CASE 27/95

Members:
RD Fayle SM

Tribunal:
Administrative Appeals Tribunal

Decision date: 12 April 1995

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RD Fayle (Associate Professor)

The issue before the Tribunal is whether the taxable value of Car Parking Fringe Benefits under Part III of Division 10A of the Fringe Benefits Tax Assessment Act 1986 [``the Act''] should be less than that which the applicant assessed in its return lodged pursuant to s 68 of the Act for the year of tax ended on 31 March 1994.

2. The applicant company, an employer for the purposes of s 136(1) of the Act, being dissatisfied with its own assessment of fringe benefits tax for the year of tax and pursuant to s 78A of the Act, lodged a taxation objection with the respondent pursuant to s 14ZU of the Taxation Administration Act 1953 [``TAA''], within the time limit of s 14ZW(1)(aa) of the TAA. The respondent duly considered the taxation objection and decided to disallow it as he is empowered to do pursuant to s 14ZY(b) of the TAA. That decision has been referred to the Tribunal for review, in accordance with s 29 of the Administrative Appeals Tribunal Act 1975 as modified by s 14ZZC of the TAA.

3. At the hearing Mr P Moltoni, the applicant's tax agent, represented it and Mr P Gerrard, a departmental officer, represented the respondent. Mr KV Hill was called by the applicant to give evidence and two exhibits were tendered in evidence.

4. Facts and contentions not in dispute are that during the year of tax the applicant provided car parking facilities on its leased premises to 27 of its employees. This resulted in a ``car parking fringe benefit'' as defined in s 136(1) with s 39A, of the Act. The premises at which the cars were parked is within one kilometre of a ``commercial parking station'' as defined in s 136(1) of the Act. The applicant elected to arrive at the taxable value of the car parking fringe benefits by reference to s 39C of the Act rather than adopt a market value approach as outlined in s 39D.

5. Although there is no dispute that there was a ``car parking fringe benefit'' in relation to each of the 27 employees, it is appropriate to set out the provisions of section 39A, so far as they relate to the matter under review, and the definitions of ``car parking benefit'' and ``car parking fringe benefit'' each of which are contained in s 136(1).

``39A If the following conditions are satisfied in relation to a daylight period, or a combination of daylight periods, on a particular day:

• (a) during the period or periods, a car is parked on... premises of a person (the ` provider '), where:
  • (i) the premises... on which the car is parked are business premises... of the provider; and
  • (ii) a commercial parking station is located within a 1km radius of the premises... on which the car is parked;
• (b) the total duration of the period or periods exceeds 4 hours;
• (c) any of the following applies:
  • (i) a car benefit relating to the car is provided on that day to an employee or an associate of an employee in respect of the employment of the employee;
  • ...
• (d) the provision of parking facilities for the car during the period or periods is in respect of the employment of the employee;
• (e) on that day, the employee has a primary place of employment;
• (f) during the period or periods, the car is parked at, or in the vicinity of, that primary place of employment;

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• (g) on that day, the car is used in connection with travel by the employee between:
  • (i) the place of residence of the employee; and
  • (ii) the primary place of employment;
• (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;
  • (i) the day is on or after 1 July 1993;

the provision of parking facilities for the car during the period or periods is taken to constitute a benefit provided by the provider to the employee or the associate of the employee in respect of the employment of the employee.''

6. Subsection 136(1); defines `` car parking benefit '' as meaning a benefit referred to in s 39A; and `` car parking fringe benefit '' is defined as meaning a fringe benefit that is a car parking benefit.

7. It is also relevant to set out the statutory definitions and provisions which bear on the matter of the assessment of the taxable value of the car parking fringe benefit:

``136(1) ...

` all-day parking ', in relation to a particular day, means parking of a single car for a continuous period of 6 hours or more during a daylight period on that day;

...

` commercial parking station ', in relation to a particular day, means a permanent commercial car parking facility where any or all of the car parking spaces are available in the ordinary course of business to members of the public for all-day parking on that day on payment of a fee, but does not include a parking facility on a public street, road, lane, thoroughfare or footpath paid for by inserting money in a meter or by obtaining a voucher.

...

` daylight period ', in relation to a day, means so much of a period on that day as occurs:

• (a) after 7 a.m. on that day; and
• (b) before 7 p.m. on that day;''

``39C Subject to this Part, the taxable value, in relation to a year of tax, of a car parking fringe benefit provided on a day in the year of tax in connection with one or more premises is equal to:

• (a) if, on that day, there is only one commercial parking station located within a 1 km radius of any of those 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 any of those 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;

reduced by the amount of the recipients contribution.''

8. The applicant maintains that because it is possible to park a vehicle in a qualifying commercial parking station for a period in excess of 6 hours for the payment of 10 cents (the smallest denomination of coin acceptable by the vending machine) then that is the appropriate fee to adopt for the purpose of assessing the taxable value in accordance with s 39C of the Act.

9. The respondent argues that as the 10 cent fee does not cover a period in excess of a few minutes, which period may be split between time occurring before 6.00 p.m. on a day and time occurring after 8.00 a.m. on the following day, the requirement of s 39B of the Act is not met.

10. Mr Hill, Acting Senior Inquiries Officer, Parking Department of Perth City Council gave evidence. He testified that a photocopy of four parking vouchers (ex A2) was representative of the vouchers issued by the vending machines at the Perth City Council No. 2 Car Park, a commercial parking station within 1 kilometre of the applicant's premises.

11. When asked about the details on one of the vouchers, which showed a fee of 10 cents paid at 5.53 p.m. on 9 February 1995 and an expiry time of 8.01 a.m. on 10 February 1995, Mr Hill agreed that it was typical of a voucher purchased about that time and said: ``There's

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no charge after 6.00 p.m. so it would've commenced charging at 8.00 a.m. the next morning''.

12. Mr Hill's evidence was that for the year in question the rate charged for parking at the car park was 70 cents per hour, so that 10 cents would entitle a person to about 8 minutes parking.

13. Mr Gerrard for the respondent referred the witness to a copy of the Perth City Council Parking Facilities By-law (ex R1) which stated in the third schedule that the No. 2 Car Park's operating hours were Monday to Sunday inclusive, from 8.00 a.m. to midnight, fees payable being 70 cents per hour to a maximum of $4.00 to 6.00 p.m., and from 6.00 p.m. Monday to Saturday inclusive the fee payable was 70 cents per hour. Mr Hill said, in reply, that as far as he was aware, (and his evidence is that he has considerable experience), there has never been a charge for parking after 6.00 p.m. until 8.00 a.m. the following day. He agreed with Mr Gerrard that the signs at the entrance to the car park indicate that there is no fee charged for parking during those hours.

14. Mr Moltoni submitted that as one may park legally in the No.2 Car Park for a period exceeding 6 hours on any week day for a fee of 10 cents, paid just before 6.00 p.m. then, for the purpose of s 39C of the Act, 10 cents is the ``lowest fee charged'' in the ordinary course of business to members of the public for all-day parking on that day. Therefore, he submitted, the taxable value of the applicant's car parking fringe benefits for the year should be based on an all-day parking charge of 10 cents per vehicle.

15. The first obstacle which the applicant must overcome is to satisfy the Tribunal that even if the 10 cents paid just before 6.00 p.m. was a charge for at least 6 hours parking at the No. 2 Car Park on that day, it is in respect of ``all-day parking'' as defined.

16. Section 39C of the Act, paraphrased, provides that the taxable value of a car parking fringe benefit provided on a day^[1] Since ``day'' is not defined in the Act it takes on its ordinary meaning which according to the Oxford Dictionary is ``time during which the sun is above the horizon; ...'' is the lowest fee charged to members of the public for all-day parking by a commercial parking station. All- day parking, as mentioned, is a continuous period of at least 6 hours during a daylight period on that day. ``Daylight period'' is defined above as being a twelve hour period from 7.00 a.m. to 7.00 p.m., a definition, it is observed, which conforms with the lexical definition of ``day''.

17. It is impossible for the applicant to satisfy this condition if the parking commences just before 6.00 p.m., only one hour before 7.00 p.m. Even if the fee of 10 cents was a charge to park from 6.00 p.m. for a continuous period of at least 6 hours, that would not be for ``all-day parking'' as defined in the Act.

18. On the assumption that the Tribunal has misinterpreted the legislation in regard to the previous point, it now considers the applicant's submission that the fee of 10 cents can be a charge for parking a car in the No. 2 Car Park for a continuous period of at least 6 hours on a day. The applicant's submission is that because a car can be legally parked in this commercial parking station for over 6 hours for a fee of 10 cents then that is sufficient to meet the requirement of s 39C of the Act.

19. However, the evidence of Mr Hill is that there is no charge between 6.00 p.m. and 8.00 a.m. the following day on any day of the week. Exhibit A2, being photocopies of typical parking vouchers issued for a small sum just prior to 6.00 p.m., in the opinion of the Tribunal, support the evidence of Mr Hill, inasmuch as the time paid for is split between the time lapsing from when the voucher was purchased until 6.00 p.m. and the time lapsing after 8.00 a.m. the following day. The evidence is that the machine does not reduce the permissible parking time for any period between 6.00 p.m. and 8.00 a.m. That is, there is no charge for parking during that time.

20. Mr Moltoni argued in the alternative, that the fee payable for parking between 6.00 p.m. and 8.00 a.m. the next day was nil and that that is the amount of the ``lowest fee charged'' for the purpose of s 39C of the Act.

21. The Tribunal is of the view that to suggest that there can be a fee charged of nil is, at best, an oxymoron. The legislators did not find it necessary to define the term ``fee charged'', presumably because it is beyond doubt - a ``fee'' being a sum payable and ``charged'', in this context, being a price demanded, that is, the manner in which the fee is made payable. With due respect to the applicant's submission the Tribunal considers that the notion of a nil fee is not sustainable.

22. The Tribunal is grateful to both representatives for their lucid references to the

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law and to cases touching on aspects of their submissions but it does not find it necessary to discuss them, having come to the view that the evidence does not support the contentions of the applicant. The Tribunal does note however, that the applicant called into support Taxation Determination TD 93/240. Suffice it to say that it does not assist the applicant as it is a ruling about a fee charged, whereas the evidence in this case is that there is no fee charged for the majority of the 6 hour period contended for by the applicant.

23. For the above reasons the decision under review is affirmed.