Private ruling: FBT Car Parking
Date of advice: 11 December 2017
Published: May 2018
Ruling period: 1 XX 20XX to 31 YY 20YY

Ruling: Q1: Can the amount of $xx charged for all day rates by Car Park A , be used as the lowest fee charged for all day parking by a commercial car parking station for the purpose of calculating the taxable value of car parking fringe benefits under section 39C of the FBTAA 1986 ? | A1: Yes | Q2: Are the car parking stations at both or either one of the following car parking stations a ‘commercial car parking station’ as defined in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (‘ FBTAA ’)? a. Car Park B b. Car Park C | A2: a. Yes b. Yes | Q3: If the car parking station of Car Park C is a commercial car parking station, can the daily rate of $yy (calculated as monthly rate of $zzz 21 days) be used as the lowest fee charged for all day parking by a commercial car parking station for the purpose of calculating the taxable value of car parking fringe benefits under section 39C of the FBTAA 1986 ? | A3: Yes | Q4: Is the car parking station at Car Park D a ‘commercial car parking station’ as defined in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (‘ FBTAA ’)? | A4: Yes | Q5: Can the early bird rate of $x be used as the lowest fee charged for all day parking ( Car Park D ) by a commercial car parking station for the purpose of calculating the taxable value of car parking fringe benefits under section 39C of the FBTAA 1986 ? | A5: Yes | Q6: Can the daily rate of $x (calculated as $yy per week 5 days) be used as the lowest fee charged for all day parking ( Car Park E ) by a commercial car parking station for the purpose of calculating the taxable value of car parking fringe benefits under section 39C of the FBTAA 1986 ? | A6: Yes

Relevant facts and circumstances: Car Park A 1. Company X has a work office in Suburb X, which is close to Car Park A. 2. Car Park A is open 24 hours, 7 days per week. 3. Parking fees apply as follows: Mon - Fri Up to the first hour $x Mon - Fri Every extra half hour $x Mon - Fri Exit after 6:00pm (flat rate on top of hourly fees) $x Mon - Fri Maximum daily fee $y Mon - Fri Early Bird Parking Entry 7:00 – 9:30am Exit 2:30 – 6:30pm $z Sat – Sun Free parking $0 24/7 Permanent parking per month $z 4. Company X has been using the average cost method and statutory formula method to calculate the car parking fringe benefit tax of this work location. Car Park B and Car Park C 5. Company X has a work place located at Suburb Y. 6. There are two parking stations close to this location: a. Car Park B, and b. Car Park C 7. Both Car Parks B and C are open all day Monday to Sunday. 8. Parking fees at Car Park B apply as follows: Mon – Fri all day 1 hour $x Mon – Fri all day 2 hours $x Mon – Fri all day 3 hours $x Mon – Fri all day 4 hours $y Mon – Fri all day 5 hours $y Mon – Fri all day 24 hours $z Mon – Fri 3pm – 6am Sat – Sun all day 1 hour $x Mon – Fri 3pm – 6am Sat – Sun all day 2 hours $y Mon – Fri 3pm – 6am Sat – Sun all day 24 hours $z 9. Parking fees at Car Park C as follows: First 30 mins $x 30 mins – 1 hour $x 1 – 3 hours $y 3+ hours $y Monthly secure parking $z 10. Company X has been using the average cost method and statutory formula method to calculate the car parking fringe benefit tax of this work location. Car Park D 11. Company X has a work place located in close proximity to Suburb Z. 12. Suburb Z has a car parking facility. 13. The car park offers onsite parking for over 200 vehicles. 14. The car park is open Mondays to Saturdays for hours longer than 7am to 7pm and public holidays from 6:00am – 1:00am. 15. The car park charges an overnight surcharge for all vehicles remaining after closing times. 16. Parking fees apply as follows: Entry time 6am – 6pm Entry time 6pm – 1am Up to 1 hour Free Free 1 – 1.5 hours $x $x 1.5 – 2 hours $x $x 2 – 2.5 hours $x $x 2.5 – 3 hours $x $x 3 – 3.5 hours $x $x 3.5 – 4 hours $x $x 4 – 5 hours $y $y 5 – 6 hours $y $y 6 – 7 hours $y $y 7+ hours $z $z Early bird parking per day $x Entry 6 – 10am Exit 3 - 7pm Lost ticket $z $z 17. Company X has been using the average cost method and statutory formula method to calculate the car parking fringe benefit tax of this work location. Car Park E 18. Company X has been including the parking spaces in Suburb W in previous fringe benefits tax returns. 19. Suburb W has introduced a range of permits for residents, visitors and business operators within the city centre, through the car park’s Permit Parking Policy. 20. There are a number of car parks in the area. 21. The Suburb W car park is a multi-storey car park located at the rear of Company X’s work place. 22. The car park is open 24 hours 7 days per week, and has over 400 hundred car parking spaces available. 23. Parking fees apply as follows: 0 – 1 hour $x 1 – 2 hours $x 2 - 3 hours $x 3 - 4 hours $x 4 – 5 hours $x 5+ hours $y Maximum per day $y Lost ticket $z Levels 4-6 Weekly fee $z Permanent per month $zz Information provided 24. You have provided a number of documents containing detailed information in relation to a number of car parking stations in the vicinity of Suburbs X, Y, Z and W, including: a. Private Binding Ruling (PBR) Application, dated 1 XX 20XX b. A total of 6 PBR questions c. Background information describing the car parking schemes at i. Car Park A ii. Car Park B iii. Car Park C iv. Car Park D v. Car Park E d. References in support of the PBR Application e. Calculations to show equivalent daily car parking rates f. Copies of previous Edited Versions of previous PBR’s 25. We have referred to the relevant information within these documents in applying the relevant tests to your circumstances.

Relevant legislative provisions: Fringe Benefits Tax Assessment Act 1986 Division 10A, Section 39 | Fringe Benefits Tax Assessment Act 1986 Section 136(1) Taxation Laws Amendment (Car Parking) Bill 1992 Explanatory Memorandum

Reasons for decision: Summary: All legislative references are to the Fringe Benefits Tax Assessment Act 1986 ( FBTAA 1986 ) unless otherwise stated. | Summary: The car parks located at Car Park B, Car Park C and Car Park D are ‘commercial parking stations’ as they fit within the definition of this term within subsection 136(1) of the FBTAA 1986 . | Detailed Reasoning - DETAILED REASONING: 26. For the purpose of this ruling, a determination is to be made regarding whether a number of car parking stations in the area are ‘commercial parking stations’. | Detailed Reasoning - CAR PARKING BENEFITS: 27. It is agreed that a car parking benefit as defined in subsection 39A(1) of the FBTAA 1986 , will arise from the provision of car parking facilities, if the relevant parking facility is a commercial parking station, located within a one kilometre radius of the business premises, which provides car parking spaces in the ordinary course of business to members of the public for all-day parking on payment of a fee. Section 39A of the FBTAA 1986 states that a car parking fringe benefit will arise where: 39A(1) If the following conditions are satisfied… (a) ...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 1km 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;... | Detailed Reasoning - COMMERCIAL PARKING STATION: 28. A ‘commercial parking station’ is defined in subsection 136(1) FBTAA 1986 to mean: In relation to a particular day, 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. 29. In considering the application of the definition of ‘commercial parking station’, it is necessary to determine whether the parking facility: a. is a permanent parking facility b. is a commercial parking facility c. provides car parking spaces in the ordinary course of business d. to members of the public e. for all-day parking on payment of a fee, and f. 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. 30. Guidance for considering each of these issues is provided in Taxation Ruling TR 96/26 Fringe benefits tax: car parking fringe benefits ( TR 96/26 ). | Detailed Reasoning - ‘Permanent’ parking facility: 31. The Explanatory Memorandum to Taxation Laws Amendment (Car Parking) Bill 1992 stated the word ‘permanent’ has its normal dictionary meaning. It also provided several examples including a car park set up for a short period to cater for a special function (like an Easter Show) which it stated would not be permanent. 32. Further examples are provided in paragraph 81 of TR 96/26 which states that the following examples are regarded as not constituting commercial parking stations: ● car parking that is established for a short period to cater for a special function; ● 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; provided that, when there is no such event, the parking facilities are not usually available to members of the public. 33. The Macquarie online Dictionary defines ‘permanent’ to mean: ● lasting or intended to last indefinitely; remaining unchanged; not temporary; enduring; abiding | Detailed Reasoning - ‘Commercial’ parking facility: 34. The term ‘commercial’ is not defined in the FBTAA 1986 . The Explanatory Memorandum stated the word ‘commercial’ has its normal dictionary meaning. 35. As an example of a parking facility that would not be regarded as a commercial facility, it stated that 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 for that facility) would not be commercial. 36. This example was also provided in paragraph 81 of TR 96/26 which provided the following examples of a parking facility that would not be regarded as being commercial: 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 value), e.g., an all-day parking fee of less than $2.00 is likely to be a nominal fee. 37. The Macquarie online Dictionary defines ‘commercial’ as follows: adjective ● of, or of the nature of, commerce. ● engaged in commerce. ● capable of returning a profit: a commercial project. ● capable of being sold in great numbers: invention is commercial | Detailed Reasoning - Ordinary course of business: 38. In considering whether these spaces are provided in the ordinary course of business, the definition of business operations in subsection 136(1) FBTAA 1986 provides that business operations in relation to a government body or a non-profit company includes any operations or activities carried out by that body or company. | Detailed Reasoning - Members of the public: 39. The circumstances in which a parking facility will be considered to provide car spaces to members of the public was considered by the Full Federal Court in Federal Commissioner of Taxation v Qantas Airways Ltd [2014] FCAFC 168; 2014 ATC 20-477 (‘ Qantas ’ ) . 40. In its submission to the court, Qantas Airways submitted that the Explanatory Memorandum to Taxation Laws Amendment (Car Parking) Bill 1992 said nothing about the meaning of the word ‘public’. The submission was that this absence of a meaning for ‘public’ supported its contention that it should be construed in other than perhaps its ordinary meaning. 41. In Federal Commissioner of Taxation v Qantas Airways Ltd [2014] FCAFC 168, the Court held that the word ‘public’ should be given its ordinary meaning. Further, paragraph 12 stated: ¶12 … and that there was no rationale for imputing into the definition a further requirement that a commercial parking station be one that employees of the employer commuting to work by car would or could in fact use… 42. The Macquarie online Dictionary defines ‘public’ to mean: …done, made, acting, etc., for the people or community as a whole; open to all the people; maintained at the public expense, under public control, and open to the public generally; of or provided by the state rather than an independent, commercial company… 43. Paragraph 81 of TR 96/26 provides the following examples of parking arrangements that are not considered to be made available to members of the public: ● car parking spaces leased to a tenant by a property developer as part of an overall lease arrangement for business premises; ● parking provided by a business for its own employees and those of a nearby business, but to no other person; ● 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. | Detailed Reasoning - All day parking: 44. Subsection 136(1) FBTAA 1986 defines ‘all day parking’ to mean: In relation to a particular day, … parking of a single car for a continuous period of 6 hours or more during a daylight period on that day. 45. Subsection 136(1) FBTAA 1986 defines ‘daylight period’ to mean: In relation to a day, … so much of a period on that day as occurs: (a) after 7:00 a.m. on that day; and (b) before 7:00 p.m. on that day. 46. The Explanatory Memorandum provides the following example of a parking arrangement that will not constitute a commercial parking station as it does not provide ‘all day parking’: Some car parking facilities have a primary purpose to provide short-term shopper parking. To discourage all-day parking, the operators of these facilities charge penalty rates for all-day parking. These rates are significantly greater than the rates that would be charged by a similar facility which encouraged all-day parking. For the purposes of these provisions, short-term shopper parking facilities using penalty rates for all-day parking will not be treated as a “commercial parking station”. 47. This example is also included in paragraph 81 of TR 96/26 . | Detailed Reasoning - Parking facilities on a public street, road, lane, thoroughfare or footpath: 48. A ‘commercial parking station’ is defined in subsection 136(1) FBTAA 1986 and does not include any parking facility on a ‘public’ street, road, lane, thoroughfare or footpath. 49. The Macquarie online Dictionary defines ‘public’ to mean: …done, made, acting, etc., for the people or community as a whole; open to all the people; maintained at the public expense, under public control, and open to the public generally; of or provided by the state rather than an independent, commercial company… | Detailed Reasoning - ONE KILOMETRE RADIUS OF PREMISES: 50. For the purposes of Division 10A FBTAA 1986 , a commercial parking station is taken to be located within a one kilometre radius of a particular business premises or particular associated premises if, and only if, a car entrance to the commercial parking station is situated less than one kilometre, by the shortest direct practicable route, by foot or car, from a car entrance to those premises. | Detailed Reasoning - TAXABLE VALUE OF CAR PARKING FRINGE BENEFITS – “COMMERCIAL PARKING STATION” METHOD: 51. Section 39C FBTAA 1986 states that the taxable value, in relation to an FBT year, of a car parking fringe benefit provided on a day in the FBT year in connection with one or more premises is equal to: (a) If, on that day, there is only one commercial parking station located within a 1 km radius of any of those premises – the lowest fee charged by the operator of the parking station in the ordinary course of business to members of the public for all-day parking on that day; or (b) If, on that day, there are 2 or more commercial parking stations located within a 1 km radius of any of those premises – the lowest fee charged by any of the operators of those parking stations in the ordinary course of business to members of the public for all-day parking on that day Reduced by the amount of the recipient’s contribution. | Detailed Reasoning - FEES CHARGED BY COMMERCIAL PARKING STATIONS: 52. Subsection 39E(1) FBTAA 1986 gives the daily rate equivalent for periodic parking arrangements as: If the operator of a 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, the operator is taken to charge a fee for all day parking on a particular day during the period equal to the amount worked out using the formula: where: ‘total fee’ is the total fee charged by the operator in respect of all day parking on days in that period; ‘business days in period’ means the number of business days in that period. 53. The Explanatory Memorandum to Taxation Laws Amendment (Car Parking) Bill 1992 also provides this formula for converting longer term car parking rates into daily rate equivalents. 54. The Explanatory Memorandum to Taxation Laws Amendment (FBT Cost of Compliance) Bill 1995 also provides this formula for converting longer term car parking rates into daily rate equivalents. 55. Paragraph 40 of TR 96/26 also provides this formula for converting longer term car parking rates into daily rate equivalents. 56. ATO Interpretative Decision ATO ID 2006/93 states that subsection 39E FBTAA provides a daily rate equivalent where there is a periodic parking arrangement. | Detailed Reasoning - CAR PARKING THRESHOLD: 57. For the year ending 31 March 2018, Tax Determination TD 2017/14 provides that the car parking threshold is $8.66. | Detailed Reasoning - COMMERCIAL PARKING STATION: 58. Pursuant to the definition of a ‘commercial parking station’ in subsection 136(1) FBTAA 1986 , a determination needs to be made whether the car parking facilities at: i. Car Park B, ii. Car Park C, and iii. Car Park D are considered to be ‘commercial parking stations’. | Detailed Reasoning - ‘Permanent’ car parking facility: 59. In applying the definition and examples as listed: i. Car Park B ii. Car Park C iii. Car Park D are considered to be permanent as they are purpose-built, established and are operating on an ongoing basis into the foreseeable future. | Detailed Reasoning - ‘Commercial’ car parking facility: 60. In applying the definition and examples as listed: i. Car Park B ii. Car Park C iii. Car Park D are considered to be commercial as they are run with a view to making a profit as the fees charged cannot be considered to be nominal and are reflective of the fees that would be charged by a car parking facility that operates on a commercial basis. | Detailed Reasoning - Ordinary course of business: 61. In applying the definition as listed, it is accepted that: i. Car Park B ii. Car Park C iii. Car Park D are offered as part of the day to day operations or activities carried out by the car park operators. | Detailed Reasoning - Members of the public: 62. In applying the definition, examples and cases as listed: i. Car Park B ii. Car Park C iii. Car Park D are available to be used by the public at large. | Detailed Reasoning - All day parking: 63. In applying the definition and examples as listed: i. Car Park B ii. Car Park C are considered to provide all day parking as they offer car parking facilities on a 24-hour, 7-day basis, and i. Car Park D provides parking for greater than between 7am – 7pm, and therefore satisfies the legislative definition of all day parking. | Detailed Reasoning - Parking facilities on a public street, road, lane, thoroughfare or footpath: 64. In applying the definitions as listed: i. Car Park B ii. Car Park C iii. Car Park D are considered to not be on a public street, road, lane, thoroughfare or footpath. | Detailed Reasoning - ONE KILOMETRE RADIUS OF PREMISES: 65. In applying the definition as listed: i. Car Park B ii. Car Park C iii. Car Park D are considered to be within a one kilometre radius of the business premises at which Company X employees park their car during their hours of employment. | Detailed Reasoning - FEE CHARGED BY COMMERCIAL PARKING STATIONS: 66. In applying the definitions, formula and examples as listed: i. Car Park B ii. Car Park C iii. Car Park D are able to utilise the daily rate equivalent of their periodic parking arrangements, derived from the rates provided for their hourly, daily, weekly and monthly parking fees. | Detailed Reasoning - CONCLUSION FOR QUESTIONS 2a, 2b and 4: 67. The car parks located at: i. Car Park B ii. Car Park C iii. Car Park D are ‘commercial parking stations’ as they fit within the definition of this term within subsection 136(1) of the FBTAA 1986 . | Detailed Reasoning - DETAILED REASONING: 68. For the purpose of this ruling, a determination is to be made regarding the monetary amount which can be used as the lowest fee charged, with respect to the provision of car parking benefits to employees of Company X. | Detailed Reasoning - Car Park A: 69. In determining the fees charged by Car Park A for all-day parking under section 39C FBTAA 1986 , and by extension for the purposes of sections 39A(1)(a)(iii), 39E(1) and 39DA FBTAA 1986 (where relevant), the fee charged for Car Park A’s daily rate for Early Bird Parking of $xx is able to be used. 70. Company X is able to value the car parking benefit of employees at the amount of $xx, which is the lowest fee charged by the operator of the parking station in the ordinary course of business to members of the public for all day parking at Car Park A. | Detailed Reasoning - Car Park B: 71. In determining the fees charged by Car Park B for all-day parking under section 39C FBTAA 1986 , and by extension for the purposes of sections 39A(1)(a)(iii), 39E(1) and 39DA FBTAA 1986 (where relevant), the fees charged for Car Park B’s monthly rate of $zz is able to be used, when converted to a daily rate of $xx. This figure is derived from the daily rate equivalent calculation using the monthly rate of $zz, divided by the number of business days in the period, being 21 days. 72. Company X is able to value the car parking benefit of employees at the amount of $xx, which is the daily rate equivalent of all day parking at Car Park B. | Detailed Reasoning - Car Park D: 73. In determining the fees charged by Car Park D for all-day parking under section 39C FBTAA 1986 , and by extension for the purposes of sections 39A(1)(a)(iii), 39E(1) and 39DA FBTAA 1986 (where relevant), the fees charged for Car Park D’s Early Bird Parking daily rate of $x is able to be used. 74. Company X is able to value the car parking benefit of employees at the amount of $x, which is the lowest fee charged by the operator of the parking station in the ordinary course of business to members of the public for all day parking at Car Park D. | Detailed Reasoning - Car Park E: 75. In determining the fees charged by Car Park D for all-day parking under section 39C FBTAA 1986 , and by extension for the purposes of sections 39A(1)(a)(iii), 39E(1) and 39DA FBTAA 1986 (where relevant), the fees charged for Car Park E’s weekly rate of $yy is able to be used, when converted to a daily rate of $x. This figure is derived from the daily rate equivalent calculation using the weekly rate of $yy, divided by the number of business days in the period, being 5 days. 76. Company X is able to value the car parking benefit of employees at the amount of $x, which is the daily rate equivalent of all day parking at Car Park E.