Private ruling: Fringe benefits tax
Published: August 2013
Ruling period: 1 April 2013 to 3l March 2016
Date scheme commenced: 1 April 2013

Ruling: Q1: In calculating the business use percentage applicable under subsection 10(2) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA), will each journey between the employee's home and workstation be a business journey? | A1: Yes. | Q2: In calculating the business use percentage applicable under subsection 10(2) of the FBTAA, will each journey between the employee's home and another location where duties of employment are performed and then to the workstation or directly home be a business journey? | A2: Yes.

Relevant facts and circumstances: Issue 1 facts The employer employs specialist employees. The duties of these specialists include to a large extent the operation of specialist equipment on location. A number of cars have been provided to the specialists for on-call purposes only who are required to carry heavy and expensive equipment to carry out duties. They all carry the same wide variety of equipment. The weight of the equipment is between 50 kg or 80 kg where the specialist's duties are more involved and require additional equipment. The specialists can use the cars for the following journeys only: · home and employer's business premises for on-call purpose · employer's business premises and varying work sites · Varying work sites and home when called out (the specialist employees when called out need to arrive at worksites relatively quickly and may need to travel relatively long distances and utilize other forms of transport if required) The employer has provided a detailed representative record of a car's usage by an on-call specialist employee. Issue 2 facts An employee of the employer was promoted early in the FBT year. The employee enters into an effective salary sacrifice arrangement with the employer to receive a car fringe benefit as defined in subsection 136(1) of the FBTAA. The taxable value of the car benefit for the relevant FBT year is more than $2,000. The employee's employment is terminated later in the FBT year and the salary-packaging arrangement also terminates. The car is leased by the employer for a number of years and the employer would be penalised for returning the car to the leasing company before end of the lease term. Hence, the employer allocates the car to other employees (not part of a salary sacrifice arrangement) to travel between home and work for on-call purposes. Issue 3 facts The employer has business premises with car parking spaces and has been including car parking benefits in its FBT returns on the basis that the business premises are located within 1 km of a car park at Location A and that the requirements of section 39A of the FBTAA are satisfied. Location A car park details: Spaces available: more than 100 bays Hours of operation: more than 6 hours Monday to Friday more than 6 hours Saturday less than 6 hours Sunday Closed Public holidays Parking rates: Early bird rate more than the relevant car parking threshold for the FBT year. All day parking more than the relevant car parking threshold for the FBT year. The employer is requesting confirmation that the car park at Location A constitutes a "commercial parking station" as defined in subsection 136(1) of the FBTAA for the purposes of section 39A of the FBTAA. Issue 4 facts The employer holds Vehicle A. Employees can use Vehicle A for the following journeys only: · Home and work sites for on-call purpose · Home and office for on-call purpose and · Office and work sites Non work-related use, if any, will be minor, infrequent and irregular. The employer has provided the relevant specifications for the motor vehicle. Payload: less than 1 tonne Seating capacity: less than 9 Issue 5 facts The employer has business premises with car parking spaces and has been including car parking benefits in its FBT returns on the basis that the business premises are located within 1 km of a car parks at Location B, Location C and Location D respectively. The requirements of section 39A of the FBTAA are satisfied. The employer is requesting confirmation that each of the car parks at Location B, Location C and Location D constitute a "commercial parking station" as defined in subsection 136(1) of the FBTAA for the purposes of section 39A of the FBTAA. Location B car park details: Spaces available: more than 100 bays Hours of operation: more than 6 hours Monday to Sunday Parking rates: All day parking more than the relevant car parking threshold for the FBT year. Location C car park details: Spaces available: more than 100 bays Hours of operation: more than 6 hours Monday to Sunday Parking rates: All day parking more than the relevant car parking threshold for the FBT year. Location D car park details: Spaces available: more than 100 bays Hours of operation: more than 6 hours Monday to Sunday Parking rates: All day parking more than the relevant car parking threshold for the FBT year.

Relevant legislative provisions: Fringe Benefits Tax Assessment Act 1986 subsection 5E(3), | Fringe Benefits Tax Assessment Act 1986 section 7, | Fringe Benefits Tax Assessment Act 1986 subsection 8(2), | Fringe Benefits Tax Assessment Act 1986 section 39A, | Fringe Benefits Tax Assessment Act 1986 subsection 47(6), | Fringe Benefits Tax Assessment Act 1986 subsection 136(1) and | Fringe Benefits Tax Regulations 1992 regulation 8.

Reasons for decision: Summary: The journeys are business journeys on the basis that the employees are required to carry bulky equipment in the course of performing their duties of employment. | Detailed Reasoning - Detailed reasoning: Taxation Rulings TR 95/34, IT 112 and Miscellaneous Taxation Ruling MT 2027 set out the administrative guidelines and the commissioner's views on 'Private use of Cars' and 'Home to Work Travel', and the deductibility of travelling expenses between home and work. In particular, these taxation rulings cover travel by employees carrying out itinerant work and travel incorporating the transport of equipment. Private use is defined in subsection 136(1) of the FBTAA and basically means the use of a motor vehicle by an employee that is not exclusively in the course of producing assessable income. In essence, the test for determining business or private use for FBT purposes is the same as that under income tax law. If the expenditure incurred in travelling by car is deductible under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997), then the travel would be business use. Subsection 8-1(1) of the ITAA 1997 allows a deduction for expenditure that was incurred in gaining or producing assessable income. Generally expenditure incurred in travelling between home and a person's regular place of employment or business is private in nature and is not an allowable deduction, as the expenditure is a pre-requisite to the earning of assessable income as opposed to expenditure which is incurred in the actual course of gaining or producing income. Put at its simplest, travel to work is private, travel on work is business. This position is confirmed in paragraph 14 of MT 2027. Where an employee is required to take a car between home and work as a condition of employment (for example, because it may be needed for out-of-hours calls) the Commissioner would still regard the home/work travel as private use. Home/work travel by employees on a stand-by duty roster system would also normally be regarded as private, unless one of the specific exceptions referred to in MT 2027 applies. The Commissioner will allow an exception and regard home to work travel as business travel in the following circumstances as provided in MT 2027: 1. Employment duties of an itinerant nature 2. Business trip on way to and from work 3. Travel incorporating the transport of bulky equipment The relevant exception in this instance is where the transport costs can be attributed to the transportation of bulky, cumbersome equipment. Guidelines for the application of this principle are discussed in Income Tax Ruling IT 112 in the context of the decision in FCT v Vogt 75 ATC 4073; 5 ATR 274. Broadly, such claims should be allowed where the employee performs duties at a number of places requiring the transport and use of equipment of substantial bulk such as to justify the need for a motor vehicle to transport it and where there are sound reasons for keeping the equipment at home. In the AAT Case 94 ATC 140; 27 ATR 1127 the Tribunal considered the deductibility of travel for a medical practitioner carrying heavy, bulky equipment when travelling between his home and the various locations at which he saw his patients. The taxpayer carried various items of equipment on a daily basis, one of which - an EMG machine weighed 15 kilograms. The Tribunal found that the necessity to carry the bulky equipment to and from the taxpayer's home each day was sufficient to bring him within the principle established in Vogt's case and allowed the claim. Merely having to transport items of equipment will not alter the essential character of the home to work travel expenditure. The essence of MT 2027 and TR 95/34 and the court cases in relation to carriage of bulky equipment is in the first instance a deduction is allowed if the transportation is attributable to bulky equipment. However, the deduction will be denied where the transport occurs as a matter of convenience or of personal choice. In this instance the employees using the cars are on-call and required to carry equipment totalling 50 kg to 80 kg. This is considered cumbersome and bulky. The employees are on-call and the equipment is with them at all times to enable them to respond to perform their duties and to respond to call outs. With the necessity to travel to various work places, it would not be possible for the employees to store this equipment at one particular place. Consequently, where the employees carry this equipment in the cars and use the cars for travel between home and work, the journey would be considered to be a business journey as it is in respect to the carriage of the bulky equipment. | Summary: The journeys are business journeys on the basis that the employees are required to carry bulky equipment in the course of performing their duties of employment. | Detailed Reasoning - Detailed reasoning: Refer to the reasons for decision applicable to our answer to issue 1 question 1 above. These reasons are equally applicable to our answer to this question. | Summary: The car fringe benefit is an excluded fringe benefit under regulation 8 of the Fringe Benefits Tax Regulations 1992 because the car is a pooled or shared car. | Detailed Reasoning - Detailed reasoning: Car fringe benefits arose when the employee used the salary sacrifices car during the year prior to the employee's termination of employment. Car fringe benefits also arose when the car is allocated to other employees to travel between home and work for on-call purposes. Subsection 5E(3) of the FBTAA states that an excluded fringe benefit is a fringe benefit: ... (i) that is a benefit prescribed by the regulations for the purposes of this paragraph; or ... Regulation 8 of the Fringe Benefits Tax Regulations 1992 is about excluded fringe benefits in relation to pooled or shared cars. It states: 8(1) For paragraph 5E(3)(i) of the Act (FBTAA), a car benefit is prescribed if: (a) the benefit: (i) is a car fringe benefit; or (ii) would be a car fringe benefit if it were not an exempt benefit; and (b) the car to which the benefit relates is applied to or available for the private use of more than one employee under subsection 7(1) of the Act. Example: An employer makes one car available to 3 employees, for private use, at different times during the year of tax. 8(2) The benefit is prescribed in relation to: (a) each employee in relation to which the benefit is provided; and (b) each year of tax from 1 April 2007. Regulation 8(1)(a)(i) and 8(1)(b) are both satisfied and the car is a pooled or shared car for the purposes of the FBT regulations. The car benefit is prescribed for the purposes of subsection 5E(3)(i) of the FBTAA. Consequently, the employer does not have reportable fringe benefit obligations in respect of the car benefit in relation to the FBT year. | Summary: Not applicable as the answer to issue 2 question 1 is yes. | Detailed Reasoning - Detailed reasoning: Not applicable as the answer to issue 2 question 1 is yes. | Summary: For all days other than Sundays and public holidays the car park at Location A is a commercial parking station as defined in subsection 136(1). | Detailed Reasoning - Detailed reasoning: The criteria for what constitutes a car parking benefit are detailed in section 39A of the FBTAA. Subsection 39A(1) states: If the following conditions are satisfied in relation to a daylight period, or a combination of periods on a particular day: (a) during the period or periods, a car is parked on one or more premises of a person (the 'provider'), where: (i) 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; (b) the total duration of the period or periods exceeds 4 hours; (c) 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; (d) the provision of parking facilities for the car during the period or periods is in respect of the employment of the employee; (e) on that day, the employee has a primary place of employment; (f) during the period or periods, the car is parked at, or in the vicinity of, that primary place of employment; (g) on that day, the car is used in connection with travel by the employee between: (i) the place of residence of the employee; and (ii) that primary place of employment; (h) 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; (i) the day is on or after 1 July 1993; the provision of parking facilities for the car during the period or periods is taken to constitute a benefit provided by the provider to the employee or the associate of the employee in respect of the employment of the employee. Subsection 136(1) of the FBTAA defines a commercial parking station as follows: 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. For the purposes of section 39A, a parking facility will be a commercial parking station where it meets this definition. For the purposes of Division 10A of the FBTAA ' all-day parking ' and 'daylight period' are defined in subsection 136(1) of the FBTAA as follows: | Detailed Reasoning - All-day parking: …in relation to a particular day, means parking of a single car for a continuous period of 6 hours or more during a daylight period on that day. | Detailed Reasoning - Daylight period: … in relation to a day, means so much of a period on that day as occurs: (a) after 7a.m. on that day, and (b) before 7p.m. on that day. | Detailed Reasoning - Permanent car parking facility: The term 'permanent' is not defined in the FBTAA and therefore takes it normal dictionary meaning. | Detailed Reasoning - Commercial car parking facility: The term 'commercial' is not defined in the FBTAA. In the EM, the term 'commercial parking station' is addressed as part of the explanation of proposed amendments. According to the explanation: · the word 'commercial' has its normal dictionary meaning · a car parking facility that is not run with a view to making a profit (usually reflected in significantly lower car parking rates charged compared with normal market value for that facility) would not be commercial, and · short term shopper parking facilities that charge penalty rates to discourage all-day parking are not treated as commercial parking stations. As is relevant, commercial is defined in the Macquarie Dictionary as follows: adjective 1. of, or of the nature of, commerce. 2. engaged in commerce. 3. capable of returning a profit: a commercial project. 4. capable of being sold in great numbers: is the invention commercial? … The Macquarie Dictionary defines commercial as capable of returning a profit. In applying this definition the examples in paragraph 81 of TR 96/26 also consider whether the fee charged is only a nominal fee. As an example of a nominal fee the ruling states that an all-day parking fee of less than two dollars is likely to be a nominal fee. | Detailed Reasoning - Car parking spaces are available in the ordinary course of business to members of the public for all-day parking: Where there are no restrictions to prevent members of the public from parking in the relevant car park, car parking spaces will be available in the ordinary course of business to members of the public. The Explanatory Memorandum (EM) to the Taxation Laws Amendment (Car Parking) Bill states that 'some car parking facilities have a primary purpose of providing short term shopper parking', the EM went on to discuss that such facilities use penalty rates to discourage all-day parking. Penalty rates were said to be rates 'significantly greater than the rates that would be charged by a similar facility that encouraged all-day parking'. Paragraph 81 of TR 96/26 states that car parking facilities, with a primary purpose other than providing all-day parking, that usually charge penalty rates significantly higher than the rates charged for all-day parking (emphasis added) at commercial all-day facilities (such as parking provided for short term shoppers or hotel guests) are excluded from the definition of commercial parking station. Division 10A of the FBTAA does not refer to the term 'penalty rates'. In considering the application of the definition of commercial parking station it is necessary to determine whether the relevant car parking facility: · is a permanent car parking facility · is a commercial car parking facility · provides car parking spaces in the ordinary course of business to members of the public · provides all-day parking on payment of a fee, and · is not a parking facility on a public street, road, lane, thoroughfare or footpath paid by inserting money in a meter or obtaining a voucher. Guidance on the application of the definition of commercial parking station is provided by paragraphs 80 and 81 of Taxation Ruling TR 96/26 which state: 80. A vacant lot, utilised commercially as a car park, could be considered to be a permanent commercial car park even where it is intended that a building will be erected on the site in due course. 81. We do not regard the following parking arrangements as constituting commercial parking stations: · car parking facilities, with a primary purpose other than providing all-day parking, that usually charge penalty rates significantly higher than the rates chargeable for all-day parking at commercial all-day parking facilities (such as parking provided for short term shoppers or hotel guests); · a car park that is not run with a view to making a profit or which charges a nominal fee (usually a significantly lower rate than the current market value), e.g., an all-day parking fee of less than $2.00 is likely to be a nominal fee; · car parking that is established for a short period to cater for a special function; · car parking spaces leased to a tenant by a property developer as part of an overall lease agreement for business premises; · parking facilities provided by a sporting venue to persons associated with the venue where: (a) parking facilities are usually available only after 5 pm to coincide with night events; or (b) parking is available only for a specific event, and the event is a daytime event; or (c) parking is available to all members of the public only during sporting events; and provided that, when there is no such event, the parking facilities are not usually available to members of the public; · parking provided by a business for its own employees and those of a nearby business, but to no other person, if there is no commercial car park within 1 km; · in an area without a commercial parking station and where street parking is not permitted, arrangements made by a business for its employees to park during business hours in yards and driveways of surrounding houses; · a kerb side parking meter, from the FBT year commencing 1 April 1994, even where it is possible to purchase all-day parking at the meter in a single transaction. The car park at Location A falls within the definition of commercial parking station in subsection 136(1) of the FBTAA as all the requirements in the definition are satisfied. This conclusion is supported by the fact that the car park offers members of the public an early bird rate that is above the car parking threshold for the relevant FBT year and no additional amounts are charged for parking more than 6 hours. We note however that this car park does not operate on public holidays and only operates for less than 6 hours on Sundays. Consequently, the car park at Location A will not fall within the definition of commercial parking station on Sundays and public holidays. | Summary: The vehicle is a car as defined in subsection 136(1) of the FBTAA. | Detailed Reasoning - Detailed reasoning: Subsection 136(1) of the FBTAA defines car as having the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997. In relation to the tern 'car' this subsection states: car means a motor vehicle (except a motor cycle or similar vehicle) designed to carry a load of less than 1 tonne and fewer than 9 passengers. As Vehicle A under consideration has a payload of less than 1 tonne and seating capacity for less than 9 occupants, it fits within this definition and is a car for the purposes of the FBTAA. | Summary: The use of Vehicle A in the manner described will give rise to an exempt benefit under subsection 8(2) of the FBTAA as all the requirements for that exemption to apply are satisfied. | Detailed Reasoning - Detailed reasoning: Subsection 8(2) of the FBTAA states: 8(2) [Exempt vehicles] A car benefit provided in a year of tax in respect of the employment of a current employee is an exempt benefit in relation to the year of tax if: (a) the car is: (i) a taxi, panel van or utility truck, designed to carry a load of less than 1 tonne; or (ii) any other road vehicle designed to carry a load of less than 1 tonne (other than a vehicle designed for the principal purpose of carrying passengers); and View history reference (b) there was no private use of the car during the year of tax and at a time when the benefit was provided other than: (i) work-related travel of the employee; and (ii) other private use by the employee or an associate of the employee, being other use that was minor, infrequent and irregular. The use of Vehicle A in the manner described meets all the requirements in subsection 8(2) of the FBTAA and consequently the car benefits provided are exempt benefits pursuant to this subsection. | Summary: Not applicable as Vehicle A is a car. | Detailed Reasoning - Detailed reasoning: Subsection 47(6) of the FBTAA applies only to vehicles other than cars. | Summary: The car park at Location B is a 'commercial parking station' as it fits within the definition of this term in subsection 136(1) of the FBTAA and does not charge penalty rates to discourage all-day parking. | Detailed Reasoning - Detailed reasoning: The explanation of the relevant law and definitions referred to in our reasons for decision to issue 3 question 1 above are equally applicable to our reasons for decision to this question. In considering the application of the definition of commercial parking station to this question it is necessary to determine whether the car park at Location B: · is a permanent car parking facility · is a commercial car parking facility · provides car parking spaces in the ordinary course of business to members of the public · provides all-day parking on payment of a fee, and · is not a parking facility on a public street, road, lane, thoroughfare or footpath paid by inserting money in a meter or obtaining a voucher. We have decided that the car park at Location B is a commercial parking station as defined in subsection 136(1) of the FBTAA as all the requirements of the definition are met. Further, we have concluded that the all-day rate charged is not a penalty rate to discourage all-day parking. This is supported by the fact that no additional amounts are charged for parking more than 6 hours. | Summary: The car park at Location C is a 'commercial parking station' as it fits within the definition of this term in subsection 136(1) of the FBTAA and does not charge penalty rates to discourage all-day parking. | Detailed Reasoning - Detailed reasoning: The explanation of the relevant law and definitions referred to in our reasons for decision to issue 3 question 1 above are equally applicable to our reasons for decision to this question. In considering the application of the definition of commercial parking station to this question it is necessary to determine whether the car park at Location C: · is a permanent car parking facility · is a commercial car parking facility · provides car parking spaces in the ordinary course of business to members of the public · provides all-day parking on payment of a fee, and · is not a parking facility on a public street, road, lane, thoroughfare or footpath paid by inserting money in a meter or obtaining a voucher. We have decided that the car park at Location C is a commercial parking station as defined in subsection 136(1) of the FBTAA as all the requirements of the definition are met. Further, we have concluded that the all-day rate charged is not a penalty rate to discourage all-day parking. This is supported by the fact that no additional amounts are charged for parking more than 6 hours. | Summary: The car park at Location D is a 'commercial parking station' as it fits within the definition of this term in subsection 136(1) of the FBTAA and does not charge penalty rates to discourage all-day parking. | Detailed Reasoning - Detailed reasoning: The explanation of the relevant law and definitions referred to in our reasons for decision to issue 3 question 1 above are equally applicable to our reasons for decision to this question. In considering the application of the definition of commercial parking station to this question it is necessary to determine whether the car park at Location D: · is a permanent car parking facility · is a commercial car parking facility · provides car parking spaces in the ordinary course of business to members of the public · provides all-day parking on payment of a fee, and · is not a parking facility on a public street, road, lane, thoroughfare or footpath paid by inserting money in a meter or obtaining a voucher. We have decided that the car park at Location D is a commercial parking station as defined in subsection 136(1) of the FBTAA as all the requirements of the definition are met. Further, we have concluded that the all-day rate charged is not a penalty rate to discourage all-day parking. This is supported by the fact that no additional amounts are charged for parking more than 6 hours.

For the purposes of paragraph 5E(3)(i) of the FBTAA, is the car fringe benefit an excluded fringe benefit under regulation 8 of the Fringe Benefits Tax Regulations 1992 ? | Question 2: If the answer to issue 2 question 1 is no, is the employer required to include the taxable value of the car fringe benefit in the employee's payment summary? | This ruling applies for the following periods: 1 April 2013 to 3l March 2014 | For the purposes of section 39A of the FBTAA, does the car park at Location A constitute a "commercial parking station" as defined in subsection 136(1) of the FBTAA? | Yes, excluding Sundays and Public Holidays. | Is Vehicle A a "car" as defined in subsection 136(1) of the FBTAA? | Question 2: If the answer to issue 4 question 1 is yes, is the use of vehicle A by an employee an exempt benefit under subsection 8(2) of FBTAA? | Question 3: If the answer to issue 4 question 1 is no, is the use of the Vehicle A by an employee an exempt benefit under subsection 47(6) of FBTAA? | Is the car park at Location B a "commercial parking station" as defined in subsection 136(1) of the FBTAA? | Question 2: Is the car park at Location C a "commercial parking station" as defined in subsection 136(1) of the FBTAA? | Question 3: Is the car park at Location D a "commercial parking station" as defined in subsection 136(1) of the FBTAA?