Edited version of private advice

Authorisation Number: 1052100221876

Date of advice: 6 June 2023

Ruling

Subject: Commercial car park

Question

Is the particular car park (Car Park) a 'commercial parking station' as defined in subsection 136(1) of the Fringe Benefits Tax Assessment Act (FBTAA)?

Answer

No.

This ruling applies for the following periods:

FBT year ended 31 March 20XX

FBT year ended 31 March 20XX

FBT year ended 31 March 20XX

FBT year ended 31 March 20XX

FBT year ended 31 March 20XX

The scheme commenced on:

1 April 20XX

Relevant facts and circumstances

The entity provides car parking for employees and clients/visitors onsite at premises. There are multiple entry points to the car park.

The entity has identified a car park located within 1 km of the entities offices. Whether this Car Park is a commercial car park for the purposes of subsection 39A of the FBTAA is the subject of the Private Ruling request.

There are no other commercial car parks located within 1 km of the offices.

In relation to the Car Park:

•         There are no boom gates, electronic number plate readers or similar;

•         There are no pay stations/ticket machines located in the car park or surrounding shopping complex;

•         There is no parking attendant onsite; and

•         All vehicles can come and go freely.

There are no parking fees based on an hourly rate at this location.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 Section 39A

Fringe Benefits Tax Assessment Act 1986 Subsection 136(1)

Reasons for decision

Issue 1

Question 1

Is the Car Park a 'commercial parking station' as defined in subsection 136(1) of the Fringe Benefits Tax Assessment Act (FBTAA)?

Answer

No.

Summary

The Car Park is not a commercial car park as defined in subsection 136(1) of the FBTAA.

Detailed reasoning

Subsection 136(1) of the 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) of the FBTAA to mean a benefit referred to in section 39A of the FBTAA.

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. One of these conditions is that there must be a 'commercial parking station' within a one-kilometre radius of a work car park (that an employer provides to an employee in respect of their employment) which charges a fee for all-day parking.

Commercial parking station' is defined in section 136 of the FBTAA as:

'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.'

Taxation Ruling TR 2021/2 Fringe benefits tax: car parking benefits (TR 2021/2) discusses the meaning of the term "commercial parking station". Paragraph 16 of TR 2021/2 provides that a car parking facility, on a particular day, is a "commercial car parking facility" if it:

•         Is a permanent parking facility

•         Is not on-street parking

•         Has car spaces available in the ordinary course of business to the public for all-day parking on payment of a fee.

For a car parking benefit to arise, the commercial parking station must be located within a one-kilometre radius of the work car park.

According to TR 2021/2, "commercial car parking facility" takes its ordinary meaning. In considering its ordinary meaning and the statutory context, there must first be a parking facility. Without limiting what might be a parking facility, it may be:

• A purpose-built complex designed for car parking; or
• An area of land dedicated or adapted to providing car parking.

The ordinary meaning of "commercial" should also be considered in the compound phrase "commercial car parking facility". As such, a commercial car parking facility is a parking facility that displays certain characteristics that are hallmarks of such a facility.

A parking facility will be commercial if it is operated by a car parking operator, including a parking facility which exists within another complex, such as an office.

Nevertheless, where a parking facility is not managed by a car parking operator, it will generally be considered a commercial car parking facility if it displays two or more of the following characteristics:

• Clear signage visible from the street advertising that paid parking is available;
• Mechanisms to control who can enter and/or exit the parking facility, or park at the facility. This may include boom gates, or 'pay and display' ticketing machines; and
• Charges more than a nominal fee (usually a significantly lower rate than the local market rate) for paid parking.

All-day parking available in the ordinary course of business to the public on payment of a fee

Whether the car parking spaces in the Car Park are available in the ordinary course of business to the public for all-day parking on payment of a fee is the key consideration given the facts and circumstances.

'All-day parking' on 'payment of a fee'

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.

'Daylight period' is defined in subsection 136(1) of the FBTAA 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.

As per paragraph 41 of TR 2021/2, a fee must be charged to access all-day parking.

In this case, the terms and conditions of the car park are that parking is available for a maximum of 2 hours. Furthermore, a fee is not payable for all day parking. Rather, free parking is available for a maximum of 2 hours. If the two-hour limit is exceeded, an amount may be charged, however this charge is not in respect of the provision of all day parking.

Therefore, the condition that all day parking is available on payment of a fee is not satisfied.

Ordinary course of business

In general, income is derived in the ordinary course of carrying on a business if the income is of a kind that is regularly or customarily derived by the entity in the course of carrying on its business, arising out of no special circumstance or unusual event. Similarly, the income is derived in the ordinary course of carrying on a business if the income, although not regularly derived, is a direct result of the normal activities of the business.

In the current circumstances, the Commissioner considers that, for the following reasons, all-day parking on payment of a fee is not provided in the ordinary course of business for the paring management company in operating the Car Park:

•         The predominant use of the Car Park is to provide free parking shopping centre users to encourage patronage.

•         All day parking is not available, as it is restricted to a maximum of 2 hours.

No parking is available on the payment of a fee as the only charge is for those who park longer than 2 hours. Ordinarily, the provision of car parking for a fee is where a user of the facility actively pays (the operator) for parking. Not one where an owner of a private car park retrospectively seeks payment from the registered owner of a vehicle for having parked, as is the case at the Car Park.

Conclusion

In order to meet the definition of a 'commercial parking station' in subsection 136(1) of the FBTAA, the Car Park would need to satisfy all of the following elements on a particular day:

1.    It must be a commercial car parking facility.

2.    It must be permanent.

3.    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 payment of a fee.

4.    It is not on-street parking.

The Commissioner considers that the Car Park is not a commercial parking station because all-day parking is not provided in the ordinary course of business on payment of a fee.