Private ruling: Car Parking Fringe Benefits Tax
Published: May 2015
Ruling period: 1 April 2014 to 31 March 2015
Date scheme commenced: 1 April 2014

Ruling: Q1: Can a commercial car parking station's rate for 0-6 hours be used as the lowest fee in determining the taxable value of a car parking fringe benefit under section 39C of the Fringe Benefits Tax Assessment Act 1986 ? | A1: Yes.

Relevant facts and circumstances: The employer provides a car parking facility to its employees. The employer uses the commercial car parking station method at section 39C of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) to calculate the taxable value of car parking fringe benefits provided to its employees. The commercial parking station has a Multi-Level car park that is located within 1 km of the employer's parking facility and operates 24 hours a day. The commercial parking station charges a parking fee at its Multi-Level car park on a tiered basis according to the number of hours the car is parked: as follows Off Peak Rates • 0-6 hours • 6-8 hours • 8-24 hours • Daily Maximum A flat rate is charged under certain circumstances as follows: • Friday & Saturday between 11am to midnight • Peak Event Days, Public Holiday Eves and Public Holidays • Lost Ticket The employer has advised the car parking facilities it provides to an employee are as follows: • The car is parked at premises that are owned or leased by or otherwise under the control of the provider. • A commercial car parking station is located within 1 km of the employer-provided parking facility. • The lowest fee charged in the ordinary course of business to members of the public for all-day parking by a commercial car parking station exceeds the car parking threshold figure. • The car is parked for a total of more than 4 hours between the hours of 7 am and 7 pm. • The car is owned by, leased to, or otherwise under the control of, an employee or associate, or it is provided by the employer or associate of the employer. • The parking is provided in respect of the employee's employment. • On that day, the employee has a primary place of employment. • The car is used by the employee to travel between place of residence and primary place of employment at least once that day. • The commercial parking station's Multi-Level car park is within 1 km of the employer's parking facility. The employer has advised that the commercial parking station's Multi-Level car park does not fall under one of the following categories: • A car parking facility, with a primary purpose other than providing all-day parking that usually charges penalty rates significantly higher than the rates chargeable for all-day parking at commercial all-day parking facilities. • A car park that is not run with a view to making a profit or which charges a nominal fee (usually significantly lower rate than the current market value). • A car park 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. • A car parking facility provided by a sporting venue to persons associated with the venue where: • parking facilities are usually available after 5 pm to coincide with night events • parking is only available for a specific event and the event is a daytime event • 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. • A car park 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. • A car parking facility 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 employer has confirmed the following in relation to the commercial parking station's Multi-Level car park: • It is a permanent facility as it is intended to function indefinitely. • It provides all-day parking that is available in the ordinary course of business to members of the public. • It charges for a fee for parking. • It is run with a view to making a profit. • It is not on a public street, road, lane thoroughfare or footpath.

Relevant legislative provisions: Fringe Benefits Tax Assessment Act 1986 - Division 10A | Fringe Benefits Tax Assessment Act 1986 - Section 39A | Fringe Benefits Tax Assessment Act 1986 - Section 39C | Fringe Benefits Tax Assessment Act 1986 - Subsection 136(1)

Reasons for decision: Summary: The term 'benefit' in subsection 136(1) of the FBTAA includes any right (including a right in relation to, and an interest in, real or personal property), privilege, service or facility and, without limiting the generality of the foregoing includes a right, benefit, privilege, service or facility that is, or is to be, provided under: (a) an arrangement for or in relation to: (i) the performance of work (including work of a professional nature), whether with or without the provision of property; (ii) the provision of, or of the use of facilities for, entertainment, recreation or instruction; or (iii) the conferring of rights, benefits or privileges for which remuneration is payable in the form of a royalty, tribute, levy or similar exaction; (b) a contract of insurance; or (c) an arrangement for or in relation to the lending of money. The Commissioner is satisfied that the car parking facilities provided by the employer to its employees comes within the definition of a benefit in subsection 136(1) of the FBTAA. Section 39A of the FBTAA lists the criteria which must be met before a 'car parking fringe benefit' will arise. The aforementioned criteria are listed at paragraph 9 of Taxation Ruling TR 96/26 Fringe benefits tax: car parking fringe benefits as follows: a) a car is parked at premises that are owned or leased by or otherwise under the control of the provider (usually the employer); b) a commercial parking station is located within 1 km of the employer-provided parking facility; c) the lowest fee charged in the ordinary course of business, to members of the public, for all-day parking by a commercial parking station, exceeds the car parking threshold figure; d) the car is parked for a total of more than 4 hours between the hours of 7 am and 7 pm on the day. The 4 hour period need not be continuous, but may be made up of several parking periods; e) the car is owned by, leased to, or otherwise under the control of, an employee or associate, or it is provided by the employer or associate of the employer; f) the parking is provided in respect of the employee's employment; g) on that day, the employee has a primary place of employment; h) the car is used by the employee to travel between place of residence and primary place of employment at least once on that day; and i) the day is on or after 1 July 1993. It is accepted that the above criteria are met in relation to the parking facilities provided by the employer to its employees. Therefore, the parking facilities provided by the employer to its employees are car parking fringe benefits. There are three methods used to work out the taxable value of a car parking fringe benefit. The employer uses the 'commercial parking station method' at section 39C of the FBTAA to calculate the taxable value of car parking fringe benefits it provides to its employees. Section 39C of the FBTAA states: Subject to this Part, 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 1km 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 1km radius of any of these 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 recipients contribution. [emphasis added] The commercial car parking station's Multi-Level car park is located within a 1 km radius of the employer's car parking facility. However, in order to determine whether the commercial car parking station's Multi- Level car park is able to be used as the lowest fee charged for all-day parking for the purposes of section 39C of the FBTAA, it must be a 'commercial parking station'. Subsection 136(1) of the FBTAA defines a 'commercial parking station' to mean: … 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. Paragraph 81 of Taxation Ruling TR 96/26 states that the following parking arrangements are not regarded 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. It is accepted that the Multi-Level car park does not fall within any of the above categories and that it satisfies the definition of a commercial car parking station at subsection 136(1) of the FBTAA. As discussed above, the taxable value of a car parking fringe benefit under section 39C is the lowest fee of a commercial car parking station (located within 1 km of the parking facility) for all-day parking to members of the public. 'All-day parking' is defined in subsection 136(1) of the FBTAA as: … parking in a single car for a continuous period of 6 hours or more during a daylight period on that day. The commercial car parking station charges a parking fee at its Multi-Level car park for 0-6 hours of $X. The commercial car parking station operates 24 hours a day and there is no time restriction on when a person can enter the car park. As such, a car can be parked for 6 hours during a daylight period at the commercial car parking station's Multi-Level car park. Therefore, commercial car parking station's Multi-Level car parking rate for 0-6 hours can be used as the lowest fee in calculating the taxable value of a car parking fringe benefit under section 39C of the FBTAA.