ATO ID 2004/935: Exempt benefits: small business car parking - the sum of the employer's ordinary income and statutory income
Date of decision: 11 October 2004
Year of income: Year ended 31 March 2005
Business line: SEO

Issue
In determining whether the employer's ordinary and statutory income for the income tax year ending most recently before the start of the fringe benefits tax (FBT) year is less than $10 million, for the purposes of subparagraph 58GA(1)(d)(i) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA), is the $10 million threshold calculated on a GST inclusive basis?

Decision
Yes. The employer's ordinary and statutory income for the income tax year for the purposes of subparagraph 58GA(1)(d)(i) of the FBTAA, the $10 million threshold is calculated on a GST inclusive basis.

Facts
The employer provides 'car parking benefits' in respect of the employment of employees as defined in subsection 136(1) of the FBTAA. The parking is not provided in a commercial car park. The employer is neither a government body, nor a listed public company, nor a subsidiary of a listed public company. The employer carries on an enterprise and is registered for GST. The employer's ordinary and statutory income includes amounts of GST.

Reasons for decision
Summary: Section 58GA of the FBTAA exempts from fringe benefits tax car parking benefits provided by small business employers. The exemption will apply to a car parking benefit provided in respect of the employment of an employee if all of the conditions of subsection 58GA(1) of the FBTAA are satisfied. Paragraph 58GA(1)(d) of the FBTAA specifies that the employer's ordinary and statutory income for the income tax year ending most recently before the start of the FBT year must be less than $10 million; or that 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. Subsection 58GA(3) of the FBTAA defines 'ordinary income' and 'statutory income' and subsection 136(1) of the FBTAA defines 'small business entity' to have the same meaning as in the Income Tax Assessment Act 1997 (ITAA 1997). 'Ordinary income' has the meaning given in subsection 6-5(1) of the ITAA 1997. 'Statutory income' has the meaning given in subsection 6-10(2) of the ITAA 1997. 'Small business entity' has the meaning given to it by subsection 328-110(1) of the ITAA 1997. Ordinary and statutory income includes exempt income (subsection 6-1(2) of the ITAA 1997). The GST amount payable on a taxable supply in the absence of paragraph 17-5(a) of the ITAA 1997 would be ordinary or statutory income. Paragraph 17-5(a) of the ITAA 1997 however specifically excludes the GST payable on a taxable supply from being included in the assessable income or exempt income of a taxpayer. Subparagraph 58GA(1)(d)(i) of the FBTAA refers to the sum of the employer's ordinary and statutory income for the income year. This is not the employer's assessable income. Therefore, although the GST payable on a taxable supply would not form part of the employer's assessable income, it would constitute its ordinary or statutory income. Accordingly, in determining whether the sum of the employer's ordinary and statutory income for the income year is less than $10 million, for the purposes of subparagraph 58GA(1)(d)(i) of the FBTAA, the $10 million threshold is calculated on a GST inclusive basis.

Legislative references: Fringe Benefits Tax Assessment Act 1986 section 58GA subsection 58GA(1) paragraph 58GA(1)(d) subsection 58GA(3)
Related ATO interpretative decisions: ATO ID 2002/793 | ATO ID 2003/25 | ATO ID 2004/296
Subject references: Car parking fringe benefits Exempt benefits Fringe benefits Fringe benefits tax Small business