Key points
- A shopping centre car park within one kilometre of an employer’s premises may now trigger car parking FBT, even if it offers free short-stay parking or mainly exists to attract shoppers.
- Employers should review nearby public parking facilities and reassess whether their employee parking arrangements create an FBT liability.
High Court refusal leaves the Toowoomba decision standing.
What happened?
The High Court has refused Toowoomba Regional Council special leave to appeal the Full Federal Court’s decision in Commissioner of Taxation v Toowoomba Regional Council [2026] FCAFC 50. The Full Court decision therefore stands.
The Full Court held that the Grand Central Shopping Centre car park was a “commercial parking station” for fringe benefits tax (FBT) purposes. The facility did not need to have a profit-making purpose. It was enough that it was engaged in commerce or was commercial in nature. Parking can therefore still be “commercial” when it supports the wider shopping centre business or is free for an initial period.
Why this matters
The outcome confirms a broad approach consistent with the Commissioner’s position in Taxation Ruling TR 2021/2. Shopping centre car parks, as well as paid facilities at hospitals, universities and similar sites, may now be considered relevant commercial parking stations when testing an employer’s car parking FBT exposure.
A commercial parking station within one kilometre of your workplace could mean you are providing employees with car parking benefits.
Employer considerations
A car parking fringe benefit can arise where the statutory conditions are met, including where:
- an employee parks a car at, or in the vicinity of, the employer’s business premises;
- the parking is provided for more than four hours between 7.00 am and 7.00 pm;
- the car is used for travel between home and work on that day;
- a commercial parking station is located within a one-kilometre radius; and
- the lowest qualifying all-day fee charged by a commercial parking station exceeds the annual statutory threshold.
For the FBT year ending 31 March 2027, the car parking threshold is $11.48. Employers must still consider all statutory conditions, exemptions and valuation rules when determining if they have provided a car parking benefit. The small business exemption remains unchanged.
Employers that previously treated shopping centre car parks within one kilometre as not being commercial parking stations for FBT purposes may need to reconsider that position.
Our view
For employers outside traditional CBD locations, this is a significant compliance development. Reviews should focus on the features and fees of nearby public parking facilities, rather than on whether parking revenue is the operator’s primary business or generates a profit on its own.
Quantifying any exposure should be undertaken in advance of the end of the 2027 FBT year, 31 March 2027. This may be a sensitive issue where a car parking provided is now subject to FBT, increasing costs for employers. Employers may also need to manage employee expectations about any changes to their parking arrangements.
If you have any questions about your upcoming FBT obligations, reach out to your nearest Pitcher Partners expert, or contact the author below.
