13 October 2021

The ATO has recently released Taxation Ruling TR 2021/2[1] which provides an updated view on the Commissioner’s position in determining when a car parking fringe benefit is provided for Fringe Benefits Tax (FBT) purposes.

TR 2021/2 finalises Draft Taxation Ruling TR 2019/D5 issued in late 2019.

Outlined below are details on the ruling and our commentary on the Commissioner’s position.

When is a car parking benefit provided?

For a car parking fringe benefit to be provided on a particular day, the following conditions are satisfied:

• A car is parked for a minimum parking period between the hours of 7.00am and 7.00pm;

• An employee uses the car in connection with travel between their place of residence and primary place of employment at least once on that day;

• The work car park is located at or 'in the vicinity of' the primary place of employment, on that day;

• A commercial parking station is located within a one-kilometre radius of the work car park used by the employee;

• The 'lowest representative fee' charged by any commercial parking station for all-day parking within a one-kilometre radius of the work car park exceeds the car parking threshold (the daily threshold for the FBT year ending 31 March 2022 is $9.25);

• The parking is provided to the employee in respect of their employment; and

• The parking is not excluded by the regulations (e.g. a car space is excluded if it is provided to a disabled employee who holds and displays a valid disabled person's parking permit and the permit allows the employee to park in spaces that are designated for the exclusive use of a disabled person).

What is a ‘commercial car parking facility’?

For a car parking benefit to arise, one condition is that a commercial parking station must be located within a one-kilometre radius of the work car park used by the employee.

The FBT definition of a ‘commercial parking station’ is a ‘commercial car parking facility’ that is:

• Permanent (but is not on-street parking); and

• At least one car space is available (in the ordinary course of business) to the public for all-day parking on payment of a fee.

TR 2021/2 provides that employers are required to determine and reasonably conclude whether a car parking facility is a ‘commercial car parking facility’ by applying the following tests:

• If a car parking facility is run by a car parking operator, that facility is to be considered to be a ‘commercial car parking facility’ for FBT purposes.

Otherwise, if the car parking facility is not run by a car parking operator, TR 2021/2 provides three characteristics to determine if a car parking facility is a ‘commercial car parking facility’:

• The facility has clear signage visible from the street advertising that paid parking is available;

• The facility has mechanisms to control who can enter and/or exit the parking facility, or park at the facility. This may include boom gates, or 'pay and display' ticketing machines; or

• The facility charges more than a nominal fee (usually a significantly lower rate than the local market rate) for paid parking. This includes charging a user for parking which is not all-day parking (such as parking at an hourly rate).

If a car parking facility displays two or more of the above characteristics, the Commissioner has determined that the facility is a ‘commercial car parking facility’.

As such, TR 2021/2 takes the view that a ‘commercial car parking facility’ can include the following:

• Hospital.

• Shopping centre.

• Hotel.

• University.

• Airport.

A car parking facility may qualify as a commercial parking station even if the facility has another purpose other than providing all-day parking (e.g. it may also have a purpose of providing short term parking).

Further, the Commissioner’s view is that if a car park allows all-day parking, but its fees structure discourages all-day parking with higher fees, the car park can still be considered a ‘commercial car parking facility’.

This ruling applies in respect of car parking benefits provided on or after 1 April 2022.

With the introduction of TR 2021/2 many more employers will be subject to FBT on the provision of car parking to employees from 1 April 2022.

Previously, shopping centre car parks and other similar facilities such as hospital car parks were generally not considered to be commercial parking stations for FBT purposes.

This change of interpretation may have a significant impact for businesses providing car parking spaces for its employees where FBT has historically not been paid.

Importantly, TR 2021/2 does not address the meaning of ‘primary place of employment’ as the Commissioner’s position is being considered in light of the recent Federal Court decision in Virgin Australia Airlines Pty Ltd v Commissioner of Taxation [2021] FCA 523. However, we understand that the Ruling will be amended to include further guidance on this point in due course.

FBT Exemption – Retraining and Reskilling

Employers who provide training or education benefits to their employees who are redundant, or soon to be made redundant, may be exempt from FBT.

Retraining and reskilling benefits are exempt from FBT where the:

• Employer provides a benefit in respect of training or education to a redundant, or soon to be redundant, employee;

• Employer has complied with all obligations under the Fair Work Act 2009 that relate to the employee's redundancy; and

• Education or training that is provided is:

• • not related to the employee's current job role; and

  • for the primary purpose of helping that employee gain new employment.

The exemption includes employees being redeployed within your business or seeking employment elsewhere.

The exemption covers the provision of education or training (such as reimbursing or paying the course fees or giving training) and also benefits associated with the education or training (such as related course materials, textbooks, travel and accommodation).

There are no limits on the number of training or education courses an employee may undertake, or on the cost of the education or training.

If you need any help with your FBT obligations please contact your Findex adviser or get in touch with the Findex Tax Advisory Team.

[1] TR 2021/2 Fringe benefits tax: car parking benefits