We have previously covered recent changes to the ATO position regarding FBT and car parking fringe benefits – refer our July 2021 TaxEd article, “ATO finalises car parking fringe benefit ruling – what’s changed“?
The inclusion of shopping centre car parks within the concept of what is a commercial car parking station will bring many employers into the car parking fringe benefit net for the first time. As we move towards the 1 April 2022 commencement date for this key change we are seeing a few common issues emerge.
In this article we explore 2 key issues that members are raising where they are impacted by the change in approach to shopping centre car parks.
What is the lowest daily rate charge by shopping centre car park?
Where a commercial car parking station is located within the requisite 1km of the employer provided car parking, it is necessary to determine whether the lowest fee charged by it in the ordinary course of business to members of the public for all-day car parking exceeds the car parking threshold. A car parking fringe benefit liability will potentially only exist where this situation arises.
To start with, the car parking threshold for 2021/22 is $9.25.
‘All-day parking’ means parking of a single car for a continuous period of 6 hours or more on a day during a daylight period.
When assessing the threshold, employers need to ascertain if the lowest fee (and not any fee) charged by a commercial car parking station exceeds the threshold. For example, a car parking station may charge $10 for all-day parking (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.
The all day rate at a shopping centre car park will routinely be set at a premium level ($30+) and be above the car parking threshold.
As catered for in s. 39E of the FBTAA, the ATO confirm (in draft Chapter 16 of the ‘Fringe Benefits Tax – a guide for empl0yers’) 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 (in the relevant state/territory).
Employers should be certain that they are using the lowest daily rate charged by a shopping centre/commercial car parking station when considering whether the threshold is exceeded. In this regard the ordinary daily rates should not be relied upon to make decisions without checking whether any periodical rates exist that may produce a lower all day parking rate (and hopefully one below the threshold).
Formal enquiries should be made as to the existence of periodical rates and any terms and conditions applicable. As noted above the periodical rate must be divided by the number of business days in the period.
Valuing car parking fringe benefits
Employers that face a potential car parking liability as a result of the change in ATO position to should consider the ‘market value’ basis when determining which taxable value method to use for car parking benefits. More information on this method is available at draft chapter 16.2.5.2 of draft Chapter 16 of the ‘Fringe Benefits Tax – a guide for empl0yers’.)
This is particularly the case where, despite the existence of a shopping centre/ commercial car park within a 1km radius that charges more than the threshold, there is ample free street or other free parking near the employer provided parking.