FBT – Car Parking: is it really a commercial car parking station that is above the threshold?

FBT, Public
Author: Steve Griffiths
5 Apr 2017

We remind TaxEd member employers of two key conditions of the car parking fringe benefit rules that must be satisfied prior to there being any FBT liability.

These issues are particularly important for TaxEd employers providing parking outside major CBD areas where it can be expected the car parking FBT criteria are more likely to be met.

The two issues are set out below.

Issue 1

Where a commercial car parking station is located within the requisite 1km from the employer provided car parking – does the lowest fee charged in the ordinary course of business to members of the public for all day car parking by the commercial parking station exceed the car parking threshold?

To start with, the car parking threshold for 2016/17 is $8.48 (update: $8.66 for 2017/2018).

‘All day parking’ means parking of a single car for a continuous period of more than 6 hours on a day during a daylight period.

When assessing the threshold employers need to ascertain if the lowest fee (and not any fee) charged exceeds the threshold.

For example, a car parking station may charge $10 for all day parking (e.g. in before 10am – leave after 4pm); however it may have other periodical parking arrangements (monthly or annual parking fees) that, when converted to a daily basis, results in the daily fee being below the threshold.

As catered for in s. 39E of the FBT Act, the ATO in TR 96/26 (at paragraph 40) confirm (in the context of valuing car parking fringe benefits) that where periodical parking arrangements are available (i.e. monthly or yearly) it is possible to derive the daily rate by reference to the total fee charged for the period divided by the number of business days in the period. It should be noted that the number of business days in the period excludes Saturdays and Sundays and public holidays. Employers should also be sure, in a full year parking scenario, not to assume the denominator is 228 days. The 228 day rule is used when determining how many car park benefits are provided using the ‘statutory formula method’.

Employers should therefore be certain that they are using the lowest daily rate charged by a commercial car parking station when considering whether the threshold is exceeded.

Issue 2

Is it a commercial parking station?

The FBT law prescribes that a commercial car parking station includes a permanent car parking facility where all or any of the car parking spaces are available in the ordinary course of business to members of the public for all day parking.

The ATO (at paragraph 81 of TR 96/26) confirm that certain arrangements do not constitute commercial car parking stations.

Of most relevance to employers outside of major CBD areas is the prospect that a car parking station, despite having a lowest all day parking fee above the threshold, is excluded based on paragraph 81.

Paragraph 81 states that a car parking facility that has a primary purpose other than providing all day parking may not be a commercial car parking facility.

The concession at paragraph 81 has been the subject of many favourable rulings by taxpayers where it is established the primary purpose of the car park is other than all day parking. For example car parking facilities that exist primarily to provide free or low cost short term parking, for example shopping centres, hospitals etc. may not be commercial car parking stations.

Paragraph 81 contains a range of other car parking scenarios that the ATO accepts are not commercial car parking stations. Tax Ed members that are within the car parking fringe benefits rules due to a non-standard car parking facility are encouraged to have a read of the ruling to see whether there is any relief available.

This article provides a general summary of the subject covered as at the date it is published. It cannot be relied upon in relation to any specific instance. TaxEd Pty Ltd and any person connected with its production disclaim any liability in connection with any use. It is not intended to be, nor should it be relied upon as, a substitute for professional advice.


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