Fringe benefits tax - a guide for employers

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Chapter 16 - Car parking fringe benefits

16.1 What is a car parking fringe benefit?

Very broadly, a car parking fringe benefit may arise for each day on which you (the employer) provide a car parking space for the use of an employee.

Specifically, a car parking fringe benefit arises during a fringe benefits tax (FBT) year only if all of the following conditions are satisfied:

• a car is parked at premises that are owned or leased by, or otherwise under the control of, the provider (usually you as the employer)
• within a one-kilometre radius of the premises on which the car is parked, there is a commercial parking station that charges a fee for all-day parking , which is more than the car parking threshold
• the car is parked for a total of more than four hours between 7.00am and 7.00pm on the day
• the car is owned by, leased to, or otherwise under the control of, an employee, or is provided by you
• the parking is provided in respect of the employee's employment
• the car is parked at or near the employee's primary place of employment on that day
• the car is used by the employee to travel between home and work (or work and home) at least once on that day
• the commercial parking station referred to above must also, on the first business day of the FBT year, charge a representative fee for all-day parking that is more than the car parking threshold .

Car parking scenarios table

If...	then...
a commercial car parking station commences to operate during the FBT year has not charged a fee for all day parking on the first business day of that FBT year, and the other conditions of a car parking fringe benefit are met	a car parking fringe benefit will not arise during that FBT year. However, car parking fringe benefits may arise during the following FBT year.
a commercial car parking station commences to operate on the first business day of the FBT year does not charge a fee for all day parking that is more than the car parking threshold, and the other conditions for a car parking fringe benefit are met	a car parking fringe benefit will not arise during that FBT year.
a commercial car parking station commences to operate on the first business day of the FBT year charges a fee for all day parking that is more than the car parking threshold ceases to operate during that FBT year, and there are no other commercial car parks within a one kilometre radius that charge a fee more than the car parking threshold	car parking fringe benefits are only provided during the period that the commercial car park had operated.
a commercial car parking station commences to operate on the first business day of the FBT year charges a fee for all day parking that is more than the car parking threshold ceases to operate during that FBT year, and there are other commercial car parks within a one kilometre radius that charge a fee more than the car parking threshold	car parking fringe benefits will continue to arise while there is a commercial car park within a one kilometre radius that charges a fee that is more than the car parking threshold.

Car

The meaning of 'car' is described in section  7.1 of Car fringe benefits.

Commercial parking station

A commercial car parking station is one that charges a fee for all-day parking, is permanent, and is commercial (that is, it operates with a view to making a profit).

All-day parking

All-day parking means parking for a continuous period of at least six hours between 7.00am and 7.00pm.

One-kilometre radius

The one-kilometre distance is measured not by radius but by the shortest practicable direct route (by whatever means this route is travelled, for example, by foot, car or boat).

Primary place of employment

The employee's primary place of employment is your premises at which the employee performs the majority of their employment-related duties on a particular day.

Car parking threshold

The car parking threshold is indexed in line with movements in the consumer price index.

The table below lists the car parking thresholds from 2003 to 2013.

Year ending 31 March	Threshold
2013	$7.83
2012	$7.71
2011	$7.46
2010	$7.25
2009	$7.07
2008	$6.78
2007	$6.62
2006	$6.43
2005	$6.28
2004	$6.16
2003	$5.96

Representative fee

The fee for any particular day is not representative if it differs substantially from the average lowest fee ordinarily charged for all-day parking. For this purpose, you can compare the fee for a particular day with the average fee charged during a four-week period beginning or ending on that particular day.

Example

An employee of a company has a car provided by the company and is allowed to park the car in the basement of the company's building. The employee uses the car to drive to and from work each day. Other employees use the car during the day for business purposes. There is a parking station within one kilometre that charged more than $7.07 a day on 1 April 2008.

On a particular day the car is parked in the basement for three hours and taken out by the employee to visit clients. The employee does not return to work that day but goes straight home after visiting the last client. As the car is not parked in the basement for more than four hours, a car parking fringe benefit is not provided on that day.

On a different day the car is parked in the basement for three hours before another employee takes it out and uses it for deliveries. The car is returned in the afternoon and parked in the basement for another two hours. As the car is parked on the employer's premises for more than four hours between 7.00am and 7.00pm, a car parking fringe benefit has been provided.

16.2 Taxable value - summary of methods

There are five ways you can calculate the taxable value of a car parking fringe benefit:

1. Commercial parking station method - you must keep records of the actual number of car parking fringe benefits provided.
   
   
2. Market value method - you must keep records of the actual number of car parking fringe benefits provided.
   
   
3. Average cost method - you must keep records of the actual number of car parking fringe benefits provided.
   
   
4. 12-week register method - once every five years, you must keep records of the use of car parking spaces for a 12-week period, and value the use as if you had used the commercial parking station method, the market value method or the average cost method.
   
   
5. Statutory formula method - 228 car parking fringe benefits are deemed to arise from the use of each car parking space during the course of the FBT year and are valued in a way similar to the commercial parking station method, the market value method or the average cost method.

The commercial parking station method must be used unless you elect to use one of the alternative methods. You must decide to use an alternative method no later than the day on which your FBT return is due to be lodged with the Tax Office or, if you do not have to lodge a return, by 21 May. You may elect to use an alternative method for any or all of your car parking spaces. The use of a particular method in a previous year does not affect what methods you choose in subsequent years.

16.3 Taxable value - the commercial parking station method

The taxable value of a car parking fringe benefit is the lowest fee charged for all-day parking on that day by any commercial parking station within a one-kilometre radius of the premises on which the car is parked. This is reduced by any amount the employee pays towards the cost of the fringe benefit.

Lowest fee for all-day parking

Where all-day parking fees are paid for on a weekly, monthly, yearly or other periodic basis, you can determine an equivalent daily rate by dividing the total fee by the number of business days in the period. For this purpose, a business day is a day other than a Saturday, Sunday or public holiday. For example, if a commercial parking station offers all-day parking for $8 a day or $30 a week, the lowest all-day parking fee charged by that parking station is $6.

Example

An employee of a company is allowed to park his privately owned car in the basement of the company's building for three weeks (five days a week). There are two permanent all-day commercial car parking stations within one kilometre of the employer's building. The employee drives the car from home to work each day and parks it there for more than four hours each day between 7.00am and 7.00pm. There is no employee contribution.

At the beginning of the 2009 FBT year and also during the three-week period, parking station number one charges $5.50 a day and parking station number two charges $8.00 a day. Since there is a car parking station that charged more than the car parking threshold of $7.07 on 1 April 2008, there is a fringe benefit. To calculate the taxable value, the employer can use the lowest rate, that is, $5.50.

The taxable value of the car parking fringe benefit provided is $82.50 (15 days x $5.50).

Number of benefits provided

The commercial parking station method provides the taxable value of a single car parking fringe benefit. You can obtain the exact number of benefits provided only from records of actual use.

For this method, the FBT law does not contain a specific rule for determining the actual number of car parking fringe benefits that may arise from each car parking space, nor for determining how many car parking spaces are in a given area.

Records

The following guidelines describe the minimum records acceptable to the Tax Office for car parking fringe benefits valued according to the commercial parking station method.

Basic records

The minimum record you should keep is a declaration relating to the FBT year. If you do not keep any other records, you will be subject to FBT on the basis that a car parking fringe benefit arose on each business day of the year for all the available car parking spaces.

There is no specific format for the declaration, but it must include all of the following details:

• the number of car parking spaces available to be used by employees
• the number of business days in the FBT year
• the valuation method you have chosen to use
• the daily value of the car parking spaces.

Additional records

Where the number of employees parking on the premises is always less than the number of available parking spaces, you should keep an additional declaration showing the actual number of employees who park on the premises.

Also record the days when no car parking fringe benefits arise for a car parking space (for example, where employees are absent) or those that are not ordinary business days for your business.

You should also keep records that show when:

• more than one car parking benefit arises for a particular car parking space, such as with shift workers
• you provide car parking benefits to employees outside normal business hours, for example, on weekends.

16.4 Taxable value - the market value method

The taxable value of a car parking fringe benefit is the market value of the car parking you actually provide, less any amount paid by the employee towards its cost. You must obtain a valuation report from a suitably qualified valuer to substantiate the market value.

Valuation report

The valuation report should include at least:

• the date of the valuation
• the precise description of the location of the car parking facilities valued (either the street address or block and section number)
• the number of car parking spaces valued and the value of the car parking spaces based on a daily rate
• the full name of the valuer and a description of their qualifications as a valuer
• the valuer's signature
• a declaration stating that the valuer is at arm's length from the valuation.

You must also be able to produce, when required, details of the basis on which the valuation was determined. This information may be set out in a separate valuer's report.

Suitably qualified valuer

A suitably qualified valuer is a person who has expertise in valuing parking facilities, through either relevant experience or attaining relevant professional qualifications. The valuer should be at arm's length from the valuation.

Number of benefits provided

The market value method provides the taxable value of a single car parking fringe benefit. You can obtain the exact number of benefits provided only from records of actual use.

For this method, the FBT law does not contain a specific rule for determining the actual number of car parking fringe benefits that may arise from each car parking space, nor for determining how many car parking spaces are in a given area.

Records

The following guidelines describe the minimum records acceptable to the Tax Office for car parking fringe benefits valued according to the market value method.

Basic records

The minimum record you should keep is a declaration relating to the FBT year. If you do not keep any other records, you will be subject to FBT on the basis that a car parking fringe benefit arose on each business day of the year for all the available car parking spaces.

There is no specific format for the declaration, but it must include all of the following details:

• the number of car parking spaces available to be used by employees
• the number of business days in the FBT year
• the valuation method you have chosen to use
• the daily value of the car parking spaces.

Additional records

Where the number of employees parking on the premises is always less than the number of available parking spaces, you should keep an additional declaration showing the actual number of employees who park on the premises.

Also record the days when no car parking fringe benefits arise for a car parking space (for example, where employees are absent) or days that are not ordinary business days for your business.

You should also keep records that show when:

• more than one car parking benefit arises for a particular car parking space, such as with shift workers
• you provide car parking benefits to employees outside normal business hours, for example, on weekends.

16.5 Taxable value - the average cost method

The taxable value of a car parking fringe benefit is the average of the lowest fees charged on relevant days by any operator of a commercial parking station within a one-kilometre radius of the premises on which the car is parked. The relevant days are the first and last days on which you provided a benefit during the FBT year. The taxable value is reduced by the amount of the employee's contribution towards the benefit.

Average fees

Calculate the average of the lowest fees by adding the lowest fee for the first relevant day to the lowest fee for the second relevant day and then dividing the sum by two.

Lowest fees charged

The parking fees you use for this method must be representative. The fee for any particular day is not representative if it differs substantially from the average lowest fee ordinarily charged for all-day parking. For this purpose, you can compare the fee for a particular day with the average fee charged during a four-week period beginning or ending on that particular day.

For the purpose of averaging the lowest fees charged on each of the relevant days, it is not necessary to use the fees charged by the same commercial parking station operator. If there is more than one commercial parking station operator within a one-kilometre radius of the relevant premises, you may use the lowest fee charged by any of the operators on each of the relevant days.

Number of benefits provided

The average cost method provides the taxable value of a single car parking fringe benefit. You can obtain the exact number of benefits provided only from records of actual use.

For this method, the FBT law does not contain a specific rule for determining the actual number of car parking fringe benefits that may arise from each car parking space, nor for determining how many car parking spaces are in a given area.

Records

The following guidelines describe the minimum records acceptable to the Tax Office for car parking fringe benefits valued according to the average cost method.

Basic records

The minimum record you should keep is a declaration relating to the FBT year. If you do not keep any other records, you will be subject to FBT on the basis that a car parking fringe benefit arose on each business day of the year for all the available car parking spaces.

There is no specific format for the declaration, but it must include all of the following details:

• the number of car parking spaces available to be used by employees
• the number of business days in the FBT year
• the valuation method you have chosen to use
• the daily value of the car parking spaces.

Additional records

Where the number of employees parking on the premises is always less than the number of available parking spaces, you should keep an additional declaration showing the actual number of employees who park on the premises.

Also record the days when no car parking fringe benefits arise for a car parking space (for example, where employees are absent) or those that are not ordinary business days for your business.

You should also keep records that show when:

• more than one car parking benefit arises for a particular car parking space, such as with shift workers
• you provide car parking benefits to employees outside normal business hours, for example, on weekends.

16.6 Taxable value - the 12-week register method

This method differs from the typical FBT valuation method, which provides the taxable value of a single fringe benefit. You are required to keep records of each fringe benefit as it is provided during the year and then value each fringe benefit individually. However, the 12-week register method gives a total taxable value for all the fringe benefits you have elected to value by this method.

You calculate the taxable value using the following formula:

$A x (52 ÷ 12) x (B ÷ 366)

Regardless of whether or not the year is a leap year, B is always divided by 366.

Where:

A = the total taxable value of all car parking fringe benefits provided during the 12 weeks the register is kept. The taxable value is worked out according to whether you have chosen to use the commercial parking station method, the market value method or the average cost method, explained in sections 16.3 and 16.5.

B = the number of days in the period of use of the car parking space. It begins on the first day in the FBT year on which you provide a car parking fringe benefit to an employee who is covered by the election, and ends on the last day in the FBT year on which you provide a car parking fringe benefit to that same employee.

Example

An employer starts providing car parking fringe benefits on 1 October 2008 and continues to do so for the rest of the FBT year. A register kept for the necessary 12-week period reveals that 250 car parking fringe benefits were provided to employees covered by the election during the time the register was maintained. Using the market value method, the employer establishes that the taxable value of each car parking fringe benefit is $10.

For the purposes of the 12-week register method, the value of A is $2,500 (250 x $10) and the value of B is 183 days. Therefore the taxable value of the entire car parking fringe benefits provided during the FBT year to employees who are covered by the election is:

$A x (52 ÷ 12) x (B ÷ 366)

$2,500 x (52 ÷ 12) x (182 ÷ 366)

= $5,387.06

Election

If you elect to use the 12-week register method, you must hold a valid register and specify in a written election whether the election covers all employees, a particular class of employees, or specific employees.

Valid register

You must keep the register for a continuous period of 12 weeks. The use of car parking facilities during this period must be representative of use during the first FBT year for which the register is valid.

Generally, a register is valid for the year in which you keep it and the four following years. However, if the period during which the register is kept begins in one FBT year and ends in the following FBT year, the register is valid only for the second year in which it is kept and the four following years.

If the number of car parking spaces (or the number of employees allowed to park if this is less) increases by more than 10% in a year, the register is not valid for any of the years following the year in which the increase occurred.

A register is not valid if either:

• there is a later valid register for that FBT year covering the same employee
• it contains an entry that is false or misleading in a material particular
• the necessary details are not included in a register
• entries are not made as soon as practicable.

Details to be included in register

You must include all of the following details in a register:

• the date on which each car was parked
• whether the car was parked for a total time exceeding four hours
• whether the car travelled between the place of residence of an employee covered by the election and their primary place of employment on that day
• the place where the car was parked.

16.7 Taxable value - the statutory formula method

Under the statutory formula method, 228 car parking fringe benefits are deemed to arise from each car parking space that is available to be used by an employee during the course of the FBT year. However, the result is reduced proportionately if the number of employees is less than the number of spaces.

Note that this method differs from the typical FBT valuation method, where you are required to keep records of each fringe benefit as it is provided during the year and then value each benefit individually. The statutory formula method gives a total taxable value for all of the fringe benefits you have elected to value by this method.

The statutory formula involves a four-step process. While this involves finding the taxable value of each daily benefit as if the commercial parking station method, market value method or average cost method applies (refer to sections  16.3 to 16.5 ), you treat employee contributions quite differently.

The four steps of the statutory formula method are as follows:

Step	Action
1	Apply the following formula to each car parking space used by an employee who is covered by your election to use this method: $A x (B ÷ 366) x 228 Where: A = the amount that would be the taxable value of one car parking fringe benefit if you used the commercial parking station method, market value method or average cost method and there was no employee contribution (a car parking fringe benefit arises from the use of one space during one day by one employee) B = the number of days in the period of use of the car parking space. This period begins on the first day in the FBT year in which the car parking space is available for use by any employee who is covered by the election, and ends on the last day in the FBT year in which the car parking space is available for use by any employee who is covered by the election.
2	Obtain the total of all the amounts calculated under step 1. If the average number of employees covered by the election is less than the average number of spaces made available to those employees, divide the total of all amounts calculated under step 1 by the average number of spaces made available, and multiply by the average number of employees covered by the election.
3	Obtain the total of all employee contributions for all employees covered by your election to use this method.
4	Reduce the step 2 amount by the step 3 amount. The amount remaining is the taxable value of the entire car parking fringe benefits that you elected to value under this method.

Regardless of whether or not the year is a leap year, always divide B (in step 1) by 366.

Election

If you elect to use the statutory formula method, you must specify in a written election whether the election covers all employees, a particular class of employees, or specific employees.

Average number of employees covered by the election

To obtain the average number of employees, add the number of employees covered by the election at the beginning of the parking period to the number of employees covered by the election at the end of the parking period, and then divide the sum by two.

The number of employees you use for this method must be representative. On any particular day, the number of employees is representative if it is substantially the same as the average number of employees covered by the election during a four-week period beginning or ending on that particular day.

Average number of spaces made available

You obtain the average number of spaces by:

1. counting the number of spaces made available to employees covered by the election at the beginning of the parking period
2. counting the number of spaces made available to employees covered by the election at the end of the parking period
3. adding (1) and (2) together and dividing the total by two.

The number of spaces you use for this method must be representative. On any particular day, the number of spaces is representative if it is substantially the same as the average number of spaces available to employees covered by the election during a four-week period beginning or ending on that particular day.

Example

An employer starts providing car parking fringe benefits on 1 October 2008 and continues to do so for the 182 days to 31 March. The employer elects to use the statutory formula method. The employer has four car parking spaces available for use by three employees. Using the average cost method, the employer establishes that the taxable value of each car parking fringe benefit is $10.

The employees are required to make employee contributions of $30 each a week for 26 weeks.

Now apply the four steps of the statutory formula method:

Car parking for employee's covered by the employer's election

Step	Action
1	Apply the following formula to each car parking space used by an employee who is covered by the employer's election to use this method: $A x (B ÷ 366) x 228 Where: A = the amount that would be the taxable value of one car parking fringe benefit if the commercial parking station method, the market value method or the average cost method was used and there was no employee contribution (a car parking fringe benefit arises from the use of one space during one day by one employee), that is, $10. B = the number of days in the period of use of the car parking space. This period begins on the first day in the FBT year on which a car parking fringe benefit is provided to an employee who is covered by the election and ends on the last day in the FBT year on which a car parking fringe benefit is provided to that same employee, that is, 182 days. $10 x (182 ÷ 366) x 228 = $1,133.77
2	Obtain the total of all the amounts calculated under step 1. $1,133.77 x 4 = $4,535.08 If the average number of employees covered by the election is less than the average number of spaces made available to those employees, divide the total of all the amounts calculated under step 1 by the average number of spaces available and multiply by the average number of employees covered by the election. ($1,133.77 x 4) ÷ 4 x 3 $4,535.08 ÷ 4 x 3 = $3,401.31
3	Obtain the total of all employee contributions for all employees covered by the employer's election to use this method. $30 x 26 weeks x 3 employees = $2,340
4	Reduce the step 2 amount by the step 3 amount. The amount remaining is the taxable value of the entire car parking fringe benefits the employer elected to value under this method. $3,401.31 - $2,340 = $1,061.31 $1,061.31 is the taxable value of the car parking fringe benefits the employer has elected to value under the statutory formula method.

Regardless of whether or not the year is a leap year, always divide B (in step 1) by 366.

16.8 Car parking expense payment benefits

Where you reimburse or pay for an employee's car parking costs, this is not a car parking fringe benefit, but may be a car parking expense payment benefit (refer to section  9.9 of Expense payment fringe benefits).

16.9 Exempt benefits - motor vehicle parking

The following car parking benefits provided to employees are exempt from FBT:

• residual benefits
• certain expense payment benefits
• parking for the disabled
• benefits provided by certain employers.

Residual benefits

Parking you provide that does not satisfy all of the criteria set out in section  16.1 is a residual benefit that is exempt from FBT.

Expense payment benefits

If you pay or reimburse a car parking expense incurred by an employee, this is exempt from FBT if the expense is not a car parking expense payment fringe benefit as described in section  16.8 .

Parking for the disabled

Car parking you provide for a car used by a disabled employee is exempt from FBT if the disabled employee is legally entitled to use a disabled person's parking space and has a valid disabled person's car parking permit displayed on the car.

Exempt employers

All of the following employers who are otherwise liable to pay FBT are exempt from car parking fringe benefits and car parking expense payment benefits:

• a scientific institution (other than an institution run for the purposes of profit or gain to its shareholders or members)
• a religious institution
• a charitable institution
• a public educational institution
• a government body, but only in relation to an employee who is employed exclusively in, or in connection with, a public educational institution.

16.10 Exempt benefits - small business car parking

If you are a small business employer, car parking benefits you provide are exempt if:

• the parking is not provided in a commercial car park
• you are not a government body, a listed public company or a subsidiary of a listed public company, and
• either
  • you were a small business entity for the last income year before the relevant FBT year
  • your total income for the last income year before the relevant FBT year was less than $10 million. For this purpose, your income includes ordinary income and statutory income as defined in the Income Tax Assessment Act 1997 , that is, total gross income before any deductions.
   

There are special FBT transitional rules which mean an entity can be considered to be a small business entity for the 2005-06 and 2006-07 income years as if the small business entity provisions had applied to those earlier years. From 1 April 2007 such an entity will be entitled to utilise the concession provided it also meets the first two dot point requirements.

See also:

• TR 96/26 - Fringe benefits tax: car parking fringe benefits.
• TD 2011/14 - Fringe benefits tax: for the purposes of section 39A of the Fringe Benefits Tax Assessment Act 1986 what is the car parking threshold for the fringe benefits tax year commencing on 1 April 2011?
• TD 2012/9 - Fringe benefits tax: for the purposes of section 39A of the Fringe Benefits Tax Assessment Act 1986 what is the car parking threshold for the fringe benefits tax year commencing on 1 April 2012?

Changes and updates

The following tables detail any major changes and updates made to this chapter.

June 2012

Section	Changes and updates
16.1 What is a car parking fringe benefit?	Updated car parking thresholds table
More information	Most recent tax determinations included. Removed reference to older tax rate determinations.

ATO references:
NO Fringe benefits tax - a guide for employers