Article

FBT Q&A – Can a car parking fringe benefit arise where the use of a car does not give rise to an FBT liability?

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Question

If a parking space on employer premises is being utilised by a car in a situation where the car does not give rise to an FBT liability does a car parking fringe benefit arise?

Answer

In last month’s Tax Update, we examined whether a car parking fringe benefit could arise where the vehicle that used the parking space was not a ‘car’ as defined for FBT purposes. For example, a greater than 1 tonne load carrying capacity vehicle or a vehicle designed to carry 9 or more people is not within the definition of a ‘car’ for FBT purposes and therefore a car parking fringe benefit cannot arise.

Similarly, we have previously covered (April 2017) the issue of whether employer-provided car parking space for a motorcycle can give rise to a car parking fringe benefit. Again, as a motorcycle is excluded from the definition of a ‘car’, a car parking fringe benefit does not arise.

We have received numerous requests for clarification as to the FBT treatment of employer-provided car parking for vehicles that are cars for FBT purposes, but where the nature of and use of the vehicle is such that no FBT liability arises in relation to the vehicle. The queries have related to employer-provided car parking for vehicles such as utes, panel vans and other less than one tonne load carrying vehicles that are not principally designed for carrying passengers. As readers will be aware, provided private use of such vehicles is limited to home to work travel and other minor, infrequent and irregular private use; no FBT liability will arise in relation to the vehicle.

The short answer to the question is that employer-provided parking for such vehicles ‘could’ give rise to a car parking fringe benefit.

Section 39A of the FBT Act sets out the conditions which must be satisfied before the provision of car parking facilities will be taken to constitute a car parking benefit. All of the s. 39A conditions must be satisfied before a benefit will arise.

One of the s. 39A conditions is that the car is parked for a period that exceeds 4 hours during a daylight period on a given day.

The nature and use of vehicles for which no FBT liability may arise is such that use of the vehicle during the working day for business purposes will often be such that it is not parked at the employer premises for a period that exceeds the stipulated 4 hours.

However, where the 4 hour parking condition is exceeded, the outcome may change.

Despite a vehicle’s design/usage not giving rise to an FBT liability under the car fringe benefits rules, if the vehicle is a car for FBT purposes and the ‘exceeds 4 hours parking’ condition is satisfied, prima facie a car parking fringe benefit arises on that day (subject of course to all other s. 39A conditions being satisfied).

The small business car parking and/or minor benefit exemption may be available, however, this will need to be considered on a case by case basis.

Disclaimer: This article is based upon information available as at the time of publishing and may be subject to change.