Edited version of private advice

Authorisation Number: 1051590502756

Date of advice: 21 November 2019

Ruling

Subject: Car parking fringe benefits

Question 1

Can a particular daily rate be used as the lowest fee charged for all day parking by a commercial car parking station for the purpose of calculating the taxable value of car parking fringe benefits under section 39C of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

Answer

Yes

Question 2

Is the car parking station in a particular shopping centre a commercial car parking station as defined in subsection 136(1) of the FBTAA?

Answer

Yes

Question 3

Does a particular vehicle satisfy the definition of a car under section 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes

Question 4

Is use of this vehicle for home to work travel by employees an exempt benefit under section 8(2) and section 47(6) of the FBTAA?

Answer

No

Question 5

Is the lowest fee charged by certain parking stations for all day parking more than the FBT threshold ($8.95) on 1 April 2019 under section 39A of the FBTAA?

Answer

No

This ruling applies for the following periods

Year ended 31 March 2020

Year ended 31 March 2021

Year ended 31 March 2022

Year ended 31 March 2023

The scheme commenced on

1 April 2019

Relevant facts

An employer has car parking spaces and has used the statutory formula method and average cost method to calculate car parking fringe benefits.

A new car parking station has opened, and the employer has several workstations which are near this new car parking station.

The car parking station in a particular shopping centre has been opened.

The employer has ordered a particular vehicle, and employees can use this vehicle for the following travels only:

·        travel between home and workstation for on-call purposes; and

·        travel between workstation and workplaces to perform duties of employment.

This van has 8 seats, is suitable for family use, and has a Designed Load Capacity of less than one tonne.

There are several car parking stations within one kilometre of a particular workstation. The car parking is limited to a maximum of five hours per day. Alternatively, the car parks offer all day parking when there are major events, or monthly or annual fees.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 Subsection 8(2)

Fringe Benefits Tax Assessment Act 1986 Section 39A

Fringe Benefits Tax Assessment Act 1986 Section 39C

Fringe Benefits Tax Assessment Act 1986 Section 39E

Fringe Benefits Tax Assessment Act 1986 Subsection 47(6)

Fringe Benefits Tax Assessment Act 1986 Subsection 136(1)

Income Tax Assessment Act 1997 Section 995-1(1)

Reasons for decision

Question 1

Can a particular daily rate be used as the lowest fee charged for all day parking by a commercial car parking station for the purpose of calculating the taxable value of car parking fringe benefits under section 39C of the FBTAA?

For the purpose of this ruling, a determination is to be made whether particular daily ratescan be used as the lowest fee charged for all day parking by a commercial car parking station for the purpose of calculating the taxable value of car parking fringe benefits pursuant to section 39C of the FBTAA.

Firstly, a determination is to be made regarding whether the car parking station is a 'commercial parking station'.

CAR PARKING BENEFITS

It is agreed that a car parking benefit as defined in subsection 39A(1) of the FBTAA, will arise from the provision of car parking facilities, if the relevant parking facility is a commercial parking station, located within a one kilometre radius of the business premises, which provides car parking spaces in the ordinary course of business to members of the public for all-day parking on payment of a fee.

Section 39A of the FBTAA 1986 states that a car parking fringe benefit will arise where:

39A(1) 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 1km 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;...

Commercial parking station

A 'commercial parking station' is defined in subsection 136(1) of the FBTAA as follows:

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.

In considering the application of the definition of 'commercial parking station', it is necessary to determine whether the parking facility:

a. is a permanent parking facility

b. is a commercial parking facility

c. provides car parking spaces in the ordinary course of business

d. to members of the public

e. for all-day parking on payment of a fee, and

f. 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.

Guidance for considering each of these issues is provided in draft Taxation Ruling TR 2019/D5 Fringe benefits tax: car parking benefits (TR 2019/D5).

'Permanent' parking facility

The Explanatory Memorandum to the Taxation Laws Amendment (Car Parking) Bill 1992 (Explanatory Memorandum) stated the word 'permanent' has its normal dictionary meaning. It also provided several examples including a car park set up for a short period to cater for a special function (like an Easter Show) which it stated would not be permanent.

The Macquarie online Dictionary defines 'permanent' to mean:

·        lasting or intended to last indefinitely; remaining unchanged; not temporary; enduring; abiding

'Commercial' parking facility

The term 'commercial' is not defined in the FBTAA. The Explanatory Memorandum stated the word 'commercial' has its normal dictionary meaning.

The Macquarie online Dictionary defines 'commercial' as follows:

adjective

·        of, or of the nature of, commerce.

·        engaged in commerce.

·        capable of returning a profit: a commercial project.

·        capable of being sold in great numbers: invention is commercial

Paragraph 16 of TR 2019/D5 provides that a parking facility will generally be considered 'commercial' if it is run to make a profit.

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.

Members of the public

The circumstances in which a parking facility will be considered to provide car spaces to members of the public was considered by the Full Federal Court in Federal Commissioner of Taxation v Qantas Airways Ltd [2014] FCAFC 168; 2014 ATC 20-477 (Qantas).

In its submission to the Court, Qantas Airways submitted that the Explanatory Memorandum said nothing about the meaning of the word 'public'. The submission was that this absence of a meaning for 'public' supported its contention that it should be construed in other than perhaps its ordinary meaning.

In Qantas, the Court held that the word 'public' should be given its ordinary meaning. Further, paragraph 12 stated:

12 ... and that there was no rationale for imputing into the definition a further requirement that a commercial parking station be one that employees of the employer commuting to work by car would or could in fact use...

The Macquarie online Dictionary defines 'public' to mean:

...done, made, acting, etc., for the people or community as a whole; open to all the people; maintained at the public expense, under public control, and open to the public generally; of or provided by the state rather than an independent, commercial company...

Paragraph 17 of TR 2019/D5 provides that a car park is offered to the public where car spaces are available to any member of the public, and that contractual terms that restrict who may use the car park (such as meeters and greeters of passengers at an airport car park) do not prevent the car park from being available to the public, provided any member of the public that accepts the restrictions can use it.

All day parking

Subsection 136(1) of the FBTAA defines 'all-day parking' to mean:

In relation to a particular day, ... 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:

In relation to a day, ... so much of a period on that day as occurs:

(a) after 7:00 a.m. on that day; and

(b) before 7:00 p.m. on that day.

Parking facilities on a public street, road, lane, thoroughfare or footpath

A 'commercial parking station' is defined in subsection 136(1) of the FBTAA and does not include any parking facility on a 'public' street, road, lane, thoroughfare or footpath.

One kilometre radius of premises

For the purposes of Division 10A of the FBTAA, a commercial parking station is taken to be located within a one kilometre radius of a particular business premises or particular associated premises if, and only if, a car entrance to the commercial parking station is situated less than one kilometre, by the shortest direct practicable route, by foot or car, from a car entrance to those premises.

Daily rate equivalent

Subsection 39E(1) of the FBTAA gives the daily rate equivalent for periodic parking arrangements as:

if the operator of a commercial parking station provides all day parking in the ordinary course of business to members of the public on a weekly, monthly, yearly or other periodic basis, the operator is taken to charge a fee for all day parking on a particular day during the period equal to the amount worked out using the formula:

where:

total fee is the total fee charged by the operator in respect of all day parking on days in that period;

business days in period means the number of business days in that period.

The Explanatory Memorandum also provides this formula for converting longer term car parking rates into daily rate equivalents.

The Explanatory Memorandum to Taxation Laws Amendment (FBT Cost of Compliance) Bill 1995 also provides this formula for converting longer term car parking rates into daily rate equivalents.

Paragraph 40 of Taxation Ruling TR 96/26 also provides this formula for converting longer term car parking rates into daily rate equivalents.

ATO Interpretative Decision ATO ID 2006/93 Fringe Benefits Tax: car parking fringe benefits: fee charged by a parking station for all-day parking - daily rate equivalent for periodic parking arrangements (ATO ID 2006/93) states that subsection 39E of the FBTAA provides a daily rate equivalent where there is a periodic parking arrangement.

Application to your circumstances

It is accepted that the particular car park satisfies the definition of a commercial car park, namely,

a. is a permanent parking facility

b. is a commercial parking facility

c. provides car parking spaces in the ordinary course of business

d. to members of the public

e. for all-day parking on payment of a fee, and

f. 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 applicable daily rate equivalent can be calculated as the monthly parking fee divided by the number of business days.

Question 2

Is the car parking station in a particular shopping centre a commercial car parking station as defined in subsection 136(1) of the FBTAA?

The particular shopping centre car park renovations were completed with the following features:

• a permanent car park for the shopping centre;
• charges commercial fees;
• provides car parking spaces in the ordinary course of business to members of the public for all-day parking on payment of a fee; and
• 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.

It is accepted that the particular shopping centre car park is a commercial car parking station as defined in subsection 136(1) of the FBTAA.

Question 3

Does a particular vehicle satisfy the definition of a car under section 995-1(1) of the ITAA 1997?

'Car' is defined in section 995-1(1) of the ITAA 1997 to mean:

a motor vehicle (except a motor cycle or similar vehicle) designed to carry a load of less than 1 tonne and fewer than 9 passengers.

'Motor vehicle' is defined in section 995-1(1) of the ITAA 1997 to mean:

any motor-powered road vehicle (including a 4 wheel drive vehicle).

The vehicle in question has 8 seats, is suitable for family use, and has a Designed Load Capacity of less than one tonne.

The vehicle in question therefore satisfies the definition of 'car' under section 995-1(1) of the ITAA 1997.

Question 4

Is use of this vehicle for home to work travel by employees an exempt benefit under section 8(2) and section 47(6) of the FBTAA?

Exempt car benefits are discussed in subsection 8(2) of the FBTAA:

A car benefit provided in a year of tax in respect of the employment of a current employee is an exempt benefit in relation to the year of tax if:

(a) the car is:

(i) a taxi, panel van or utility truck, designed to carry a load of less than 1 tonne; or

(ii) any other road vehicle designed to carry a load of less than 1 tonne (other than a vehicle designed for the principal purpose of carrying passengers); and

(b) there was no private use of the car during the year of tax and at a time when the benefit was provided other than:

(i) work-related travel of the employee; and

(ii) other private use by the employee or an associate of the employee, being other use that was minor, infrequent and irregular.

Exempt benefits for a vehicle other than a car are discussed in subsection 47(6) of the FBTAA:

Where:

(a) a residual benefit consisting of the provision or use of a motor vehicle is provided in a year of tax in respect of the employment of a current employee:

(aa) the motor vehicle is not:

(i) a taxi let on hire to the provider; or

(ii) a car, not being:

(A) a panel van or utility truck; or

(B) any other road vehicle designed to carry a load of less than 1 tonne (other than a vehicle designed for the principal purpose of carrying passengers); and

(b) there was no private use of the car during the year of tax and at a time when the benefit was provided other than:

(i) work-related travel of the employee; and

(ii) other private use by the employee or an associate of the employee, being other use that was minor, infrequent and irregular.

the benefit is an exempt benefit in relation to the year of tax.

The private use of a motor vehicle (either a car or otherwise) is exempt from FBT under either subsection 8(2) or 47(6) of the FBTAA if all of the following conditions are satisfied:

·        the vehicle is a panel van, utility or other commercial vehicle (that is, one not designed principally to carry passengers)

·        the employee's private use of such a vehicle is limited to

·        travel between home and work

·        travel that is incidental to travel in the course of duties of employment

·        non-work related use that is minor, infrequent and irregular.

It is confirmed in question 3 above, that the vehicle in question is a car. Therefore, subsection 47(6) of the FBTAA does not apply.

The vehicle in question is not a taxi, panel van or utility. The vehicle is designed for the principal purpose of carrying passengers, and is therefore not a vehicle designed other than for the principal purpose of carrying passengers. Subsection 8(2) of the FBTAA also does not apply.

The use of the vehicle in question for home to work travel by employees is not an exempt benefit under either subsection 8(2) or 47(6) of the FBTAA.

Question 5

Is the lowest fee charged by certain parking stations for all day parking more than the FBT threshold ($8.95) on 1 April 2019 under section 39A of the FBTAA?

Car parking stations on location

The car parking stations offer car parking facilities for up to five hours in the ordinary course of business to members of the public.

Subsection 136(1) of the FBTAA defines 'all-day parking' to mean:

In relation to a particular day, ... parking of a single car for a continuous period of 6 hours or more during a daylight period on that day.

None of the three car parking stations are open in the ordinary course of business to members of the public for all-day parking, being a continuous period of six or more hours, except on the days of major events when all day parking is available.

The car parking stations are also open to members of the public for all-day parking either midweek or all week for monthly or annual fees.

Taxation Determination TD 2018/7 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 2018? (TD 2018/7) states that the car parking threshold for the fringe benefits tax year commencing on 1 April 2018 is $8.83.

Taxation Determination TD 2019/9 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 2019? (TD 2019/9) states that the car parking threshold for the fringe benefits tax year commencing on 1 April 2019 is $8.95.

Calculating the daily rate equivalent, the lowest fee charged by each car parking station is below the car parking threshold for the fringe benefits tax years commencing on 1 April 2018 and 1 April 2019.

Other nearby car parks

Calculating the daily rate equivalent, the lowest fee charged by each of the other car parking station is below the car parking threshold for the fringe benefits tax years commencing on 1 April 2018 and 1 April 2019.