Edited version of private advice

Authorisation Number: 1052133559516

Date of advice: 7 July 2023

Ruling

Subject:Fringe benefits tax - car parking benefits

Question

Is there a car parking fringe benefit under subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) for the proposed scheme to offer employees discounted parking at the same rate as is available to the public?

Answer

No

This ruling applies for the following period

FBT year ending 31 March 20XX

The scheme commenced on:

During FBT year ending 31 March 20XX

Relevant facts and circumstances

The Employer runs a number of commercial car parks in the city's Parking division.

The Employer would like to facilitate the purchase of bulk car parking permits for its staff to obtain the same discounts as those available to the general public.

The arrangement is proposed to commence during the FBT year ending 31 March 20XX and is as follows:

•         The Employer operates commercial car parking facilities in which they have control.

•         The Employer currently offers discounts for bulk car parking permit purchases. The focus of these bulk discount is at businesses, however there are no rules or regulations stipulating this.

•         The employee, subject to availability can nominate any car park they wish to utilise. These car parking facilities may or may not be within 1km of the place employee is taken to be performing their duties.

•         The car parking fees, including discounts, are set by the Employer and the same rates which will be charged to employees depending on which car park they wish to use.

•         The arrangement will be one where the cost of the bay is deducted from post-tax earnings (it is a redirection of taxed salary and/or wages subject to Pay-As-You-Go Withholding)

Parking in the commercial car park operated by and under the control of the Employer will be provided to each employee who chooses to take up the offer.

Other car parking operators provide commercial car parking within a one-kilometre radius of the business premises. The lowest fee charged by those operators exceeds the car parking threshold. Employee cars are to be parked at premises which are owned or leased by, or otherwise under the control of, the Employer (being The Employer's commercial car parks).

It is assumed each employee who takes up the offer will have their car parked for a total of more than four hours between 7:00am and 7:00pm on the applicable business day.

It is assumed employee cars parked in the commercial car parks operated by and under the control of the Employer will be used by employees to travel between home and work (or work and home) at least once on that business day.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 Section 39A

Fringe Benefits Tax Assessment Act 1986 Subsection 136(1)

Reasons for decision

Under Subdivision B of Division 10A of the FBTAA, an employer is required to calculate the taxable value of car parking fringe benefits. Subsection 136(1) of the FBTAA defines a car parking fringe benefit as '...a fringe benefit that is a car parking benefit.'

The definition of a 'fringe benefit' in subsection 136(1) of the FBTAA requires the following conditions to be satisfied:

1.    A benefit is provided at any time during the year of tax.

2.    The benefit is provided to an employee or an associate of the employee.

3.    The benefit is provided by:

a.    their employer; or

b.    an associate of the employer; or

c.     a third party other than the employer or an associate under an arrangement between the employer or associate of the employer and the third party; or

d.    a third party other than the employer or an associate of the employer, if the employer or an associate of the employer:

                                          i.    participates in or facilitates the provision or receipt of the benefit; or

                                         ii.    participates in, facilitates or promotes a scheme or plan involving the provision of the benefit; and the employer or associate knows, or ought reasonably to know, that the employer or associate is doing so;

4.    The benefit is provided in respect of the employment of the employee.

5.    The benefit is not one that is specifically excluded as per paragraphs (f) to (s) of the definition of a fringe benefit in subsection 136(1) of the FBTAA.

A benefit is provided

Subsection 136(1) of the FBTAA provides a broad definition of a 'benefit' as including:

•         any right (including a right in relation to, and an interest in, real or personal property), privilege,

•         service or facility and, without limiting the generality of the foregoing, includes a right, benefit,

•         privilege, service or facility that is, or is to be, provided under:

(a) an arrangement for or in relation to:

(i) the performance of work (including work of a professional nature), whether with or

without the provision of property; ...

In this case, the car parking fees are deducted from the employees after tax salary. The discounted is provided at the same rate as which is available to the general public and therefore a benefit has not been provided.

Car parking benefit

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:

(b)  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;

(c)   the total duration of the period or periods exceeds 4 hours;

(d)  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;

(e)  the provision of parking facilities for the car during the period or periods is in respect of the employment of the employee;

(f)    on that day, the employee has a primary place of employment;

(g)  during the period or periods, the car is parked at, or in the vicinity of, that primary place of employment;

(h)  on that day, the car is used in connection with travel by the employee between:

a.    the place of residence of the employee; and

b.    that primary place of employment;

(i)    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;

(j)    the day is on or after 1 July 1993;

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.

Application to your current circumstances

Regardless of where the bay is located with respect to the employee's employment, it is considered the supply of parking to employees who wish to take up the offer of a 10% discount is not a benefit "in respect of the employee's employment". This is because, in the ordinary course of the Employer's business, the offer is available to any member of the public who meets the criteria and makes an appropriate application for parking.

The discounted rate is set out in the Employer's schedule of fees and charges and is publicly available, the application process is virtually the same for employees as for the public, except the application will be run through and managed by the HR department being the 'business' for practical reasons.

Conclusion

Therefore, as explained above, there is not a car parking fringe benefit under subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) for the proposed scheme to offer employees discounted parking at the same rate as is available to the public