Edited version of your written advice

Authorisation Number: 1051457052002

Date of advice: 23 November 2018

Ruling

Subject: Fringe Benefits Tax: Car Parking Benefits

Question 1

Is there a commercial car parking station, as defined in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA), within 1km of the Employer?

Answer

Yes

Question 2

Does the provision of car parking facilities to its employees by the Employer give rise to car parking fringe benefits under section 39A of the FBTAA 1986?

Answer

Yes

This ruling applies for the following period

1 April 20XX – 31 March 20XX

The scheme commences on

1 April 20XX

Relevant facts and circumstances

The Employer provides car parking to its employees at nearby locations.

The employees of the Employer park their cars at the locations for a total of more than four hours between 7am and 7pm on any day.

The car/s parked at the locations are owned by, leased to, or otherwise under the control of the employer of the employee. The car/s is used by the Employers’ employee to travel between home and work (or work and home) at least once during that day.

The parking is provided by the Employer in respect of the employees’ employment.

Parking at X public car park

A public car parking facility is located at X public car park.

X public car park is located over one level with car park spaces. A ticket dispenser controls a boom gate at the entrance and a credit card payment is required at the exit point to enable egress.

Company A manages X public car park.

Corporate signage is evident near the drive way in X public car park identifying the premises.

Company A advertises X public car park online as available seven days per week, including public holidays, from 7am -7pm for an advertised price.

The paid parking facility offered hourly rates for parking above the Commissioners published car parking rates. Relevantly for more than 4 hours X public car park charges $25.00.

The Employers business and the parking premises are within a one kilometre radius of X public car park.

Parking at Y public car park

Company B manages the 24 hour car parking facilities at Y public car park.

The parking rates at Y public car park are $90 for more than four hours.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 Section 39A

Fringe Benefits Tax Assessment Act 1986 Subsection 136(1)

Reasons for decision

Question 1

Summary

The car parking facility at X public car park is a commercial parking station as defined under subsection 136(1) of the FBTAA 1986.

Detailed Reasoning

Subsection 136(1) of the FBTAA defines the following terms 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.

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

…the period between 7am and 7pm.

The Explanatory Memorandum to Taxation Laws Amendment (Car Parking) Bill 1992 Taxation Laws Amendment (Car Parking) Act 1992 (EM), uses the term ‘commercial parking station’ and is addressed as part of the explanation of amendments:

Commercial Parking Station

In relation to the definition of “commercial parking station", the words "permanent" and "commercial" have their normal dictionary meanings. For example, a car park set up for a short period to cater for a special function (like an Easter Show) would not be permanent. A car park which was not run with a view to making a profit (usually reflected in significantly lower car parking rates charged compared with the normal market value for that facility) would not be commercial.

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".

Taxation Ruling TR96/26 Fringe benefits tax: car parking fringe benefits (TR 96/26) explains at paragraph 80:

A vacant lot, utilised commercially as a car park, could be considered to be a permanent commercial car park even where it is intended that a building will be erected on the site in due course.

TR 96/26 also provides guidance in what is not regarded as constituting a commercial car park:

● car parking facilities, with a primary purpose other than providing all-day parking, that usually charge penalty rates significantly higher than the rates chargeable for all-day parking at commercial all-day parking facilities (such as parking provided for short term shoppers or hotel guests);

● 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), eg, an all-day parking fee of less than $2.00 is likely to be a nominal fee;

● car parking that is established for a short period to cater for a special function;

● car parking spaces leased to a tenant by a property developer as part of an overall lease agreement for business premises;

● 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; and

provided that, when there is no such event, the parking facilities are not usually available to members of the public;

parking provided by a business for its own employees and those of a nearby business, but to no other person, if there is no commercial car park within 1 km;

● 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;

● a kerb side parking meter, from the FBT year commencing 1 April 1994, even where it is possible to purchase all-day parking at the meter in a single transaction.

Therefore, in considering whether X public car park meets the factors in subsection 136(1) of the FBTAA, the following factors are determined exclusively:

● is X public car park a permanent car parking facility;

● is X public car park a commercial car parking facility;

● does X public car park provide car parking spaces in the ordinary course of business to members of the public;

● does X public car park provide all-day parking on payment of a fee, and;

● is X public car park a parking facility on a public street, road, lane, thoroughfare or footpath paid by inserting money in a meter or obtaining a voucher?

permanent car parking facility

The EM advises that ‘permanent’ will take on it normal dictionary meaning. Permanent is defined in the Macquarie Dictionary to mean “lasting or intended to last indefinitely; remaining unchanged; not temporary; enduring; abiding”. The X public car park is managed by Company X and provides parking facilities on an on-going basis, stating is availability is all week and public holidays from 6am to 6pm, as well as an option of monthly parking. These indicators are representative of a permanent establishment and for this reason this condition is satisfied.

commercial car parking facility

The term ‘commercial’ is also not defined in the FBTAA. The EM states that the normal dictionary meaning will apply. Relevantly, commercial is defined in the Macquarie Dictionary as:

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?

…

The Macquarie Dictionary defines commercial as capable of returning a profit. In applying this definition an example in paragraph 81 of TR 96/26 considers whether the fee charged is only a nominal fee. An example of a nominal fee is cited as an all-day parking fee of less than two dollars.

The fees charged by Company A for X public car park for all day parking is considerably higher than an arbitrary dollar value. Secure charges based on time spent and increases each hour to a maximum price. As such this is not considered to be nominal, and indicates a profit motive. Accordingly it is considered that X public car park is commercial in nature.

In relation to whether the X public car park is commercial we have also considered the rates, and if there is any fee free period or any other factors in the pricing that indicate a non-commercial purpose. There is nothing in the pricing structure that indicates that it can be distinguished from a commercial parking station. It has no fee free period, it has no reduction in rates for validation, and it has no wavier of the full fee once maximum hours are reached.

provides car parking spaces 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, and will take on the ordinary meaning of the words aligned with the Macquarie Dictionary. Public (when used as a noun) means ‘the people constituting a community, state, or nation’ or (emphasis added) ‘a particular section of the people’. In this case X public car park is advertised online by Company A as available seven days per week, including public holidays, from 6am -6pm for an advertised price, if these conditions are met, the car park is available in the ordinary course of business to members of the public.

provides all-day parking on payment of a fee

The meaning of ‘all-day parking’ is provided as, in relation to a particular day, means the parking of a single car for a continuous period of 6 hours or more between 7.00 am and 7.00 pm. on that day.

It is contended that the rates charged by X public car park are significantly greater than rates that would be charged by similar car parking facilities which encourage all-day parking.

Similar car parking facilities are available across the road from X public car park, at Y public car park. Located here are shopping outlets. Car park rates obtained from this establishment significantly differ to that of X public car park. Notably this car park operates on a 24 hour basis. The maximum daily rate is $90. This is significantly higher than X public car park where the maximum daily rate is $25.00. It is not considered that these factors discourage all-day parking, particularly when there is a competitive public car park, that is, Y public car park, across the road that is much more expensive.

Comparably, the spaces at X public car park are advertised as available for all-day parking, advertised as a set rate, available for anyone to park for six hours between 7am and 7pm on payment of a fee.

For these reasons cited above, it is considered that the X public car park provides all-day parking on payment of a fee.

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

The X public car park is not a parking facility on a public street, road, lane, thoroughfare or footpath. It is located over one level with parking spaces. A ticket dispenser controls a boom gate at a single lane entrance and a credit card payment is required at an exit point to enable egress, thereby meeting the commerciality requirement.

Conclusion

X public car park is a permanent, commercial car parking facility, which provides car parking spaces to the public in the ordinary course of business between the hours of 7am and 7pm for over 6 hours. It is a drive in car park facility which is off street on one level. A ticket is dispensed on arrival by boom gate where payment is required on exit. The car parking facility at the X public car park is a commercial parking station as defined under subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA 1986).

Question 2

Does the provision of car parking facilities to its employees by the Employer give rise to car parking fringe benefits under section 39A of the FBTAA 1986?

Summary

The provision of car parking facilities to the employees gives rise to car parking fringe benefits under section 39A of the FBTAA 1986.

Detailed reasoning

Section 39A of the FBTAA sets out the conditions which must be satisfied before the provision of car parking facilities will be taken to constitute a benefit provided by the provider to the employee (or associate) in respect of the employment of the employee. Each condition as set out must apply before the benefit will be caught under this section, as follows:

…

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 of 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 nor an associate of the employer of the employee; and

(B) 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 periods, 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 provider to the employee or the associate of the employee in respect of the employment of the employee.

Therefore, in considering whether the provision of car parking facilities to the employees gives rise to car parking fringe benefits under section 39A, the following factors are examined exclusively:

● the car is parked at premises that are owned or leased by, or otherwise under the control of, the provider (usually you as the employer)

● the car is parked for a total of more than four hours between 7.00am and 7.00pm on any day

● the car is owned by, leased to, or otherwise under the control of, an employee, or is provided by you

● the parking is provided in respect of the employee's employment

● the car is parked at or near the employee's primary place of employment on that day

● the car is used by the employee to travel between home and work (or work and home) at least once on that day

● there is a commercial parking station that charges a fee for all-day parking within a one-kilometre radius of the premises on which the car is parked and

● the commercial parking station fee for all-day parking is more than the car parking threshold

● at the beginning of the FBT year, the commercial parking station fee for all-day parking was more than the car parking threshold.

the car is parked at premises that are owned or leased by, or otherwise under the control of, the provider (usually you as the employer)

The Employer provides car parking to its employees at various locations. These locations are owned, leased or under the control of the Employer.

the car is parked for a total of more than four hours between 7.00am and 7.00pm on any day

The employee or associate is parked during the daylight periods for more than four hours.

the car is owned by, leased to, or otherwise under the control of, an employee, or is provided by you

The car in question will be owned by, leased to, or otherwise under the control of, an employee or provided by the Employer.

the parking is provided in respect of the employee's employment

The parking provided is provided by the Employer to the employees in respect of their employment.

the car is parked at or near the employee's primary place of employment on that day

The car will be parked at either the Employers premises or nearby as the employees primary place of employment for the day.

the car is used by the employee to travel between home and work (or work and home) at least once on that day

The employee or associate uses the car to travel between their home address and work address at least once during the day.

there is a commercial parking station that charges a fee for all-day parking within a one-kilometre radius of the premises on which the car is parked and

● the commercial parking station fee for all-day parking is more than the car parking threshold

● at the beginning of the FBT year, the commercial parking station fee for all-day parking was more than the car parking threshold.

It has been previously established that a commercial car park exists within a 1 km radius of the Employer’s premises. Taxation Determination TD 2017/14 Fringe benefits tax: for the purposes of section 39A of the Fringe Benefits Tax Assessment Act 1986 what is the car parking threshold for the fringe benefits tax year commencing on 1 April 2017? (TD 2017/14) provides the car parking threshold for the period commencing 1 April 2017 as $8.66. Therefore as the all-day parking price for the commercial car park is $25.00 the parking threshold for the period ended 31 March 20XX is exceeded.

Conclusion

Section 39A of the FBTAA has set out the conditions which must be satisfied in order for a car parking fringe benefit to apply. Examination of section 39A has revealed that each requirement under this provision has been satisfied. Therefore the provision of car parking facilities will be taken to constitute a benefit provided by the provider to the employee (or associate) in respect of the employment of the employee.