House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Treasurer the Hon John Dawkins, M.P.)

Car Parking benfits

Overview

2.1 This Bill will amend the definitions of "all-day parking" and "commercial parking station" in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 ('the FBTAA') so that night time rates charged by commercial parking station operators and fees charged at kerbside parking meters cannot be used when determining the taxable value of a car parking benefit under section 39C of the FBTAA.

Summary of the amendments

Purpose of the amendments

2.2 The amendments will change the wording of the definitions of "all-day parking" and "commercial parking station" in subsection 136(1) of the FBTAA. These definitions are used in section 39C of the FBTAA which sets out a method for determining the taxable value of a car parking benefit.

2.3 These definitions allow employers to determine the taxable value of a car parking benefit provided to an employee by reference to night time fees set by commercial parking station operators and also by reference to fees charged at kerbside parking meters. The use of these fees result in a lower taxable value for a car parking benefit. A further consequence is that car parking in some non-CBD areas may be subject to FBT where there are kerbside parking meters.

2.4 The definitions will be amended so that the taxable value of a car parking benefit determined under section 39C of the FBTAA can only be determined by reference to daylight period rates and kerbside parking meters are excluded from being commercial parking stations.

Date of effect

2.5 The amendment applies from 1 April 1994 for fringe benefits tax purposes and from 1 July 1994 for income tax purposes.

Background to the legislation

2.6 Under section 39A of the FBTAA a car parking benefit exists during a daylight period where an employer provides to an employee any car parking facilities on business or associated premises which are owned, controlled or leased, in whole or in part, by the employer. However, a benefit will only exist where certain criteria are satisfied. The criteria are that:

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a permanent commercial car parking facility available for all day parking is located within 1 kilometre of the employer provided car parking facilities;

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the car is parked at, or in the vicinity of, the employee's primary place of employment for more than 4 hours between 7.00 am and 7.00 pm on a particular day;

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the car is owned or leased by the employee or an associate of the employee, or is provided to the employee by the employer or any other person;

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the provision of car parking facilities is in respect of the employment of the employee;

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the provision of car parking facilities is not excluded by Regulation; and

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the car is used by the employee for travel between home and work.

2.7 Under section 39C of the FBTAA the taxable value of a car parking benefit is the lowest fee for all-day parking charged by any commercial parking station operator within a 1 kilometre radius of the car parking facilities provided by the employer. The value is reduced by any contribution made by the employee towards the benefit.

2.8 The terms "all-day parking" , "commercial parking station" and "daylight period" are defined in subsection 136(1) of the FBTAA as follows:

"all-day parking" means parking of a single car for a continuous period of 6 hours or more;

"daylight period" means a period between 7.00 am and 7.00 pm on a particular day; "commercial parking station" means a permanent commercial car parking station 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 payment of a fee.

Explanation of amendments

2.9 This Bill will amend the definitions of "all-day parking" and "commercial parking station" in subsection 136(1) of the FBTAA so that the taxable value of a car parking benefit determined under section 39C can only be based on parking fees charged between 7.00 am and 7.00 pm on a particular day and kerbside parking meters are excluded from being a commercial parking station [Clause 8].