Taxation (Deficit Reduction) Act (No. 1) 1993 (57 of 1993)

Part 3   Amendment of the Income Tax Assessment Act 1936

Division 2   Amendments to deny deductions to certain non-employees for certain car parking expenses

14   Insertion of new section

After section 51AGA of the Principal Act the following section is inserted:

51AGB No deductions for certain self-employed persons, partnerships and trusts for certain car parking expenses

When section applies

(1) This section applies if:

(a) apart from this section, a deduction (the gross deduction ) is allowable to a taxpayer under this Act in respect of expenditure to the extent to which it is incurred in respect of the provision of car parking facilities for a car on a day; and

(b) any of the following subparagraphs applies:

(i) both:

(A) the taxpayer is a natural person (other than a person in the capacity of trustee); and

(B) on that day, the taxpayer (the parker ) has a primary place of self-employment;

(ii) all of the following apply:

(A) the taxpayer is a partnership;

(B) a partner in the partnership is a natural person;

(C) on that day, the partner (the parker ) has a primary place of self-employment;

(iii) both:

(A) the taxpayer is both the trustee of a trust estate and a natural person; and

(B) on that day, the taxpayer (the parker ) has a primary place of self-employment; and

(c) on that day, the car is parked on particular premises (the parking premises ) for one or more daylight periods exceeding 4 hours in total; and

(d) the parking premises are at, or in the vicinity of, that primary place of self-employment; and

(e) a commercial parking station is located within a 1 km radius of the parking premises; and

(f) the expenditure is in respect of the provision of the parking facilities to which that parking relates; and

(g) on that day, the car is used in connection with travel by the parker between:

(i) the place of residence of the parker; and

(ii) that primary place of self-employment; and

(h) the provision of parking facilities for the car during the period or periods is not taken, under the regulations, to be excluded from this section; and

(i) the day is on or after 1 July 1994.

Gross deduction not allowable unless taxpayer elects to use a reduction method

(2) The gross deduction is not allowable to the taxpayer unless the taxpayer elects that subsection (3) or (5) applies.

Taxpayer may elect to reduce gross deduction using the commercial parking station method

(3) The taxpayer may elect that this subsection apply in relation to:

(a) the gross deduction; or

(b) if 2 or more gross deductions relating to a particular car, a particular parker, particular parking premises and a particular day are allowable to the taxpayer - the sum of those gross deductions.

If such an election is made, the gross deduction, or the sum of the gross deductions, as the case may be, is to be reduced by the commercial parking station amount worked out under subsection (4).

Commercial parking station amount

(4) The commercial parking station amount mentioned in subsection (3) is equal to:

(a) if, on the day concerned, there is only one commercial parking station located within a 1 km radius of the parking premises - the lowest fee charged by the operator of the parking station in the ordinary course of business to members of the public for all-day parking on that day; or

(b) if, on that day, there are 2 or more commercial parking stations located within a 1 km radius of the parking premises - the lowest fee charged by any of the operators of those parking stations in the ordinary course of business to members of the public for all-day parking on that day.

Taxpayer may elect to reduce gross deduction using the market value method

(5) The taxpayer may elect that this subsection apply in relation to:

(a) the gross deduction; or

(b) if 2 or more gross deductions relating to a particular car, a particular parker, particular parking premises and a particular day are allowable to the taxpayer - the sum of those gross deductions.

If such an election is made, the gross deduction, or the sum of the gross deductions, as the case may be, is to be reduced by the market value amount worked out under subsection (6).

Market value amount

(6) The market value amount mentioned in subsection (5) is the amount that the taxpayer could reasonably be expected to have been required to pay in respect of the provision of the parking facilities for the car on that day if:

(a) those facilities had been provided by another person; and

(b) the parties to the transaction were dealing with each other at arm’s length.

Market value method to be based on valuer’s report

(7) An election purporting to be made under subsection (5) in relation to one or more days in a year of income has no effect unless:

(a) a suitably qualified valuer gives to the taxpayer a report, in a form approved by the Commissioner, about the valuation of the provision of the car parking facilities; and

(b) the valuer is at arm’s length in relation to the valuation; and

(c) the taxpayer’s return for the year of income, in so far as it relates to subsections (5) and (6), is based on the report.

When commercial parking stations are located within a 1 km radius of parking premises

(8) For the purposes of this section, a commercial parking station is taken to be located within a 1 km radius of particular parking premises if, and only if, a car entrance to the commercial parking station is situated less than 1 km, by the shortest practicable route, from a car entrance to those premises.

Daily rate equivalent for periodic parking arrangements

(9) For the purposes of this section, if the operator of a commercial parking station provides all-day parking in the ordinary course of business to members of the public on a weekly, monthly, yearly or other periodic basis, the operator is taken to charge a fee for all-day parking on a particular day during the period equal to the amount worked out using the formula:

Total fee / Business days in period

where:

Business days in period means the number of business days in that period.

Total fee is the total fee charged by the operator in respect of all-day parking on days in that period.

Anti-avoidance - commercial parking stations

(10) If either or both of the following apply:

(a) a transaction between the operator of a commercial parking station and a customer is not at arm’s length;

(b) the operator of a commercial parking station sets the level of a fee for the sole or dominant purpose of enabling one or more taxpayers to avoid, in whole or in part, the application of this section;

then, for the purposes of this section:

(c) if only paragraph (a) applies - it is to be assumed that the fee is the fee that would have been payable if the operator and the customer had been dealing with each other at arm’s length in relation to the transaction; and

(d) if only paragraph (b) applies - it is to be assumed that the fee is the fee that would have been payable if it had been set without that purpose in mind; and

(e) if both paragraphs (a) and (b) apply - it is to be assumed that the fee is the fee that would have been payable if:

(i) the operator and the customer had been dealing with each other at arm’s length in relation to the transaction; and

(ii) it had been set without that purpose in mind.

Definitions

(11) In this section:

all-day parking has the same meaning as in the Fringe Benefits Tax Assessment Act 1986.

business day has the same meaning as in the Fringe Benefits Tax Assessment Act 1986.

car has the same meaning as in the Fringe Benefits Tax Assessment Act 1986.

commercial parking station has the same meaning as in the Fringe Benefits Tax Assessment Act 1986.

daylight period has the same meaning as in the Fringe Benefits Tax Assessment Act 1986.

expenditure does not include expenditure of a capital nature.

income-producing activity , in relation to a person, means an activity (including an investment activity) carried on for the purpose, or purposes that include the purpose, of producing:

(a) in any case - assessable income (other than salary or wages) of the person of any year of income; or

(b) if the person is a partner in a partnership - assessable income of the partnership of any year of income; or

(c) if the person is the trustee of a trust estate - assessable income of the trust estate of any year of income.

place of residence has the same meaning as in the Fringe Benefits Tax Assessment Act 1986.

primary place of self-employment , in relation to a person in relation to a day, means premises where:

(a) if the person carried on income-producing activities on that day - on that day; or

(b) in any other case - on the most recent day before that day on which the person carried on income-producing activities;

those premises are or were the sole or primary place from which, or at which, the person carried on income-producing activities.

salary or wages has the same meaning as in section 221A.