ATO ID 2006/93: Car parking fringe benefits: fee charged by a parking station for all-day parking - daily rate equivalent for periodic parking arrangements.
Date of decision: 15 February 2006
Year of income: 31 March 2006
Business line: Private Groups and High Wealth Individuals

Issue
Where a parking station charges a parking fee for all-day parking which becomes progressively lower after a number of days parking, does the formula in section 39E of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) apply to determine the lowest fee the parking station is taken to charge for all-day parking on a particular day?

Decision
Yes. When a customer parks their car for more than one day, the parking station provides all-day parking on a periodic basis and the lowest fee for all-day parking on a particular day will be calculated using the formula in section 39E of the FBTAA.

Facts
A parking station is a 'commercial parking station' and provides 'all-day parking' in accordance with subsection 136(1) of the FBTAA. The parking station provides all-day parking in the ordinary course of business to members of the public. The parking station charges a parking fee for all-day parking which becomes progressively lower after a number of days parking. The following table represents the fees charged by the parking station: For 25 or more days parking the additional charge per day is $5.00 (including GST). There is no limit to how many days a customer could park their car under this arrangement. A customer who parked their car for 365 days would incur a $1,909 parking fee. During this period there are 246 business days.

Reasons for decision
Summary: The car parking fringe benefits provisions require the ascertainment of the amount of the lowest fee charged by a commercial parking station for all-day parking on a particular day. Section 39E of the FBTAA provides a daily rate equivalent where there is a periodic parking arrangement. Section 39E of the FBTAA applies if the commercial parking station provides all-day parking in the ordinary course of business to members of the public on a weekly, monthly, yearly or other periodic basis. When a customer parks their car for more than one day, the parking station is providing all-day parking on a periodic basis under section 39E of the FBTAA. The facts show that the parking station has no limit to the number of days of continuous parking. Under this arrangement, it is accepted that customers could park their car on a longer term periodic basis and as a practical general rule for a continuous period of up to one year. In order to determine the lowest rate charged for all-day parking by the car park, on a particular day, the formula in section 39E of the FBTAA would be applied on the basis that a car had been parked for a continuous period of one year (365 days). The parking station is taken to charge, on any particular day, a daily rate equivalent. This is calculated by use of the formula: | Detailed Reasoning - Total Fee/Business days in period: Total fee is the total fee charged by the operator in respect of all-day parking for the total days in that period. Business days in period means the number of business days in that period. | Detailed Reasoning - Total Fee/Business days in period = 1909/246 = $7.76: The lowest rate charged for all-day parking on a particular day would therefore be $7.76. In determining the amount of that lowest fee, it has been accepted that a customer has parked their car on a yearly periodic basis in these circumstances. Accordingly, where a parking station charges a parking fee for all-day parking which becomes progressively lower after a number of days parking, the formula in section 39E of the FBTAA applies to determine the lowest fee the parking station is taken to charge for all-day parking on a particular day.

Legislative references: Fringe Benefits Tax Assessment Act 1986 section 39E
Related public rulings and determinations: Taxation Ruling TR 96/26
Subject references: Car parking fringe benefits Fringe benefits Fringe benefits tax