Article:

Important update for car parking fringe benefits

20 May 2021

Judy White, Associate Director, Tax |

The Federal Court handed down an important case in the area of Fringe Benefits Tax and car parking fringe benefits on 18 May 2021.

The Court ruled that no car parking fringe benefit arose for Virgin Airlines, for car parking provided to flight and cabin crew.

Interestingly, the reasoning was that the primary place of employment was the aircraft (rather than the airport terminal), so employees were not parked within the vicinity of their workplace. The Court also noted that where these employees were on more than one aircraft that day, there was no primary place of employment at all.

Notably, the Court rejected the following arguments:

  • Airport terminal - Whether a primary place of employment
    • The Court ruled that the amount of time spent performing duties at an airport terminal was far outweighed by the time spent performing duties on the aircraft during the day
  • Aircraft – Whether part of an airport terminal
    • The Court rejected the argument that the aircraft was part of the terminal when physically connected to it.

What organisations should do

If your organisation provides car parking to employees you should consider the impact of this case. Ask the following:

  • Have you considered different categories of employees rather than employees as a whole?
  • Is there a distinction in your organisation between where employees commence and cease work compared to where they perform duties?
  • Does your organisation have employees that park and then travel all day in another vehicle? (e.g. work vehicle, taxis, courier vehicles, etc.).

It is also important to note the following instances as examples of where car parking fringe benefits would not apply:

  • Employers that qualify under the small business car parking exemption (noting this has a wider reach from 1 April 2021, because the turnover threshold increased from $10 million to $50 million) 
  • Registered charities, scientific institutions and public educational institutions are generally exempt from car parking fringe benefits
  • Where there is no commercial parking station within a one kilometre radius of the organisation’s premises that charges more than the threshold (being $9.15 for 2020/21 and $9.25 for 2021/22 year)
  • Where employees are required to pay towards the car parking (this reduces the value of the car parking fringe benefit)
  • Where employees don’t park within daylight hours, i.e. a car parking fringe benefit only arises where the employee parks for more than four hours between 7am and 7pm on a given day.

If you would like to know more about the results of this case and what it means for your organisation, please get in touch with your local BDO adviser.

Reference: Virgin Australia Airlines Pty Ltd v FCT [2021] FCA 523 (Federal Court, Griffiths J, 18 May 2021