these factors by themselves do not provide the necessary connection between the provision of the parking facility and the employee’s employment.

Given that the provision of car parking is not in respect of the employee’s employment, and that paragraph 39A(1)(d) of the FBTAA is not satisfied, a car parking benefit will not arise because all of the requirements of section 39A of the FBTAA are not met.

As a car parking benefit will not arise, a car parking fringe benefit as defined in subsection 136(1) of the FBTAA will not be provided.

Question 2

Summary

A car parking fringe benefit will not arise when an employee who has garaged their employer’s vehicle at their residence returns the car to the employer’s car park and it is driven home by a different employee on that day.

Detailed reasoning

The facts of this situation are similar to those in Question 1 except that in this situation, instead of the car remaining in the car park, the car is driven home by a different employee that day.

The fact that a different employee drives the car home at night will not cause a car parking fringe benefit to arise for the employee who had returned the car to the car park earlier in the day.

Similarly, a car parking fringe benefit will not arise for the employee who drives the car home that day because provided the employee does not have an ongoing entitlement to use the car to travel between home and work, the employee cannot be said to have received a benefit prior to the time at which he or she drove the car home. That is, the provision of car parking is not in respect of the employee’s employment.

Paragraph 39A(1)(d) of the FBTAA is not satisfied and therefore all of the requirements for a car parking fringe benefit specified in section 39A of the FBTAA are not satisfied.

A car parking benefit will not arise and a car parking fringe benefit as defined in subsection 136(1) of the FBTAA will not be provided.

Question 3

Summary

A car parking fringe benefit will not arise when an employee who has garaged their employer’s vehicle at their residence returns the car to the employer’s car park and it is driven home by the same employee on that day.

Detailed reasoning

The facts of this situation are similar to those in Question 1 except that in this case, instead of the car remaining in the car park, the employee who returns the car to the car park earlier in the day drives the car home again later that day.

As required by paragraph 39A(1)(d) of the FBTAA, for a car parking benefit to arise, the parking facilities provided for the car must be provided ‘in respect of the employment of the employee’.

The fact that a car is driven both from home to work, and then from work to home, on the same day by the same employee, does not by itself provide the necessary connection between the benefit and the employment of the employee. However, the necessary connection may exist if the employee had an ongoing entitlement to the private use of the car.

When the car is returned to car parking facility utilised by the employer the car becomes available for use by all the employer’s employees. From that point, it is the employer which receives the benefit of having its car parked in the parking facilities. The provision of the parking facility for the car is not an entitlement of the employee’s employment but instead is due to the business needs of the employer.

As such the employee does not have an ongoing entitlement to the private use of the car and cannot be said to have received a benefit. That is, the provision of car parking is not in respect of the employee’s employment.

Paragraph 39A(1)(d) of the FBTAA is not satisfied and therefore all of the requirements of section 39A of the FBTAA are not satisfied. A car parking benefit will not arise and a car parking fringe benefit as defined in subsection 136(1) of the FBTAA will not be provided.