Edited version of private advice

Authorisation Number: 1051518101051

Date of advice: 15 May 2019

Ruling

Subject: Fringe Benefits Tax - Car parking fringe benefit - Commercial parking station

Question

Is the specified car parking facility a 'commercial 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 20XX to 31 March 20XX

The scheme commences on:

1 April 20XX

Relevant facts and circumstances

There are approximately six car parking stations within one kilometre of the premises of an employer that charge for all-day parking.

Of these car parking stations, the specified car parking facility charges the lowest all-day parking fee of $6.81 (paid 12 months in advance).

The employer would like to use the specified car parking facility's rate to calculate the value of its car parking fringe benefits under the 'commercial parking station' method. In order to do this, it is necessary for the employer to ensure that the specified car parking facility is a commercial parking station.

The specified car parking facility is located just under one kilometre from the employer's premises. It is located further from the main government and commercial buildings than the other car parking facilities, and is in an area where there are less commercial offices and more housing and community facilities, and therefore greater availability of free parking.

The remaining car parking stations within one kilometre of the employer's premises are charging between $11.00 and $12.00.

The original purpose of the specified car parking facility was to provide car parking for people visiting the adjacent facility, which is a non-profit entity.

The adjacent facility now offers paid all-day parking to the public during business hours and car parking for visitors to the facility outside of business hours and on the weekends.

The facility's website provides the public with the following information in respect of the specified car parking facility:

·         a limited number of car spaces are normally available during business hours on a long term basis. However, there are currently no car parking spaces available for hire to the community;

·         there is a waiting list, with a form available on the website which members of the public can download and submit if they wish to be placed on the waiting list;

·         an access card is issued for a refundable deposit to operate a boom gate; and

·         anyone that is interested in a parking space can contact the facility's office.

The car parking fees for the specified car parking facility are to be paid 12 months in advance.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 Section 39C

Fringe Benefits Tax Assessment Act 1986 Subsection 136(1)

Reasons for decision

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 recipient's contribution.

A 'commercial parking station', in relation to a particular day, is defined under 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.

To determine whether the specified car parking facility is a commercial parking station, it is necessary to consider the following:

·         is the car parking facility a permanent commercial car parking facility?

·         are any of the car parking spaces in the car parking facility available in the ordinary course of business to the members of the public?

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 [Online], viewed April 2019, defines the word 'permanent' as meaning 'lasting or intended to last indefinitely, remaining unchanged; not temporary; enduring; abiding'.

As provided in paragraph 81 of Taxation Ruling TR 96/26 Fringe benefits tax: car parking fringe benefits (TR 96/26), the following examples are not regarded as constituting commercial parking stations:

·         car parking that is established for a short period to cater for a special function, and

·         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

·         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.

The specified car parking facility is considered to be permanent facility on the basis of the following:

·         the specified car parking is part of a property that comprises an established building that is intended to be a long term structure;

·         payment of parking fees is offered 12 months in advance; and

·         the specified car parking facility is not considered to be temporary and, with parking offered on a long-term basis.

Is the car parking facility a commercial facility?

The term 'commercial' is not defined in the FBTAA. The Macquarie Dictionary [Online], viewed April 2019, defines 'commercial' as follows:

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.    setting possible commercial return above artistic considerations

6.    preoccupied with profits or immediate gains

Paragraph 81 of TR 96/26 provides the following example of a parking facility that would not be regarded as a commercial facility:

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

On the basis of the above definition and example, the specified car parking facility is a commercial facility as it is considered that the fees charged are not nominal and that the car park is run with a view to making a profit.

Does the specified car parking facility provide car parking spaces in the ordinary course of business to members of the public for all-day parking on payment of a fee?

The specified car parking facility provides car parking spaces that can be used on payment of a fee in advance as well as use of an access card to operate a boom gate.

Are the car parking spaces provided in the ordinary course of business?

In considering whether these spaces are provided in the ordinary course of business, the definition of 'business operations' in subsection 136(1) of the FBTAA provides that business operations in relation to a government body or a non-profit company include any operations or activities carried out by that body or company.

The adjacent facility is a non-profit entity. Part of its operations is a car parking facility. In applying this definition, it is accepted that the car parking spaces are offered as part of the day-to-day operations or activities carried out by the adjacent facility.

Are the car parking spaces provided to members of the public?

Paragraph 81 of TR 96/26 provides the following examples of car parking arrangements that are not considered to be made available to members of the public:

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

·         parking provided by a business for its own employees and those of a nearby business, but to no other person; and

·         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.

The information on the adjacent facility's website promotes the specified car parking facility to members of the public for long-term periods for payment of a fee. Currently, there is a waiting list.

Are spaces available for all-day parking?

'All-day parking' is defined in subsection 136(1) of the FBTAA to mean:

parking of a single car for a continuous period of 6 hours or more during a daylight period on that day.

Subsection 136(1) of the FBTAA defines 'daylight period' to mean the period of the day that occurs after 7:00am and before 7:00pm on that day.

The specified car parking facility offers all-day car parking spaces in the ordinary course of business to members of the public during business hours on payment of a fee.

Conclusion

The specified car parking facility constitutes a commercial parking station as it meets all of the criteria of the definition of a 'commercial parking station' as defined in subsection 136(1) of the FBTAA. The lowest all-day parking fee charged by the specified car parking facility can therefore be used by the employer to calculate the taxable value of the car parking fringe benefits.