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Fringe Benefits Tax:  You could be ‘parked’ with a $300,000 FBT liability
Technical article

Fringe Benefits Tax: You could be ‘parked’ with a $300,000 FBT liability

You could be ‘parked’ with a $300,000 FBT liability if you don’t take the time to consider it.

Under FBT rules, if an employer provides car parking to an employee, either at their own premises, at a parking facility or leased car park near their place of employment, there may be a potential FBT liability.
As a reminder, if an employer provides car parking to an employee, they must consider whether a fringe benefit exists. A fringe benefit is provided to an employee (or their associates) on a particular day if the following conditions are met:

  1.  Within a 1km radius of your provided work car park, there is a commercial car park that offers all day parking (considered car parking for 6 consecutive hours) which is more than the statutory car parking threshold ($10.40 for the 31 March 2024 period).
  2. At the commercial car park, a representative fee is charged for that all-day parking.
  3. Car is parked in the vicinity of the employer’s primary place of employment.
  4. Car is parked for a period of at least 4 hours between the time 7am and 7pm (This means it is possible for one car park provided to more than one employee on the same day to be considered a car parking benefit for each employee)
  5. Car is used on that day in connection with travel between the place of residence of the employee and primary place of employment and/or vice versa.

Remember, these conditions are a trigger to determine firstly whether a car parking fringe benefit exists, however determining the taxable value of such benefit is a separate matter and is discussed later.

Like most things in the tax world, words can have layers to them. The word “commercial” is one example when considering whether a car parking benefit is being provided to an employee and has been a topic of conversation over the past couple of years.

Prior to 1 April 2022, Tax Ruling 96/26 (TR 96/26) was relied on to determine whether a car park was considered ‘commercial’. Under the previous ruling, ‘commercial’ car parks only included car parking facilities whose main trade was to provide car parking. This meant car parks whose primary purpose was not to provide car parking, were not considered commercial e.g. shopping centres, universities, hospitals, where hourly rates were charged.

However, after the decision made in Commissioner of Taxation V Qantas Airway Ltd (2014) case, the ATO released a new tax ruling to take over the previous one which became effective from 1 April 2022. The successor being Tax Ruling 2021/2 (TR 2021/2), in which, the ATO expanded it’s meaning of ‘commercial’. This means employers must take extra care when considering whether a car parking fringe benefit exists. In this tax ruling, the ATO stated that the word ‘commercial’ should not be considered in “isolation”. Under TR 2021/2, the ATO has broadened its definition of ‘commercial’ car park and considers them to have two of the three following characteristics:

  1. Has clear signs displayed to advertise that paid parking is available.
  2. Has mechanisms to control who can enter and exits the parking facility (including barriers, pay & display etc).
  3. Charges more than a nominal fee for paid parking and includes parking where all-day parking is not offered i.e. an hourly rate is offered.

So, what does this change mean for employers?

Employers need to be more wary when considering whether the car park they provide to an employee is within a 1km radius to a ‘commercial’ car park. Employers who were considered not to have provided a car parking fringe benefit previously, may be providing one under the updated tax ruling.

TR 2021/2 also addresses the term ‘primary place of employment’ after the decision from Commissioner of Taxation v Virgin Australia Regional Airlines Pty Ltd (2021). The ruling emphasizes that there are two separate tests to determine the primary place of employment being:

1) The business premises which are, or were, the ‘sole or primary place of employment for an employee’ or

2) The business premises which are, or were, ‘otherwise the sole or primary place from which, or at which, the employee performs duties of their duties of employment.

So, what does this mean?

For most office workers, the place where they work from each day is their primary place of employment, however for employees who travel between sites for their employer will need to be more careful when determine where their primary place of employment is.

Generally, the place of employment is where your employee performs their duties, this would be the case for most employees. However, this is not the only consideration, the place where the condition of employment takes place can also be a test to determine the primary place of employment. It is also important to note, this is seen as a separate test.

Employers might argue that some of their employees are not ‘parked’ at the vicinity of the business, as they might travel from home to other businesses within the group or visit multiple dealerships in the company each day. Taking this into consideration, it is important to consider not only where an employee works physically, but where the condition of their employment occurs, where they perform their duties of employment, what their contract entails, where they report to etc. Employers should take time considering where an employee’s primary place of employment is, especially for employees that travel between entities within their groups.

Dealerships, by nature, allow employees to utilise demos and stock to travel to and from work, so the question is whether a car parking fringe benefit exist where these employees park these cars near their place of employment. The ATO has confirmed a car spot which is used to park trading stock is not a ‘car park’ by definition. This means where dealerships allow employees to take home, either overnight or on weekends, trading stock and parks these cars in the dealerships holding yards for sale, then no fringe benefit arises (TD 94/54) for car parking. However, a motor vehicle fringe benefit will arise and should be considered separately.

As discussed, the above information is helpful to determine whether a car park fringe benefit is being provided to an employee. If a car park fringe benefit is being provided, the next step is to determine the value of that taxable benefit.

There are a few methods for determining the taxable value of a car parking fringe benefit. These being:

  1. Commercial Parking Station Method
  2. Market Value Method
  3. Average Cost Method

These methods of calculating the value of a taxable benefit are used in conjunction with the below methods, to determine the total value of the car parking fringe benefits provided.

  1. Actual Method
  2. Statutory Formula
  3. 12-week Register

Step 1 – Calculate the value of a car parking fringe benefit




Commercial Parking Station Method
  • Will consider daily rates of commercial car parks, as such is a more accurate and complete valuation
  •   Administrative burden as taxable benefit is calculated each day a benefit is provided to each employee
Market Value Method
  • Convenient and less of an administrative burden
  • Cost factor to engage third party independent valuer
Market Value Method (continued)
  • Good option where the car park you provide to employees are valued at a lower price than those offered by other commercial car parking facilities
  • This method has been under scrutiny by the ATO in recent years, as such it is important to note onus is on the dealership to confirm basis on the valuation and not the independent valuer
Average Cost Method
  • Easier to calculate and less of an administrative burden as for the calculation, the price of a commercial car parking spot is required on the first and last day of the FBT period.
  • Does not consider fluctuations of commercial car parking prices throughout the FBT period as the method only considers the price of a commercial car parking spot on the first and last day of the FBT period e.g. the price of a commercial car parking spot may be higher on the first day of the FBT period compared to the average price over the FBT period.

The Commercial Parking Station Method is the default method unless an election is to use one of the other methods mentioned above. The most common method we see for calculating the taxable value of a car parking fringe benefit is the Average Cost Method.

Step 2 – Calculate the number of car parks provided

Any one of the above methods can be used to calculate the taxable value of a car parking fringe benefit, provided the necessary elections are made.

The number of car parking spots provided can be calculated using the following methods:




Actual Method
  • Considers sick leave, and other personal leave taken by employees
  • A more accurate representation of actual car parking benefits provided
  • Administrative burden as benefits provided are calculated on a daily basis
Statutory Formula
  • Easier to calculate than the other methods.
  • Less of an administrative burden
  • Assumes car parking benefit is provided for full work year i.e. does not take into account sick leave and other personal leave of employees
  • Considers number of available car parking spaces, rather than actual car parking spaces being utilised (adjustment fraction may be made)
12-week Register
  • Representative of the actual usage of car parking benefits provided
  • Will need to complete register again if amount of parking benefits provided to employees increases by more than 10%
12-week Register (continued)
  • The register is valid for a 4-year period
  • Option would be suitable where a 12-week register is already being used to determine employees motor vehicle benefit.
  • Administrative burden for employees
  • Does not reflect car parking usage over the full period but rather pro-ratas the usage per the 12-week register to reflect the full FBT period.

The Actual Method is the default method unless an election is made to use one of the other methods mentioned above. The most common method we see for calculating the number of car parking spots provided to employee’s is the statutory method. The total taxable benefit for car parking provided by employers is the taxable value of the car parking fringe benefit calculated using any of the methods in steps 1 times the number of car parking fringe benefits provided under step 2.

For example, making the following assumptions:

  • $27 per day is the lowest rate for a commercial car park within a one-kilometre radius;
  • 228 workdays per year;
  • Car parking spots were available every workday for more than 4 hours; and
  • 5 dealerships in group with 10 car parking spots available (50 total car parking spots).
Daily Parking Rate Days Parking Provided Number of Spaces Available Total Benefit FBT (Type 1 (benefit) gross up FBT Tax Rate FBT Tax on Parking Benefit
(A) (B) (C) (A*B*C) (E) (F) (D*E*F)
$27 228 50 307,800 2.0802 47% $300,934

We hope you found this information helpful. Our key takeaways for employers in the coming FBT period are listed as follows:

  1. Take extra time to consider whether a car parking fringe benefits exists, especially given the new tax determination and decisions in the courts.
  2. Ensure you can determine what a ‘commercial’ car park is, based on the characteristics described in TR 2021/2.
  3. If the average method is used, we recommend commercial rates for all-day parking and sufficient evidence is recorded and documented on the first day and last day of the FBT period i.e. 1 April and 31 March for the relevant FBT period.
  4. Ensure time is spent when determining the lowest value of a commercial all-day parking rate, as this may dramatically affect the taxable value of the tax benefit provided.
  5. Ensure consideration is taken on which methods are right for your business to determine the taxable benefit, and ensure the relevant elections are made.

As always, get professional advice for your situation to ensure you are compliant with FBT legislation. If you need help with your FBT, FBT elections or any dealership taxes, Pitcher Partners Motor Industry Services are happy to assist.

This content is general commentary only and does not constitute advice. Before making any decision or taking any action in relation to the content, you should consult your professional advisor. To the maximum extent permitted by law, neither Pitcher Partners or its affiliated entities, nor any of our employees will be liable for any loss, damage, liability or claim whatsoever suffered or incurred arising directly or indirectly out of the use or reliance on the material contained in this content. Pitcher Partners is an association of independent firms. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities. Liability limited by a scheme approved under professional standards legislation.

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