Published: June 2015
Ruling period: Year ending 31 March 2015
Date scheme commenced: 1 April 2014

Ruling: Q1: Will a car parking benefit as defined in subsection 39A(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) arise when an employee parks his or her car in the staff car park for at least four hours? | A1: Yes | Q2: If the answer to 1 is yes, will the car parking benefit be included in the calculation of the employer's aggregate non-exempt amount? | A2: No | Q3: If the answer to question 1 is no will the benefit that arises from the parking be included in the calculation of the employer's aggregate non-exempt amount? | A3: Not necessary to answer as the answer to question 1 is yes.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. The employer is a public hospital. The employer provides car parking facilities to its employees in a parking facility located at the business premises. There are a number of car parking facilities located within a 1km radius of the parking facility used by the employees that are open to the public - car parks A, B and C. Car park A is a multi-storey car park located on the employer's business premises and is operated by the employer. The carpark charges an hourly rate and is capped at $ for all day parking. Car park B is a multi-storey located next to the main shopping centre. It has as an early bird daily rate available to anyone parking on various levels before 11 am). Otherwise, the first two hours are free, after which a hourly rate applies with a daily cap of $. Car park C is a single level sealed car park with boom gates located across the road from the business premises. It charges an hourly rate for the first hour and $ per hour afterwards and is capped at $ for all day parking. The cars that are parked in the employer's parking facility are either held by the employees or salary packaged by the employees. The cars are parked near the employees' usual place of employment. The cars are used by the employees to travel to and from work and are parked for more than four hours between the hours of 7am and 7pm. The employees will enter into an effective salary sacrifice arrangement to pay for the cost of the car parking from pre-tax salary. The fees charged will be based on the days the car parking facilities are used.

Relevant legislative provisions: Fringe Benefits Tax Assessment Act 1986 section 39, | Fringe Benefits Tax Assessment Act 1986 section 39A, | Fringe Benefits Tax Assessment Act 1986 section 58G and | Fringe Benefits Tax Assessment Act 1986 section 5B.

Reasons for decision: Summary: 1. Will a car parking benefit as defined in subsection 39A(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) arise when an employee parks his or her car in the staff car park for at least four hours? Subsection 39A(1) of the FBTAA provides that a car parking benefit will arise when the specified conditions are met. Relevantly, paragraph 39A(1)(a) provides the following conditions: (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; For the purpose of this ruling it is assumed the car parking is provided on the employers business premises and the conditions in paragraphs 39A(1)(b) to (h) are met. Therefore, to determine whether a car parking benefit will arise when an employee parks his or her car in the staff carpark for at least four hours it is necessary to consider the following questions: (a) Is at least one of the three identified parking facilities a commercial parking station? (b) Does the identified commercial parking station charge more than the car parking threshold for all-day parking? | Detailed Reasoning - (a) Is at least one of the three identified parking facilities a commercial parking station?: A commercial parking station is defined in subsection 136(1) of the FBTAA as: 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. In considering the application of the definition of commercial parking station it is necessary to determine whether the 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 for 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 for considering each of these issues is provided in Taxation Ruling TR 96/26 Fringe benefits tax: car parking fringe benefits . | Detailed Reasoning - Are the parking facilities a permanent parking facility?: The Explanatory Memorandum to Taxation Laws Amendment (Car Parking) Bill 1992 (Explanatory Memorandum) 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. 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; and provided that, when there is no such event, the parking facilities are not usually available to members of the public; The Macquarie on line dictionary defines permanent to mean: 1. lasting or intended to last indefinitely; remaining unchanged; not temporary; enduring; abiding In applying this definition and the examples it is accepted that each of the parking facilities are permanent as they are established car parks with the relevant infrastructure for collecting fees that are operated on an ongoing basis into the foreseeable future. | Detailed Reasoning - Are the parking facilities commercial facilities?: The term 'commercial' is not defined in the FBTAA. The Explanatory Memorandum to Taxation Laws Amendment (Car Parking) Bill 1992 (Explanatory Memorandum) stated the word 'commercial' has its normal dictionary meaning. 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 value for that facility) would not be commercial. This example was also provided in paragraph 81 of TR 96/26 which provided the following example of a parking facility that would not be regarded as being commercial: 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; As is relevant, commercial is defined in the Macquarie on-line 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? … In applying this definition and the examples it is accepted that each of the parking facilities are commercial 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 is operated on a commercial basis. Do the parking facilities provide car parking spaces in the ordinary course of business to members of the public for all-day parking on payment of a fee? Each of the parking facilities provide car parking spaces that can be used on payment of a fee. Are the car parking spaces provided in the ordinary course of business? In considering whether these spaces are provided in the ordinary course of business, the definition of business operations in subsection 136(1) 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. In applying this definition it is accepted that the car parking spaces are offered as part of the day to day operations or activities carried out by the car park operators. Are the car parking spaces provided to members of the public? 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 FC of T v Qantas Airways Ltd [2014] FCAFC 168; 2014 ATC 20-477 (Qantas). In its submission to the Court, Qantas submitted the meaning of public was to be understood as being the public including persons commuting between home and work and not some broader public constituted by anyone using an airport parking station, such that the airport parking stations should be disregarded because employees did not use them. The Court held that the word public should be given its ordinary meaning and that there is no rationale for imputing into the definition a requirement that a commercial parking station be one that employees of the employer commuting to work by car would or could in fact use. The ordinary meaning of public is discussed in paragraphs 19 to 21 of Taxation Ruling TR 2000/10 Income tax: public libraries, public museums and public art galleries . At paragraphs 19 and 20 TR 2000/10 refers to the decision In re Income Tax Acts ( No 1 ) [1930] VLR 211. Paragraphs 19 and 20 of TR 2000/10 state: 19. In deciding whether other institutions make their collections available to the public, some guidance is given by the principles In re Income Tax Acts ( No 1 ) [1930] VLR 211. This case considered whether a benevolent asylum was 'public'. The asylum had been founded and controlled by Freemasons for the benefit of Freemasons and their wives and widows. The Court held that the institution was not carried on for the benefit of the public. The word 'public' in relation to institutions connotes 'the carrying on of the institution for the benefit of the public generally, or at least of a definitely ascertainable section of the public, where the benefit of the institution is available without discrimination to every member of the public or of that section of it' (per Lowe J at [1930] VLR 222). 20. By example, Lowe J went on to suggest that a club, literary society or trade union would not be construed as public. He distinguished these associations by the power they had to admit or exclude members of the public. The provision of rules and regulations, which accorded some arbitrary test before membership, distinguished these bodies. Public character was missing due to selective membership. Where admission to membership of a body or inclusion in a class depends on the consent of members or of a committee of members, it is not provided for 'a section of the public'. Such associations exist for the benefit of their members, not the public or a section of the public. 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 agreement 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. In applying this discussion, it is accepted that each of the parking facilities are available to be used by the public at large. Are spaces available for all-day parking? Subsection 136(1) defines all-day parking to mean: … parking of a single car for a continuous period of 6 hours or more during a daylight period on that day. A daylight period is so much of a period as occurs after 7 a.m. and before 7 p.m. The Explanatory Memorandum to Taxation Laws Amendment (Car Parking) Bill 1992 (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". This example is also included in paragraph 81 of TR 96/26. In applying the definition and example, all of the parking facilities provide all-day parking to members of the public as they all have spaces that are available for anyone to park for at least six hours between 7 a.m. and 7 p.m. and there are no factors that indicate that all-day parking is discouraged. | Detailed Reasoning - Are the parking facilities on a public street, road, lane, thoroughfare or footpath?: The parking facilities are not a parking facility on a public street, road, lane, thoroughfare or footpath. | Detailed Reasoning - Conclusion: Each of the three parking facilities are a commercial parking station. | Detailed Reasoning - (b) Does the identified commercial parking station charge more than the car parking threshold for all-day parking?: The car parking threshold for the year ended 31 March 2015 is less than $10.00. The lowest fee charged for all-day parking in carparks A and C is above this amount. | Detailed Reasoning - Conclusion: A car parking benefit as defined in subsection 39A(1) will arise when an employee parks his or her car in the staff car park for at least four hours as there are two commercial parking stations located within a one kilometre radius of the premises on which the car is parked that charge more than the car parking threshold for all-day parking. | Detailed Reasoning - 2. If the answer to 1 is yes, will the car parking benefit be included in the calculation of the employer's aggregate non-exempt amount?: As the employer is a public hospital the car parking benefit will be an exempt benefit under subsection 57A(3) of the FBTAA. However, the employer will be liable to pay fringe benefits tax on the employer's aggregate non-exempt amount. The method for calculating the employers aggregate non-exempt amount is provided in subsections 5B(1E) to 5B(1L) of the FBTAA. Fringe benefits that are car parking fringe benefits are excluded from this calculation by step 1 of the method statement in subsection 5B(1L). Therefore, the car parking benefits that arise when an employee parks his or her car in the staff car park for at least four hours will not be included in the calculation of the employer's aggregate non-exempt amount.