“Just when I thought I was out……they pull me back in!” – Godfather III.
In our July 2021 Tax Update we advised that the ATO had appealed the Federal Court Decision in Virgin Australia Airlines Pty Ltd v FCT [2021] FCA 523.
Virgin contracted with owners of car parks adjacent to the Sydney, Brisbane and Perth airports to procure parking spaces for flight and cabin crew.
The initial Federal Court decision concluded no car parking fringe benefits arose to the flight and cabin crew because:
- where they operated only one aircraft on a particular day, their “primary place of employment” on that day was that aircraft; and
- if they operated more than one aircraft on a particular day, they had no “primary place of employment” on that day.
The ATO appealed this decision and the Full Federal Court has allowed the ATO’s appeal!!
The Full Court’s finding was that the flight and cabin crew’s home base airport was their “primary place of employment” for the purposes of the car parking rules and therefore the employees were parked within the vicinity of that primary place of employment.
The Full Federal Court’s decision was reached after honing in on the relevant enterprise agreements covering the flight and cabin crew. Critically, those agreements, allocated a “home base” for flight and cabin crew staff and numerous rights and obligations were defined by reference to the home base, including rosters, rest periods, allowances and car parking entitlements.
Unfortunately, the car parks relating to this category of employee were adjacent to the relevant airports in question as opposed to being some distance away.
In an earlier Full Federal Court decision involving a member of the Virgin Airlines group, a car park located a distance of 2 kilometres away from Melbourne Airport Terminal 3 was considered ‘not in the vicinity’ of the primary place of employment of Melbourne Airport, Terminal 3 based staff. As such, the car parking fringe benefit rules did not apply.
The ATO’s current position on what is ‘in the vicinity of ‘ was explored in an example in the recent TR 2021/2, as reproduced below:
Example 1 – work car park is not ‘in the vicinity of’ the employee’s primary place of employment
12. An employer leases premises (a work car park) to provide car parking to its employees.
13. As the crow flies, the distance between the work car park and office building, which is the employee’s primary place of employment, is less than one kilometre.
14. However, the shortest walking route between the work car park and office building is approximately two kilometres, or 20 to 25 minutes, by foot. A shuttle bus also operates between the work car park and office building. The journey by shuttle bus takes approximately 15 to 20 minutes, one way.
15. The work car park is not ‘in the vicinity’ of the employee’s primary place of employment
Like the Godfather movies, will there be a third trilogy after this sequel?