Car parking provided to employees outside the central business districts was not typically considered subject to FBT, until some court decisions triggered a change in the ATO’s approach. Since 1 April 2022, employers located near paid car parks in shopping centres, hospitals, universities, etc. have had to consider whether FBT is payable on their employee car parking.
What has happened?
Recently, the Federal Court handed down a decision about car parking fringe benefits. They decided that a shopping centre car park in Toowoomba was not run to generate income, but to attract customers.
The car park offered free parking for up to three hours and discounts for some groups. The car park was not considered a ‘commercial parking station’ for FBT purposes and did not cause employee parking provided within 1km to be subject to FBT.
This is counter to the ATO view, as expressed in a current public ruling, which takes a much wider view of what is considered a ‘commercial parking station’. The ATO has now appealed this recent court decision and has released a Decision Impact Statement, advising that they will continue to apply the view in the current ruling pending the appeal.
What does this mean for employers?
Where employee car parking is provided within 1km of a car parking station that might have a free parking period, or penalty rates for parking all day, but charges more than the daily threshold amount ($10.77 for 2024/25), we recommend continuing to apply the ATO position, as stated in their public ruling, and including the benefits in the 2025 FBT return.
If ultimately the benefits should be considered exempt from FBT, then there will be an opportunity to lodge objections or amendments and seek a refund of the FBT paid for the relevant years (subject to applicable time limits).
Consider whether you are even providing car parking benefits. If employees are parking in the street or in an area that is open to the public with no designated spaces for employees, then you may not be providing car parking benefits at all.
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We’re here to help
Grant Thornton’s highly experienced Employment Solutions team can help navigate these changes. For further information or assistance, please reach out to our expert team.
