Edited version of private advice

Authorisation Number: 1051591952801

Date of advice: 11 October 2019

Ruling

Subject: Fringe benefits tax - car parking benefits

Question

Is a car parking fringe benefit provided to employees?

Answer

Yes

This ruling applies for the following periods

Year ended 31 March 2019

Year ended 31 March 2020

Year ended 31 March 2021

Year ended 31 March 2022

The scheme commenced on

1 April 2018

Relevant facts

A Company's office is located within one kilometre of an exhibition ground.

The exhibition ground's car park is available to the public. All day parking is charged at $10 per day.

There is no other public car park located in the vicinity of the Company's office.

The exhibition ground's car park has numerous car parking spaces, with pay stations for cash and credit card payments, bar codes cards for regular users, exhibitors and pre-paid parkers, and boom gates for entry and exit with 24 hours a day monitored security.

It is claimed that the exhibition ground car park is specifically designed for events which are hosted at the venue. However, the car park is available to members of the public on most days of the year, with the exception of the duration of the exhibition.

The Company provides car parking within the vicinity of the business premises.

The car spaces are sometimes used to park hired utes.

The parking fee is paid at arm's length to the landlord of the Company's business premises.

The employees use the car park approximately 8 hours each day between the hours of 7am to 7pm each day. The employees use the car/s which are parked in car parks, to travel from home to work.

The Company has issued shares which are owned by various individuals and companies.

Shares in the Company are quoted on the Australian Securities Exchange.

The ordinary and statutory income of the Company in the years ended 30 June 2017 and 2018 was less than $10 million.

The Company Limited was a small business entity for the years ended 30 June 2017 and 2018.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 Section 39A

Fringe Benefits Tax Assessment Act 1986 Section 58GA

Fringe Benefits Tax Assessment Act 1986 Subsection 136(1)

Income Tax Assessment Act 1936 Section 103A

Reasons for decision

For the purposes of Division 10A of Part lll of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) the Taxation Ruling TR 96/26 Fringe benefits tax: car parking fringe benefits (TR 96/26) provides at paragraph 6 that a car includes:

·         Motor car, station wagon, panel van, or utility;

·         any other goods-carrying vehicle (including a four wheel drive vehicle) with a designed capacity of less than one tonne;

·         any other passenger-carrying vehicle with designed carrying capacity of fewer than nine occupants.

Paragraph 7 of the TR 96/26 excludes from the definition of a car, panel vans and utilities designed to carry a load of one tonne or more.

A car parking benefit is discussed at subsection 39A(1) of the FBTAAas 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 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;

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.

In this case it is accepted that subsections 39A(1) (b) to (i) of the FBTAA are satisfied.

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

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.

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 Taxation Ruling TR 96/26 Fringe benefits tax: car parking fringe benefits (TR 96/26).

'Permanent' parking facility

The Macquarie online Dictionary defines 'permanent' to mean:

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

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

'Commercial' parking facility

Further examples are provided in paragraph 81 of TR 96/26 which states that the following examples are regarded as not constituting commercial parking stations:

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

·         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;

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

Application to your circumstances

Permanent parking facility

The exhibition ground car park is available to members of the general public on most days of a year. The exhibition ground website (the Website) provides information to the general public about parking rates. The Website provides that the usual rate is not applicable during the exhibition.

That is, it is only during the duration of the exhibition that the car park is not available to members of the general public. This is because on those days parking is provided to participants and organisers of the exhibition.

The parking facility is therefore permanent, and not limited to special events at the exhibition grounds.

Commercial parking facility

The exhibition ground car park is available to members of the public on any day throughout the year, with the exception of the duration of the exhibition. All-day parking is available for a fee of $10 for two hours or more.

The car park is operated in the ordinary course of business of the exhibition grounds.

The car park is not on a public road, street, lane, thoroughfare or footpath paid for by inserting money in a meter or obtaining a voucher. It is a car park with numerous car parking spaces, with pay stations for cash and credit card payments, bar coded cards for regular users, exhibitors and pre-paid parkers, and boom gates for entry and exit with 24 hours a day monitored security.

Therefore the car park is a commercial parking facility.

Is a car parking fringe benefit provided?

Business premises

The cars of employees, and on occasion hired utes are parked during daylight hours on the Company's business premises. Therefore, subparagraph 39A(1)(a)(i) of the FBTAA is satisfied.

Commercial parking station within one kilometre of the business premises

The exhibition grounds car park is a commercial parking facility which is located less than one kilometre from the business premises. Therefore, subparagraph 39A(1)(a)(ii) of the FBTAA is satisfied.

Lowest fee charged

The fee charged by the exhibition grounds car park for all-day parking is $10.00. According to 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), the car parking threshold for the year commencing 1 April 2019 is $8.95.

The fee charged by the exhibition grounds car park for all-day parking is more than the car parking threshold.

Therefore, subparagraph 39A(1)(a)(iii) of the FBTAA is satisfied.

Does the exemption for small business car parking apply?

A car parking benefit provided in an FBT year in respect of the employment of an employee will be an exempt benefit section 58GA of the FBTAA if:

(a) the car is not parked at a commercial parking station; and

(b) the employer of the employee is not a public company (see subsection (3)), or a subsidiary of a public company (see subsection (3)), in relation to the day on which the benefit is provided; and

(c) the employer is not a government body; and

(d) either:

(i) the sum of the employer's ordinary income and statutory income for the year of income ending most recently before the start of the FBT year is less than $10 million; or

(ii) the employee is a small business entity for the year of income ending most recently before the start of the FBT year.

Subsection 58GA(3) of the FBTAA provides that for this section:

ordinary income has the same meaning as in the Income Tax Assessment Act 1997.

public company means a company covered by paragraph 103A(2)(a) of the Income Tax Assessment Act 1936 , but reading the reference in that paragraph to the last day of the year of income as a reference to the day on which the benefit is provided.

statutory income has the same meaning as in the Income Tax Assessment Act 1997.

subsidiary of a public company means a subsidiary of a public company within the meaning of subsection 103A(4) of the Income Tax Assessment Act 1936, but reading:

(a) a reference in section 103A of that Act to a year of income as a reference to the day on which the benefit is provided; and

(b) a reference in that section to a public company as a reference to a public company within the meaning of this section.

Tax-exempt employer means an employer all of whose income is wholly exempt from income tax.

Subsection 103A(1) of the Income Tax Assessment Act 1936 (the ITAA 1936) provides that:

For the purposes of this Division, a company is a private company in relation to the year of income if the company is not a public company in relation to the year of income.

Subsection 103A(2) of the ITAA 36 provides that:

For purposes of subsection (1), a company is, subject to the succeeding provisions of this section, a public company in relation to the year of income if:

(a) shares in the company, not being shares entitled to a fixed rate of dividend whether with or without a further right to participate in profits, were listed for quotation in the official list of a stock exchange, being a stock exchange in Australia or elsewhere, as at the last day of the year of income;

Subsection 103A(4) of the ITAA 1936 provides that:

Subject to subsection (4D), a company is, for the purposes of this section, a subsidiary of a public company in relation to the year of income if:

(a) at all times during the year of income all the shares in the first-mentioned company were beneficially owned by a company which, or companies each of which, is a public company for the purposes of subsection (1) in relation to the year of income of that company (in this subsection referred to as the corresponding year of income) that corresponds with the first-mentioned year of income but which is not, or none of which is:

(i) a company to which paragraph (2)(c) applies in relation to the corresponding year of income; or

(ii) a subsidiary of a public company for the purposes of this section in relation to the corresponding year of income by reason of subsection (4B);

Are the cars parked at a commercial parking station?

In this case the cars (and hired utes) are parked at the Company's business address which is not a commercial parking station.

Therefore, subparagraph 58GA(1)(a) of the FBTAA is satisfied.

Is the employer a public company?

In this case the Company is a public company as defined in 58GA(3) of the ITAA 1936 because shares in the Company are quoted on the Australian Securities Exchange.

Therefore the Company is a public company which does not satisfy the first part of subparagraph 58GA(1)(b) of the FBTAA.

Is the employer a subsidiary of a public company?

The Company has issued shares which are owned by various individuals and companies. Therefore, 100% of shares in the Company were not beneficially owned by public companies.

Therefore, the second part of subparagraph 58GA(1)(b) of the FBTAA is satisfied.

Is the employer a government body?

The employer is not a government body. Therefore subparagraph 58GA(1)(c) of the FBTAA is satisfied.

Is the sum of the employer's ordinary income and statutory income for the year of income ending most recently before the start of the FBT year less than $10 million?

The most recent year of income before the start of the FBT year, on 1 April 2019, is the year of income ended 30 June 2018. The sum of employer's ordinary and statutory income in the year ended 30 June 2018 was less than $10 million.

Therefore, subparagraph 58GA(1)(d)(i) of the FBTAA is satisfied.

Was the employer a small business entity for the year of income ending most recently before the start of the FBT year?

The employer was a small business entity for the year ended 30 June 2018.

Therefore, subparagraph 58A(1)(d)(ii) of the FBTAA is satisfied.

Conclusion

A commercial parking station, an exhibition ground, is within one kilometre of the Company's business premises. Therefore a car parking fringe benefit arises.

The Company does not qualify for a small business car parking fringe benefit exemption because it does not satisfy all of the criteria in subsection 58GA(1) of the FBTAA.

This is because it is a public company and therefore the first part of 58A(1)(b) of the FBTAA has not been satisfied.