Edited version of private advice

Authorisation Number: 1052128457163

Date of advice: 18 July 2023

Ruling

Subject: Small business car parking exemption

Question

Will the car parking fringe benefit provided by the employer to the employee be exempt under subsection 58GA(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

Answer

Yes.

This ruling applies for the following periods:

Year Ended 31 March 20xx

Year Ended 31 March 20xx

Year Ended 31 March 20xx

Year Ended 31 March 20xx

The scheme commences on:

1 April 20xx

Relevant facts and circumstances

The employer is not a listed public company or a subsidiary of a public listed company.

The employer is not a government body.

The employer qualifies as a rebatable employer. The employer does not identify as an exempt employer for FBT purposes.

The employer is providing a car parking benefit as defined in section 39A FBTAA 1986.

The employer provides employees with basement car parking.

The carpark is not open to the public. It's availability for use is limited to employees, and on rare occasions to members and visitors of the employer only.

There is no fee charged under any circumstance for employees, members and visitors to use the carpark.

There is no signage related to the basement carpark as it is only available to staff (members and visitors are admitted by a staff member if necessary).

Entry to the carpark is secured by an industrial roller door. The roller door can only be opened with a security fob. Security fobs are only issued to current staff members and an internal register is kept. There is no other access to the basement carpark except via pedestrian fire escape doors. A security fob is also required to be able to exit the carpark.

The aggregated turnover of the employer, being the GST-exclusive amount of all ordinary income derived by the entity in the ordinary course of its business is less than $XX million

Assumptions

The aggregate turnover of the employer will continue to be less than $XX million.

Relevant legislative provisions

Fringe Benefit Tax Assessment Act 1986 Section 39A

Fringe Benefit Tax Assessment Act 1986 Section 58GA

Fringe Benefit Tax Assessment Act 1986 Subsection 136(1)

Income Tax Assessment Act 1997 Subsection 328-110(1)

Reasons for decision

Question 1

Will the car parking fringe benefit provided by the employer to the employee be exempt under subsection 58GA(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA 1986)?

Summary

The car parking fringe benefit provided by the employer to the employee will be exempt under section 58GA of the Fringe Benefit Tax Assessment Act 1986.

Detailed reasoning

The small business car parking exemption in subsection 58GA(1) of the FBTAA 1986 provides that a car parking benefit provided in an FBT year in respect of the employment of an employee is an exempt benefit if:

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

(b)  The employer of the employee is not a public company, or a subsidiary of a public company, 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 employer is a small business entity for the year of income ending most recently before the start of the FBT year.

(a) Is the car park a commercial parking station?

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

'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.

Paragraph 16 of Taxation Ruling TR 2021/2 provides that a car park is a commercial parking station as defined where the car park:

•         is permanent.

•         is a commercial car parking facility.

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

•         is not on-street parking.

Permanent

The car parking facility located in the basement of the offices are permanent. The car parking facility is permanent as it is enduring and lasting. It is not temporary or transient in nature (paragraph 32 of TR 2021/2). This element of the definition of commercial parking station is satisfied.

Commercial parking facility

For a commercial parking facility to exist there must firstly be a parking facility. Paragraph 18 of TR 2021/2 provides examples of parking facility which include but are not limited to:

•                     a purpose-built complex designed for car parking (including parking provided as part of an office or apartment building), or

•                     an area of land dedicated or adapted to providing car parking (including on-street parking).

As the basement parking provided is a purpose-built complex designed for car parking, a parking facility has been provided.

The FBTAA does not define a "commercial parking facility" and therefore it takes on its ordinary meaning. Paragraph 21 of TR 2021/2 provides hallmark characteristics of a commercial parking facility, namely if the parking facility:

•         has clear signage visible from the street advertising that paid parking is available.

•         has 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.

•         charges more than a nominal fee (usually a significantly lower rate than the local market rate) for paid parking. This includes charging a user for parking which is not all-day parking (such as parking at an hourly rate).

The parking facility has a security fob that controls who comes into the car park but does not charge a fee nor is there any signage to show where the carpark is located at as per the facts. The facility is missing numerous characteristics of a commercial parking station and therefore cannot be classified as one. This section is not satisfied and as a result, the parking facility is not a commercial parking facility.

Makes all-day parking available to the public on payment of a fee

The term "public" takes its ordinary meaning. Paragraph 38 and 39 of TR 2021/2 define when a parking facility is available to the public as follows:

38.  Where none of a parking facility's car spaces are 'available in the ordinary course of its business to the public for all-day parking, the parking facility would not be a commercial parking station.

39.  The term 'public' takes its ordinary meaning. A car space is available to the public when any member of the public may park their car in that space. Contractual terms and conditions may restrict who or how someone may use the parking facility, for instance, an airport car park may be restricted to passengers and those meeting and greeting passengers. Such restrictions do not prevent the car park from being available to the public, provided any member of the public who agrees to the terms and conditions can use the parking facility.

The car park is accessible via one entrance which is restricted by the security fob. Although there are emergency stairs allowing entrance to the car park, the general public is prohibited from entering or parking at any point.

No unauthorised access is permitted and to exit the parking facility, the security fob must be used.

The general public is not allowed to park in the parking facility and as stated by the earlier, there is no fee charged for parking at the facility. This section is not satisfied as there is no fee nor is the car park assessable to the public.

Not on-street parking

This element of the definition of commercial parking station is met as the parking facility is in a basement and not on-street parking.

The definition of commercial parking station has not been satisfied as not all elements have been met. The car park provided by the employer will not be considered a commercial parking station.

(b) Is the employer a public company, or a subsidiary of a public company?

As outlined earlier in the facts, is not a public company or a subsidiary of one.

(c) Is the employer a government body?

As stated above, the employer is not a government body.

(d) Will the employer satisfy the requirements for paragraph 58GA(1)(d)?

Paragraph 58GA(1)(d) of the FBTAA states one of the conditions for an exempt small business car parking benefit is:

(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 employer is a small business entity, or is an employer covered by subsection (1A), for the year of income ending most recently before the start of the FBT year.

Subparagraph 58GA(1)(d)(i) will not be satisfied as the employer has stated that the turnover for the employer was greater than $10 million. This means that Subparagraph 58GA(1)(d)(ii) must be satisfied in order for the exemption to apply. A small business entity is defined under subsection 328-110(1) of the Income Tax Assessment Act 1997 (ITAA 1997) as:

You are a small business entity for an income year (the current year) if:

(a)  you carry on a *business in the current year; and

(b)  one or both of the following applies:

(i)    you carried on a business in the income year (the previous year) before the current year and your aggregated turnover for the previous year was less than $10 million;

(ii)  your aggregated turnover for the current year is likely to be less than $10 million

Paragraph 328-110(1)(a) is satisfied as the employer carries on a business.

However, as the aggregate turnover of the employer exceeds $10 million, the employer is not considered a small business entity under the definition in subsection 328-110(1) and therefore the other qualifier must be used. Section 58GA(1A) states that:

An employer is covered by this subsection for a year of income if

(a)  the employer is not a small business entity for the year of income; and

(b)  the employer would be a small business entity for the year of income if:

(i)    each reference in Subdivision 328-C (about what is a small business entity) of the Income Tax Assessment Act 1997 to $10 million were instead a reference to $50 million; and

(ii)   the reference in paragraph 328-110(5)(b) of that Act to a small business entity were instead a reference to an employer covered by this subsection.

Subsection 58GA(1A)(a) is not satisfied as the employer does not meet the requirements to be a small business entity. However, when replacing the $10 million limit with $50 million, the employer would have been considered a small business entity satisfying subsection 58GA(1A)(b). Therefore, the car parking benefit provided by the employer will be exempt under section 58GA (1) of the FBTAA as all the conditions have been met.