Edited version of private advice

Authorisation Number: 1052185351733

Date of advice: 13 December 2023

Ruling

Subject: Car parking fringe benefit

Question 1

Are all car parks outlined in Table 1 of the facts, in the vicinity of the primary place of employment thus satisfying the requirements of paragraph 39A(1)(f) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

Answer

No.

Question 2

If the benefit provided to employees is not a car parking benefit under Q1, is it a residual benefit under section 45 of the FBTAA?

Answer

Yes.

Question 3

If the benefit being provided to employees is a residual benefit under Q2, is it an exempt benefit under paragraph 58G(1)(b) of the FBTAA?

Answer

Yes.

This ruling applies for the following periods:

FBT year ending 31 March 2024

FBT year ending 31 March 2025

FBT year ending 31 March 2026

FBT year ending 31 March 2027

Relevant facts and circumstances

You run a number of commercial car parks.

You offer a 10% discount for bulk car parking permit purchases to businesses.

You would like to facilitate an arrangement whereby your employees are able to purchase bulk car parking permits at a discount greater than what is offered to the public.

The discount may be reviewed and updated from time to time.

The discounted parking will only be offered to employees that perform their duties at or are based at the primary place of employment.

Under the proposed arrangement, an employee, subject to availability, can nominate any car park they wish to utilise.

Under the proposed arrangement, the cost of the car parking bay will be deducted from the employee's post-tax earnings.

The shortest practicable routes from the car parks that are subject to this private ruling request and the primary place of employment are shown in Table 1:

Table 1

Table 1: Shortest practicable routes from the car parks that are subject to this private ruling request and the primary place of employment:

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 section 39A

Fringe Benefits Tax Assessment Act 1986 section 45

Fringe Benefits Tax Assessment Act 1986 paragraph 58G(1)(b)

Fringe Benefits Tax Assessment Act 1986 subsection 136(1)

Reasons for decision

Detailed reasoning

Question 1

Are all car parks outlined in Table 1 of the facts, in the vicinity of the primary place of employment thus satisfying the requirements of paragraph 39A(1)(f) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

Answer

No.

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.

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

Paragraph 39A(1)(f) of the FBTAA requires the car to be parked at, or in the vicinity of, an employee's primary place of employment;

Commissioner's interpretation of 'in the vicinity of'

Taxation Ruling TR 2021/2: Fringe benefits tax: Car parking benefits (TR 2021/2) at paragraphs 10 and 11, sets out the Commissioner's interpretation of the definition of 'in the vicinity of':

10 '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.'

11 Geographical includes:

... geographical features such as rivers, railway lines, freeways and other physical obstacles which might render a car park and an employee's primary place of employment near or close as the crow flies but not so in terms of the distance of the shortest practicable route between them.

Example 1 - work car park is not 'in the vicinity of' the employee's primary place of employment

12. An employer leases premises (a work car park) to provide car parking to its employees.

13. As the crow flies, the distance between the work car park and office building, which is the employee's primary place of employment, is less than one kilometre.

14. However, the shortest walking route between the work car park and office building is approximately two kilometres, or 20 to 25 minutes, by foot. A shuttle bus also operates between the work car park and office building. The journey by shuttle bus takes approximately 15 to 20 minutes, one way.

15. The work car park is not 'in the vicinity' of the employee's primary place of employment.

'Spatial' refers to the physical measured distance between the places.

Where is an 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.

Application to your circumstances

The shortest practicable routes from the car parks that are subject to this private ruling request to the primary place of employment are shown in Table 1 (see above):

The thirteen car parks listed in Table 1 are not considered 'in the vicinity of' the primary place of employment because:

•         The car parks and the primary place of employment are not near, proximate, or close to each other;

•         The shortest practicable route requires travel by walking on foot; and

•         The time it takes to travel between the car parks and primary place of employment is at least 15 minutes.

As paragraph 39A(1)(f) of the FBTAA has not been satisfied, the requirements of subsection 39A(1) of the FBTAA have not been met and a car parking benefit has not been provided.

Question 2

If the benefit provided to employees is not a car parking benefit under Q1, is it a residual benefit under section 45 of the FBTAA?

Answer

Yes

Detailed reasoning

Broadly, a 'fringe benefit' arises when the following conditions are satisfied:

•         a benefit is provided at any time during the year of tax

•         the benefit is provided to an employee or an associate of the employee

•         the benefit is provided by:

(i) their employer; or

(ii) an associate of the employer; or

(iii) 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

(iv) a third party other than the employer or an associate of the employer, if the employer or an associate of the employer:

(A) participates in or facilitates the provision or receipt of the benefit; or

(B) 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;

•         the benefit is provided in respect of the employment of the employee

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

The provision of a car park at a discounted rate that is higher than it is for members of the public provided to employees by their employer constitutes a 'benefit' given the broad definition of the term including any privilege, service or facility under subsection 136(1) of the FBTAA.

As outlined at Q1, the requirements of subsection 39A(1) of the FBTAA have not been met and a car parking benefit has not been provided. As the benefit does not fall into any other benefit category by virtue of a provision of subdivision A of Divisions 2 to 11 of the FBTAA (inclusive), the benefit will be a residual benefit under section 45 of the FBTAA.

Question 3

If the benefit being provided to employees is a residual benefit under Q2, is it an exempt benefit under paragraph 58G(1)(b) of the FBTAA?

Detailed reasoning

Paragraph 58G(1)(b) of the FBTAA states that a residual benefit will be an exempt benefit where the benefit consists of motor vehicle parking facilities.

In this case, as the requirements of subsection 39A(1) of the FBTAA have not been met in relation to the thirteen car parks outlined at Table 1, a residual benefit is being provided.

However, as the residual benefit consists of motor vehicle parking facilities, it will be an exempt benefit under paragraph 58G(1)(b) of the FBTAA.