Edited version of private advice

Authorisation Number: 1052105523602

Date of advice: 26 May 2023

Ruling

Subject: FBT - car parking benefits

Question 1

Is there a car parking benefit provided to Employee A under section 39A of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

Answer

Yes

Question 1a

If the answer is yes, is it provided 'in respect of' the employment of Employee A?

Answer

Yes

Question 2

Is car parking benefit provided to Employee B?

Answer

Yes

Question 2a

If the answer is yes, is it provided 'in respect of' the employment of Employee B?

Answer

Yes

Question 2b

During the relevant period or periods that Employee B parks his car at the xxx-car park, is his car parked at, or in the vicinity of, his primary place of employment on that particular day?

Answer

Yes

This ruling applies for the following periods:

31 March xxxx

31 March xxxx

31 March xxxx

31 March xxxx

The scheme commenced on:

1 April xxxx

Relevant facts and circumstances

The Carpark

The carpark has maximum capacity of 311 parking spaces.

It is open 24 hours a day, 7 days a week for the general public to use.

The parking rates from 6.30am to 7pm are that the first two hours are for free, and progressively rises and the maximum daily rate of $48, charged for five hours or more. If cars enter between 7pm and 6.29am there is a flat rate of $5.50. The two hours for free is only available if the parking commences before 7pm, if after that the night time flat rate of $5.50 applies.

Employee A

•         He works in Location A of the organisation, quite close to the xxx-carpark.

•         The vehicle used by him is a car, being a motor vehicle designed to carry a load of less than 1 tonne and fewer than 9 passengers. It is not a motorcycle or similar vehicle.

•         He parks this vehicle at the xxx-carpark during a daylight period or a combination of periods between 7am and 7pm on any particular day. This is the relevant period or relevant periods.

•         There are numerous commercial parking stations located within 1 km radius of any part of or the entrance to the xxx-carpark. The lowest fee charged by the operators are these commercial car parks in the ordinary course of business to members of the public for all day parking on 1 April 2022 exceeds the car parking threshold of $9.72.

•         He parks in the xxx-carpark for a period or periods which exceeds 4 hours total duration on any particular day.

•         He is charged the night flat rate $5.50 for all day parking, a top up tag is used instead of number plate recognition.

•         On any particular day the car used by him is used by him in connection with travel by him at least once a day between his place of residence and his primary place of employment.

Where does Employee A park

Employee A does not have an allocated parking spot. After accessing the xxx-carpark building, he can park anywhere the general public car park. Employee A openly competes with the public for parking spots once within the xxx-carpark. If Employee A enters the xxx-carpark and there are no parking spots available, he needs to exit the building and find parking elsewhere.

Employee B

Employee B works a few times a month and he is required to travel to Location A of the organisation to attend meetings. These meetings generally run from about 2 hours and sometimes up to 6 hours a day. He parks his car at the xxx-carpark if space is available, competes with the public of space in the same way that Employee A does.

Accordingly, the relevant information regarding Employee B is similar to that listed above for Employee A with exceptions. His relevant information can be summarised as:

•         He is based at Location B of the organisation, more than 20kms away from the xxx carpark.

•         The xxx-carpark are business premises of the organisation.

•         The office of the organisation is his primary place of employment, it is not in the vicinity of the xxx-carpark.

•         There are numerous commercial parking stations located within 1 km radius of any part of or the entrance to the xxx-carpark. The lowest fee charged by the operators of these commercial car parks in the ordinary course of business to members of the public for all day parking on 1 April 2022 exceeds the car parking threshold of $9.72.

•         On any particular day the car used by him is used by him in connection with travel by him at least once a day between his place of residence and his primary place of employment at the office of the organisation, although sometimes he may drive directly to the Location A depending on the start time of the meeting.

Reasons for decision

Question 1

Is there a car parking benefit provided to Employee A under section 39A of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

Summary

A car parking benefit has been provided to Employee A under section 39A of the FBTAA.

Detailed reasoning

Relevant law

Subsection 39A(1) prescribes the conditions which must be satisfied before a benefit is a car parking 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 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.

Section 136 of the FBTAA defines the following key terms:

Commercial parking station

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.

All-day parking

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.

Primary place of employment

in relation to an employee in relation to a day, means business premises, or associated premises, of the employer of the employee, or of an associate of the employer, where:

(a)       if the employee performed duties of his or her employment on that day--on that day; or

(b)       in any other case--on the most recent day before that day on which the employee performed duties of his or her employment;

those premises are or were:

(c)       the sole or primary place of employment of the employee; or

(d)       otherwise, the sole or primary place from which or at which the employee performs duties of his or her employment.

Further, 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.

Taxation Ruling TR 2021/2 Fringe benefits tax: car parking benefits (TR 21/2) at paragraph 4 defines the following terms as:

Work car park

'Work car park' is a business premises or associated premises of the provider, where cars are parked in a car space on that day. A work car park does not need to be a commercial parking station and includes an area where pool cars or fleet cars available for employees to use are parked. A business may have multiple locations where car spaces are provided to employees - each is considered to be a work car park.

Lowest representative fee

the 'lowest representative fee charged by any commercial parking station for all-day parking within a one-kilometre radius of the work car park exceeds the car parking threshold (the 'car parking threshold requirement')

Paragraph 52 of TR 21/2 further clarifies that:

The lowest representative fee charged may include fees charged on 'early bird' parking rates or car-pooling arrangements, where a reasonable number of parking spaces are set aside for those purposes.

Application to your circumstances

Is a car parking fringe benefit provided?

Business premises

The car of Employee A is parked during daylight hours at the xxx-carpark. The xxx-carpark is a business premises of the organisation, the employer. Therefore, subparagraph 39A(1)(a)(i) of the FBTAA is satisfied.

Commercial parking station within one kilometre of the business premises

The xxx-carpark is a commercial parking facility which is located 61m from the business premises. Therefore, subparagraph 39A(1)(a)(ii) of the FBTAA is satisfied.

Lowest fee charged

Pursuant to paragraph 52 of TR 21/2, the lowest all-day parking fee charged by xxx-carpark, 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.

Employee A is charged the night flat rate of $5.50 for all day parking and a top up tag is used instead of number plate recognition, which is not offered to members of the public. The maximum daily rate for members of the public is $48, from 6.30am to 7pm, with the first two hours for free. As such, the lowest all-day parking fee charged by xxx-carpark on the first business day of the 2023 FBT year is $48.

Therefore, the condition in subparagraph 39A(1)(a)(iii) of the FBTAA is satisfied. This is because the lowest fee charged by xxx-carpark in the ordinary course of business to members of the public for all-day parking on the first business day of the 2023 FBT year is $48.00, significantly more than the $5.50 fee charged to employee A.

As sub-paragraph 39A(1)(a)(iii) of the FBTAA is satisfied, a car parking fringe benefit had arisen for the FBT year ending 31 March 2023.

Question 1a

If parking is provided to Employee A, is it provided 'in respect of' the employment?

Summary

Yes, a car parking benefit is provided to Employee A 'in respect of' employment.

Detailed reasoning

Only provided if 'to' the employees

A benefit can only be provided if it is provided 'to' the employees. Refer to the judgement of Edmonds J in FC of T v Indooroopilly Children Services (Qld) Pty Ltd [2007] FCAFC 16. The judgement of Edmonds J included the following statement:

19 However, unless a benefit is provided to an employee or to an associate of the employee, it will not be a " fringe benefit " even if it is provided by an employer, an associate of the employer or a person within pars (e) or (ea) of the definition. In short, a benefit will not be a " fringe benefit " as defined unless it is provided to one of two possible " recipients " and is provided by one of four possible " providers ". The dual requirement of the definition is quite clear.

'In respect of' of employment

Parking must be "in respect of" the Employee A's employment. Section 136(1) of the FBTAA definitions:

"in respect of, in relation to the employment of an employee, includes by reason of, by virtue of, or for or in relation directly or indirectly to, that employment."

The meaning of the phrase 'in respect of' the employment of an employee was considered by the Full Federal Court in J & G Knowles v Commissioner of Taxation [2000] FCA 196.

This case dealt with the question of loans to directors and considered the facts against this proposition:

"11 ... the taxable value of a fringe benefit provided by a company to its director or to an associate of that director was taxable if the benefit was provided "in respect of the employment of" the director. By s 136(1) the phrase "in respect of, in relation to the employment of an employee include[d] by reason of, by virtue of, or for or in relation directly or indirectly to, that employment".

In considering the meaning of the phrase "in respect of" the Federal Court said:

22. The words "in respect of" have no fixed meaning. They are capable of having a very wide meaning denoting a relationship or connection between two things or subject matters. However, the words must, as with any other statutory expression, be given a meaning that depends on the context in which the words are found...

23. The AAT was correct in stating that the phrase requires a "nexus, some discernible and rational link, between the benefit and employment". what is required is a sufficient link for the purpose of the particular legislation... It cannot be said that any causal relationship between the benefit and the employment is a sufficient link so as to result in a taxable transaction...

The Federal Court also made reference to Smith v Federal Commissioner of Taxation (1987) 164 CLR 513 with this comment:

26. The differences in approach in Smith show how difficult it is to state a test to determine whether the requisite relationship or connection exists.

Whatever question is to be asked, it must be remembered that what must be established is whether there is a sufficient or material, rather than a, causal connection or relationship between the benefit and the employment. There is, in any event, a danger in placing too much emphasis on causation. As Lord Hoffman pointed out in Environment Agency v Empress Car Co Ltd [1999] 2 AC 22 at 29, an answer to the question of whether A has caused B will differ according to the purpose for which the question is asked.

A benefit must be provided in respect of the employment of an employee. Where an employee accesses a car park on identical terms to non-employees, no FBT liability arises. The benefit is not provided in respect of the employment of the employee as there is no preferential access to the car park. Examples of preferential terms include access, length of stay and the car parking rate.

Application to your circumstances

Section 39A of the FBTAA sets out the conditions which must be satisfied before the provision of car parking facilities will be taken to constitute a benefit provided by the provider to the employee (or associate) in respect of the employment of the employee. Each condition as set out must apply before the benefit will be caught under this section.

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

The organisation provides car parking to Employee A at the xxx-carpark. This location is owned, leased or under the control of the organisation.

The car is parked for a total of more than four hours between 7.00am and 7.00pm on any day

Employee A is parked during the daylight periods for more than four hours.

The parking is provided in respect of the employee's employment

The parking provided is provided by the organisation to Employee A in respect of their employment. Although Employee A does not receive preferential access to a park within the xxx-carpark as they are competing with members of the public for an available spot, they do receive preferential terms once they have secured a car park. Employee A receives a benefit by paying a reduced all-day parking flat rate of $5.50 and the use of the top up tag instead of number plate registration recognition. Therefore, even though access to the carpark is not guaranteed, it is because of their employment relationship that employees receive a reduced all-day rate when they secure a car park. Therefore, a car parking benefit is provided.

The car is parked at or near the employee's primary place of employment on that day

The car will be parked at either the xxx-carpark premises or nearby which is 61m from Employee A's primary place of employment for the day.

The car is used by the employee to travel between home and work (or work and home) at least once on that day

Employee A uses his car to travel between his home address and work address at least once during the day.

Question 2 and 2a

Is car parking benefit provided to Employee B? If parking is provided to Employee B, is it provided 'in respect of' the employment?

Answer

Yes

Summary

A car parking benefit has been provided to Employee B in respect of the employment under section 39A of the FBTAA.

Detailed reasoning

In question 1 and 1a, we have discussed in detail the conditions required to determine whether car parking benefit is provided to Employee A. The same principles apply to the car parking benefit provided to Employee B.

Question 2b

During the relevant period or periods that Employee B parks his car at the xxx-carpark, is his car parked at, or in the vicinity of, his primary place of employment on a particular day?

Answer

Yes

Summary

Employee B parks his car in the vicinity of his primary place of employment on a particular day.

Detailed reasoning

Meaning of 'in vicinity of'

TR 2021/2 at paragraph 10, sets out the following definition for "in vicinity of"

'The work car park must be located at or 'in the vicinity of' the employee's primary place of employment. This means the 2 locations are near, proximate, or close to each other. When considering the distance between the places, it is the spatial and geographical separation that is significant.'

Where is the employee's 'primary place of employment'?

Section 136 of the FBTAA defines 'primary place of employment' as:

in relation to an employee in relation to a day, means business premises, or associated premises, of the employer of the employee, or of an associate of the employer, where:

(a)  if the employee performed duties of his or her employment on that day--on that day; or

(b)  in any other case -on the most recent day before that day on which the employee performed duties of his or her employment;

those premises are or were:

(c)   the sole or primary place of employment of the employee; or

(d)  otherwise, the sole or primary place from which or at which the employee performs duties of his or her employment.

TR 2021/2 provides the following paragraphs on 'primary place of employment'

Paragraph 15A: 'An employee's primary place of employment', on a particular day[1], will be the business premises of an employer identified by the application of paragraph (c) or (d) of the definition set out in subsection 136(1). These paragraphs contain 2 different tests. The employee's primary place of employment will be the business premises which are, or were, the 'sole or primary place of employment of the employee' (paragraph (c) of the definition) or the business premises that are, or were, 'otherwise the sole or primary place from which, or at which, the employee performs duties of his or her employment' (paragraph (d) of the definition).

Paragraph 15B: 'In this context, 'primary has its ordinary meaning of 'first or highest rank or importance; chief; principal'.

Paragraph 15C: Paragraph (c) of the 'primary place of employment' definition provides a broad test which may consider, but is not limited to, the place from which, or at which, duties are performed. Other considerations include the place which is primary to the employee's conditions of employment (such as rostering, allowances and car parking entitlements) as contained in their employment contract or industrial instrument, or both.

Paragraph 15D: Where the employee's conditions of employment indicate that particular business premises are primary to their employment, those premises may satisfy paragraph (c) of the 'primary place of employment' definition on a day even if the employee performs duties principally at another place on that day.

Paragraph 15E: Paragraph (d) of the 'primary place of employment' definition focuses on the place the employee performs their duties. Where an employee performs duties from, or at, more than one business premises on a day, the employee's primary place of employment under paragraph (d) of the definition is the primary place from which, or at which, they perform their duties. This primary place is identified through a quantitative and qualitative analysis of the duties performed from, or at, the different business premises.

To summarise, an employee's primary place of employment is the premises at which the employee performs the majority of their employment-related duties on a particular day.

Application to your circumstances

The car is parked at or near the employee's primary place of employment on that day

Employee B works at both the Location B and Location A. Employee B travels to the Location A, a few times a month to attend meetings. On the days that he travels to the Location A, he sometimes travels from the Location B and other times travels directly from home. He may be at the Location A for between 2 and 6 hours.

When employee B is required to attend the Location A, he will normally park at either the xxx-carpark premises or somewhere nearby. The xxx-carpark is 61m from the Location A.

On the days Employee B performs the majority of his duties at the Location A, this is his primary place of employment for the day, in accordance with section 136(d) FBTAA and explained in paragraph 15E of TR 2021/2. Therefore, a car parking fringe benefit is provided when employee B is able to secure a car park at the xxx-carpark.

[1] This means the day being tested for car parking benefit purposes (paragraph (a) of the definition of 'primary place of employment' in subsection 136(1)) or, if the employee did not perform any duties of their employment on that day, the most recent day they performed duties (per paragraph (b) of the definition of 'primary place of employment' in subsection 136(1)). Subsection 39A(1) uses the wording 'a particular day' and the definition of 'primary place of employment' in subsection 136(1) uses the wording 'in relation to a day' - see Commissioner of Taxation v Virgin Australia Regional Airlines Pty Ltd [2021] FCAFC 209 (Virgin Australia Regional Airlines) at [14].