New car parking FBT draft ruling – free periods and stepped rates

15 November 2019

In a departure from existing common practice, ATO draft ruling TR 2019/D5 says that a permanent car parking station with an initial free period or stepped rates that discourages all day parking, but does not outright prohibit it, is still a commercial parking station if operated for profit. The ATO will apply this FBT change form 1 April 2020.

Whether a shopping centre or hospital car park for example is operated for profit or just to support the associated facility is not something that would ordinarily be within the knowledge of employers. Therefore the change will create practical compliance difficulty in suburban areas where these facilities are located. However, it is a change the ATO felt compelled to make given that airport car parks which are run for profit despite initial free periods were held to be commercial car parking stations in Qantas’ case [2014] FCAFC 168.

Other points to take from the ruling are as follows.

1. Parking in the vicinity of an alternative work site that is the principal place worked by the employee that day can give rise to a car parking fringe benefit, notwithstanding that is at odds with the overall framework of the Act to ordinarily treat employee costs associated with attending an alternative work site as ‘otherwise deductible’.

2. Casual parking spots paid for or reimbursed by the employer can count as car parking benefits on the basis that the car parking station “provides” the spot (as opposed to only employer provided spots that it has ownership or reserved exclusive use of), thereby leaving little if any scope for operation of the separate “eligible car parking expense payment benefit” rule.

3. A single available off-street car spot, for example let out by a local resident, could amount to a business that is a commercial parking station that needs to be taken into account.

4. A demolition site used pending redevelopment as a car park (often at cheap rates) may by its nature have insufficient enduring permanency to be regarded as a commercial parking station, and thereby unable to be used as a commercial parking station pricing comparator.

The ruling if finalised in current form could mean that professional car parking valuations become a practical necessity in some suburban areas to ensure FBT compliance. The ruling contains no examples nor short-cut practical compliance guidelines, and ATO website material has not been updated to provide any either.

Submissions are due by 17 January 2020.



Andrew White



Graham Warren

Special Counsel