Private ruling: Fringe Benefits Tax
Published: April 2014
Ruling period: 1 April 2013 to 31 March 2014
Date scheme commenced: 1 April 2013

Ruling: Q1: Can an early bird parking rate offered by a commercial parking station via its online booking service 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 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. In respect of the car parking facilities provided by the employer, the employer advises the following: • The car is parked at premises that are owned or leased by or otherwise under the control of the provider. • A commercial parking station is located within 1km of the employer-provided parking facility. • The lowest fee charged in the ordinary course of business to members of the pubic for all-day parking by a commercial parking station exceeds the car parking threshold figure of $8.03. • 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 referred to in the application is within 1 km of the employer's parking facility. The commercial parking station referred to in the application is a commercial car parking operator. The commercial parking station referred to in the application offers an online booking service at a range of car parks where members of the public can secure a parking spot at a cheaper rate than the normal parking rate. To book parking online members of the public select a car park that offers an online booking service and select the product that suits their needs. The range of products available includes early bird parking. The online early bird parking rate is available from Monday to Friday for 1 entry and 1 exit only. The online early bird parking rate is less than the normal early bird rate. Entry to the car park must be made at the pre-booked entry time and exit at the pre-booked exit time. There is a 30 minute grace period prior to the entry time to allow for unforeseen circumstances. Bookings for online early bird parking are paid for in advance with a credit card and upon completion of the booking a confirmation email is sent that includes an access PIN number. The PIN number is used for entry and exit to the nominated car park via touch screens located in the clearly marked pre-booking lanes at the car park entry. Upon entry patrons can park in any available bay in the car park except those bays marked with a reserved sign, disabled parking bays or loading docks. The employer has advised that the commercial parking station referred to in the application 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 referred to in the application: • 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 Division 10A | Fringe Benefits Tax Assessment Act 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 (TR 96/26) 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 parking station referred to in the application is located within a 1 km radius of the employer's car parking facility. However, in order to determine whether the commercial parking station referred to in the application 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 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 commercial parking station referred to in the application does not fall within any of the above categories and that it satisfies the definition of a commercial parking station at subsection 136(1) of the FBTAA. As discussed above, the taxable value of a car parking fringe benefit under section 39C of the FBTAA is the lowest fee charged by the operator of a commercial parking station (located within 1km 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. In respect of early bird fees, paragraph 43 of TR 96/26 states that the lowest all-day fee may include a fee which a commercial parking station charges for bona fide early bird parking or car 'pooling' arrangements where a reasonable number of parking spaces are set aside for those purposes. The commercial parking station referred to in the application offers an online booking service where members of the public can secure a parking spot at a cheaper rate than the normal parking rate. In particular, the commercial parking station referred to in the application offers online early bird parking rates from Monday to Friday. It is accepted that the commercial parking station referred to in the application sets aside a reasonable number of parking spaces for early bird parking booked online. The conditions of the online early bird parking arrangement are that: • The booking is made online in advance. • The booking is available for Monday to Friday only. • The booking only allows 1 entry and 1 exit. • Entry to the car park must be made at the pre-booked time and exit at the pre-booked time. However, a 30 minute grace period is allowed. • Patrons are able to park in any bay except reserved and disabled bays and loading docks. It is considered that the online early bird parking arrangement is a bona fide early bird arrangement within the meaning of paragraph 43 of TR 96/26. Therefore, the early bird rate offered by the commercial parking station referred to in the application via its online booking service can be used as the lowest fee in calculating the taxable value of a car parking fringe benefit under section 39C of the FBTAA.