Edited version of your written advice

Authorisation Number: 1051463389472

Date of advice: 6 December 2018

Ruling

Subject: Car Parking Fringe Benefits

Question 1

Is there a car parking fringe benefit for the Fringe Benefits Tax (FBT) year ended 31 March 20XX under section 39A of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

Answer

No.

Question 2

If the answer to Question 1 is yes, what would be the lowest car parking fee (using the average cost method) on 1 April 20XX?

Answer

Not applicable.

Question 3

Is there a car parking fringe benefit for the FBT year ended 31 March 20XX under section 39A of the FBTAA, assuming that the car parking threshold is less than the all-day parking fee (being $Z)?

Answer

Yes.

This ruling applies for the following period(s)

1 April 20XX to 31 March 20XX

1 April 20XX to 31 March 20XX

The scheme commences on

1 April 20XX

Relevant facts and circumstances

An employer (the Employer) has elected to use the average cost and statutory formula method to calculate the taxable value of their car parking fringe benefits.

Car parking is provided for employees at one of the Employer’s business premises at Location B.

A car parking operator (Car Park A) has recently commenced a commercial car parking business within a one kilometre radius of the Department’s business premises at Location B.

On 1 April 20XX, there were no other commercial car parking stations that existed within the one kilometre radius of those business premises, apart from Car Park A.

On 1 April 20XX, the all-day car parking rates at Car Park A were as follows:

● Early bird rate: $X.00

(Entry between 6:00am to 9:00am, and valid for 12 hours once purchased)

● Casual rate per hour: $Y.00

(or $Z.00 for all-day parking)

The early bird rate ceased shortly after 1 April 20XX.

Employee cars are parked at premises that are owned or leased by, or otherwise under the control of, the Employer.

Each employee’s car parked on the Employer’s business premises at Location B is parked for a total of more than four hours between 7:00am and 7:00pm on the applicable business day.

Each employee’s car parked on these business premises is owned by, leased to, or otherwise under the control of, the employee.

Parking on the Employer’s business premises at Location B is provided to each employee in respect of their employment.

Employee cars parked at the Employer’s business premises at Location B are used by employees to travel between home and work (or work and home) at least once on that business day.

Assumptions

1. Prior to Car Park A ceasing its early bird rates, a reasonable number of parking spaces were set aside for the purposes of bona fide early bird parking.

2. The casual rate per hour of $Y.00 at Car Park A as at 1 April 20XX will be the same for the first business day of the FBT year ended 31 March 20XX.

3. All other requirements of section 39A of the FBTAA (that is, other than whether the lowest fee charged exceeds the car parking threshold) will be met in respect of the FBT year ended 31 March 20XX.

1. The FBT car parking threshold for the FBT year ended 31 March 20XX will be less than the all-day parking fee on the first business day of that FBT year (of $Z).

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

Is there a car parking fringe benefit for the FBT year ended 31 March 20XX under section 39A of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

Summary

A car parking fringe benefit does not arise for the FBT year ended 31 March 20XX.

Detailed reasoning

Relevant law

Subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) defines a ‘car parking fringe benefit’ to mean a fringe benefit that is a car parking benefit. A ‘car parking benefit’ is defined in subsection 136(1) to mean a benefit referred to in section 39A.

Section 39A of the FBTAA outlines all of the conditions that need to be satisfied to constitute the provision of a car parking fringe benefit.

39A(1) [Provision of car parking facilities]

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.

A summary of the above conditions in subsection 39A(1) of the FBTAA is provided in the ATO publication, Fringe benefits tax – a guide for employers, as follows:

A car parking fringe benefit arises during a fringe benefits tax (FBT) year only if all of the following conditions are satisfied:

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

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

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

● the commercial parking station referred to above must also, on the first business day of the FBT year, charge a representative fee for all-day parking that is more than the car parking threshold.

The Fringe benefits tax – a guide for employers publication defines key terms in subsection 39A(1) of the FBTAA as follows:

Commercial parking station

A commercial car parking station that changes a fee for all-day parking, is permanent, and is commercial (that is, it operates with a view to making a profit).

All-day parking

All-day parking means parking for a continuous period of at least six hours between 7.00am and 7.00pm.

One-kilometre radius

The one-kilometre distance is measured not by radius but by the shortest practicable direct route (by whatever means this route is travelled, for example, by foot, car or boat).

Primary place of employment

The employee's primary place of employment is your premises at which the employee performs the majority of their employment-related duties on a particular day.

Representative fee

The fee for any particular day is not representative if it differs substantially from the average lowest fee ordinarily charged for all-day parking. For this purpose, you can compare the fee for a particular day with the average fee charged during a four-week period beginning or ending on that particular day.

The meaning of the ‘car parking threshold’ is provided at subsection 39A(2) of the FBTAA:

39A(2)

For the purposes of this section:

(a) the carparking threshold for the FBT year beginning on 1 April 1995 is $5.00; and

(b) for later years the carparking threshold is the threshold for the previous FBT year as adjusted on the first business day of the later FBT year by a factor equivalent to the movement in the preceding twelve months in the All Groups Consumer Price Index number (being the weighted average of the 8 capital cities) published by the Australian Statistician.

Further, paragraph 3.1 of the Explanatory Memorandum to the Taxation Laws Amendment (FBT Cost of Compliance) Bill 1995 provides:

3.1 The amendments in Schedule 3 of this Bill will amend the Fringe Benefits Tax Assessment Act 1986 (FBTAA) to reduce the cost to employers of complying with the requirement to pay fringe benefits tax (FBT) on car parking benefits. The amendments will:

● ensure that FBT does not apply to car parking unless a commercial car park which charges more than $5 a day at the beginning of the FBT year is located within a one kilometre radius of the employer provided car parking facilities;

…

Paragraph 43 of Taxation Ruling TR 96/26 Fringe benefits tax: car parking fringe benefits (TR 96/26) states that:

The lowest all-day fee may include a fee which a commercial parking station charges for bona fide early bird parking or ‘car pooling’ arrangements where a reasonable number of parking spaces are set aside for those purposes.

The following example is provided at paragraph 45 of TR 96/26:

Apex Parking is a 24 hour commercial car-park. It charges $3.00 a day for early-bird parking (for cars parked before 7:30am), $1.50 hourly from 6.30am to 6.00pm with a maximum fee of $6.00 for all day parking and 20 cents per hour for cars parked between 6.00pm and midnight.

The fee to be used for valuation purposes is $3.00, which is the lowest fee charged for all-day parking.

Application to your circumstances

Pursuant to paragraph 43 of TR 96/26, the lowest all-day parking fee charged by Car Park A, a commercial parking station, may include charges for bona fide early bird parking where a reasonable number of parking spaces are set aside for this purpose.

As such, the lowest all-day parking fee charged by Car Park A on the first business day of the 20XX FBT year is the early bird rate of $X.00.

Therefore, the condition in subparagraph 39A(1)(a)(iii) of the FBTAA is not satisfied. This is because the lowest fee charged by Car Park A in the ordinary course of business to members of the public for all-day parking on the first business day of the 20XX FBT year is $X.00, which is not more than

Having regard to the intent of section 39A of the FBTAA as provided in paragraph 3.1 of the Explanatory Memorandum to the Taxation Laws Amendment (FBT Cost of Compliance) Bill 1995, the condition in subparagraph 39A(1)(a)(iii) is not satisfied irrespective of whether the early bird rate ceased shortly after 1 April 20XX. Of relevance is the value of the lowest all-day parking fee charged as at the first business day of the FBT year.

As sub-paragraph 39A(1)(a)(iii) of the FBTAA is not satisfied, a car parking fringe benefit does not arise for the FBT year ending 31 March 20XX.

Question 2

If there is a car parking fringe benefit in Question 1, what would be the lowest car parking fee (using the average cost method) on 1 April 20XX?

Summary

As per the response to Question 1, there is no car parking fringe benefit for the FBT year ended 31 March 20XX. Therefore, a response to Question 2 is not applicable.

Question 3

Is there a car parking fringe benefit for the FBT year ended 31 March 20XX under section 39A of the FBTAA, assuming that the car parking threshold is less than the all-day parking fee (being $Z)?

Summary

A car parking fringe benefit would arise for the year ended 31 March 20XX.

Detailed reasoning

Relevant law

All of the conditions that need to be satisfied to constitute the provision of a car parking fringe benefit are provided in section 39A of the FBTAA, as outlined in the response to Question 1.

Application to your circumstances

Based on the Facts and Assumptions above, the lowest all-day parking fee charged by Car Park A on the first business day of the 20XX FBT year will be $Z.00. It is assumed that this rate will be more than the car parking threshold for the 20XX FBT year.

Therefore, as all of the conditions in section 39A of the FBTAA will be satisfied, a car parking fringe benefit would arise for the FBT year ended 31 March 20XX.