FBT update: High Court refusal confirms shopping centre car parks are commercial parking stations

The long-running uncertainty surrounding the meaning of a 'commercial parking station' for fringe benefits tax (‘FBT’) purposes has now effectively come to an end.

On 8 October 2026, the High Court refused Toowoomba Regional Council's application for special leave to appeal the Full Federal Court's decision in Commissioner of Taxation v Toowoomba Regional Council. As a result, the Full Federal Court's decision remains binding authority and confirms that shopping centre car parks may constitute commercial parking stations for FBT purposes, even where the operator is not seeking to generate a profit.

The decision significantly expands the circumstances in which employers may have car parking fringe benefit liabilities and may increase the number of locations that trigger FBT exposure.

Background

The Full Federal Court overturned the earlier Federal Court decision and held that the parking facilities utilised by Toowoomba Regional Council (being the Grand Central Toowoomba Shopping Centre) satisfied the definition of a commercial parking station.

Importantly, the Court rejected the proposition that a parking facility must be operated with a dominant commercial purpose or profit-making objective to be considered a commercial parking station. Instead, the Court focused on the ordinary meaning of the legislation and found that charging members of the public for all-day parking can be sufficient for a facility to be regarded as commercial.

The decision cast doubt on long-standing assumptions adopted by many employers, particularly those relying on nearby paid shopping centre car parks being excluded from the definition of a commercial parking station.

High Court refuses special leave

Following the Full Federal Court decision, Toowoomba Regional Council sought special leave to appeal to the High Court.

The High Court has now refused that application. Accordingly, the Full Federal Court's decision stands and represents the current legal authority on the interpretation of 'commercial parking station' for FBT purposes. 

The refusal of special leave does not itself create new law. However, it removes any remaining prospect that the Full Federal Court's reasoning would be reconsidered by Australia's highest court and provides greater certainty regarding the application of the decision.

What does this mean for employers?

Firstly, please note that this is only relevant to employers that do not qualify for an FBT exemption in respect of car parking benefits, such as the small business car parking exemption. Broadly, this exemption may apply where an employer has aggregated turnover of less than $50 million and certain other eligibility requirements are satisfied.

Employers should no longer assume that paid shopping centre car parks or similar public parking facilities are automatically excluded from being commercial parking stations.

Instead, employers should carefully assess whether nearby parking facilities:

• Are available to members of the public;
• Charge a fee for all-day parking; and
• Otherwise satisfy the requirements in the FBT legislation.

Where such facilities exist within the relevant statutory distance from an employer's premises, a car parking fringe benefit may arise even if the parking operator's primary purpose is to encourage retail patronage, stimulate economic activity or recover operating costs rather than generate profits.

ATO guidance and compliance considerations

The Full Federal Court decision is also likely to influence future ATO compliance activity and should be taken into account when reviewing existing FBT positions.

Employers that have historically relied on shopping centre car parks, municipal parking facilities or similar arrangements that are not commercial parking stations should revisit those assumptions and reconsider whether their annual car parking FBT calculations remain appropriate.

Particular attention may be warranted where employers have documented positions based on the earlier Federal Court decision or pre-existing industry practice.

Next steps

With the High Court declining to hear an appeal, employers should proceed on the basis that the Full Federal Court's interpretation represents the current law.

As the 2026-27 FBT year progresses, organisations should review local parking facilities surrounding their workplaces to determine whether the expanded interpretation of 'commercial parking station' could affect their FBT obligations.

As noted above, this is only relevant for employers that do not qualify for an exemption from FBT for car parking, such as the small business car parking exemption.

For many employers, especially those located near shopping centres parking facilities, the decision may significantly increase the likelihood of a car parking fringe benefit arising. However, a car parking fringe benefit will generally only arise where all legislative requirements are satisfied, including that the lowest fee charged by a commercial parking station for all-day parking on the relevant day exceeds the statutory car parking threshold. For the FBT year ending 31 March 2027, this threshold is $11.48 per day. Accordingly, while a nearby shopping centre car park may now be regarded as a commercial parking station, an FBT liability will generally only arise where the lowest all-day parking fee charged by that station exceeds $11.48 and the other statutory conditions are met.

How BDO can help

BDO can assist employers in determining whether there are commercial parking stations for FBT purposes located within the relevant proximity to their business premises that may create car parking fringe benefit obligations. This includes assessing the characteristics of nearby public parking facilities in light of the current legal position.

Given the location-specific nature of the car parking fringe benefit rules, we recommend that employers review each business location separately and consider whether any new paid parking facilities have commenced operating since 31 March 2026 that may affect their FBT position for the year ending 31 March 2027.

BDO can also assist with:

• Reviewing existing car parking FBT methodologies and assumptions;
• Identifying potential commercial parking stations near employee workplaces;
• Assessing whether the relevant all-day parking fee exceeds the applicable car parking threshold;
• Quantifying potential car parking fringe benefit exposures; and
• Advising on available valuation and compliance options to help employers meet their FBT obligations.