Car parking provided by an employer to an employee (or associate) is subject to FBT. FBT applies to car parking where one of the following benefits is provided:
- a car parking fringe benefit; or
- an eligible car parking expense payment fringe benefit.
Basically, a car parking fringe benefit arises where an employer provides an employee with parking facilities on the employer’s premises (that is, where the employer owns or leases the premises).
However, an exemption applies for small businesses to cars not parked at a commercial parking station provided total income is less than $10 million. The exemption does not apply to government bodies or a public company.
An eligible car parking expense payment fringe benefit arises where an employer pays for or reimburses an employee’s private car parking fees (eg. parking at a commercial car park).
“Car parking benefits” as defined do not need to be shown on an employee’s payment summaries, but “eligible car parking expense payment fringe benefits” (i.e. car parking at a commercial car park) must be included in the reportable fringe benefits calculation.
In order for a Car Parking Fringe Benefit to be subject to FBT, numerous conditions must be satisfied. Car parking will generally be subject to FBT only where all of the following conditions are satisfied. This benefit is not a reportable fringe benefit.
All the following conditions must be satisfied for a car parking fringe benefit to arise:
the vehicle parked is a car (that is, it is a vehicle with a carrying capacity of less than 1 tonne or designed to carry fewer than 9 people);
the car is parked for more than 4 hours between 7am and 7pm;
the car, on a particular day, is used by the employee to commute between the employee’s place of residence and their primary place of employment;
an all-day (6 daylight hours) permanent commercial car parking facility is available within a 1km radius from the place of car entry of the commercial parking facility and the place of car entry to the premises on which the car is parked (see commercial parking station on the next page). Since 1 April 2002, the car park must also charge more than $5.96 per day (for year ended 31 March 2003);
the car is parked on business premises of the employer that are owned, controlled or leased in whole or in part by the employer; and
the parking is provided in respect of the employee’s employment.
Where any of the above conditions are not satisfied, a car parking fringe benefit will not arise.
In respect of “pool vehicles” where all of the above conditions for a car parking fringe benefit are satisfied on a particular day, a benefit is provided. This is because the law actually deems a car parking benefit to be provided, regardless of whether the employer/employee perceives there is a benefit in parking a work pool vehicle each day.
Vehicles parked on the employer’s premises but not taken home of an evening will generally not be subject to FBT.
Eligible Car Parking Expense Payment Benefit
As mentioned, an eligible car parking expense payment fringe benefit arises where an employer pays for or reimburses an employee’s car parking fees. This is a reportable fringe benefit.
There are two important differences between this form of benefit and a car parking benefit:
1. there is no requirement that a commercial parking station be located within one kilometre of the premises on which the car is parked; and
2. the car does not have to parked on the employer’s business premises. However, it does have to be parked in the vicinity of the place of employment.
The taxable value of the benefit will be the amount paid by the employer in providing the benefit to the employee, less any employee contribution.
A specific exemption for car parking and car parking expense payment fringe benefits is provided to employees whose employer is a small business (less than $10 million turnover).
Car parking provided for a car used by a disabled employee is exempt from FBT if the disabled employee is legally permitted to use a disabled person’s parking space.
Calculating Car Parking Fringe Benefits Value
There are five methods of calculating the taxable value of a car parking fringe benefit, namely:
1. the “commercial parking station” valuation method,
2. the “market value” method,
3. “average cost” method,
4. “statutory formula” method, and
5. 12 week record keeping method”.
All methods use GST inclusive prices.
Commercial Parking Station
The taxable value of the benefit is the value of the lowest fee payable for all day (6 daylight hours) parking charged by any commercial parking station operator within a one kilometre radius of the car parking provided by the employer.
One kilometre from a commercial car parking facility. The distance of 1km is measured from the car entry to the commercial parking facility to the entrance of the premises on which the car is parked by the shortest practical surface route. The measurement of this 1km radius can be travelled by foot, car, boat, train etc., whichever produces the shortest route (TD 93/17).
Lowest fee charged by commercial parking facility. The value is the lowest fee charged by a commercial parking facility within the requisite 1km radius. A commercial car parking station is one run with a view to making a profit, and may include a vacant lot utilised as a car park.
Where a commercial car parking facility provides all-day parking on a weekly, monthly, annual or other long-term basis, the daily rate is calculated as follows:
business days in period
For example, assume there are two nearby car parking facilities and one charges $5 per day and the other $84 per month. As there are 21 business days in this particular month, the daily rate is $84 ÷ 21 = $4. Therefore, the taxable value is $4 per day for each car parking benefit provided.
This data should be monitored throughout the FBT year as changes occur in parking rates. Overnight parking rates cannot be used. Where a car park levies no charge (eg “three free”), this is not a suitable basis for valuing car parking fringe benefits.
Number of days the employee uses the employer provided parking. As a car parking benefit only exists on the day the employee actually uses the employer provided parking facility, it will be necessary to monitor the usage of the car park by each employee. (The record keeping requirements are outlined later). If this is not possible, you must assume that the car park is always available, subject to the comments following. However, as a starting point you may consider reducing this on the basis of the following information.
Market Value Method
The taxable value is the amount the employee could reasonable expect to pay for the car park, if the employer and employee were dealing with each other at arm’s length. The taxable value may be reduced by any employee contribution.
The value must be determined by a suitable qualified arm’s length valuer and reported in a form approved by the ATO. The taxable value must be based on the report.
Average Cost Method – Statutory Formula
The taxable value is the average of the lowest fees charged (first and last days of the FBT year) by an operator of a commercial car parking station within 1 kilometre of the employer’s premises.
The taxable value of each car space for which there is at least one car parking benefit is calculated by multiplying the statutory number of days (228) by the daily rate. The daily rate is the value of the car space using any of the previous methods. The taxable value is reduced for part year use or any employee contribution.
For example, assume an employer has 50 employees, but 55 car spots. The value of the car space is $7 (average cost) and is provided for only half of the year.
The taxable value is:
$7 x 228 x 183 ÷ 366 x 50 employees = $39,900
12 Week Register
The taxable value is based on the total value of the car parking benefit provided during a 12-week period. The taxable value is determined in accordance with a register that the employer maintains during the period. The 12-week period must be representative and a new register kept if car spaces increase by more than 10%.
The taxable value is:
total value of car parks x (52 ÷ 12) x (no. days of car parks ÷ 365 or 366)
The value of the car park is determined using either of the first three valuation methods. If the benefit is provided for only part of the year, the value is reduced.
For example, if an employer has 150 car spots valued at $6 each and these are provide from 1 October 2000 (this is a leap year), the taxable value is:
150 x $6 x 52 ÷ 12 x (183 ÷ 366) = $1,950
The car park register should show:
- date on which the car is parked;
- whether the car is parked for more than four hours;
- whether the car travelled from home to work or vice versa; and
- the place where the car was parked.
The entries should be made as soon as practical. If an employer has previously kept a register in accordance with Tax Ruling TR 93/18 the register will still apply, provided it contains the requisite information.