It’s getting closer to the time that FBT returns need to be lodged, so it’s important to understand that there may be a change to the FBT liability of your business when it comes to one employee benefit.
Car parking as an FBT benefit is provided on a particular day when, between 7.00am and 7.00pm:
- a car is parked at a work car park for the minimum parking period;
- an employee uses the car in connection with travel between their place of residence and primary place of employment at least once on that day;
- the work car park is located at or in the vicinity of the primary place of employment, on that day;
- a commercial parking station is located within a one-kilometre radius of the work car park used by the employee;
- the lowest representative fee charged by any commercial parking station for all-day parking within a one-kilometre radius of the work car park exceeds the car parking threshold;
- the parking is provided to the employee in respect of their employment, and
- the parking is not excluded by the regulations.
However, a car parking benefit provided in respect of an employee is exempt where:
- the car is not parked at a commercial parking station;
- the employer is not a public company or a subsidiary of a public company;
- the employer is not a government body; and
- for the income year ending before the start of the FBT year, the employer’s assessable income is less than $10 million or alternatively, it is a ‘small business entity’ (SBE)
Redefining a ‘commercial parking station’ to revisit a prior concept associated with the application of fringe benefits tax may make the perks of coming into the office a little more appealing to employees.
FBT applies to parking provided by employers to their employees where there is alternative parking available commercially available.
Prior to the recent ruling, there was a previous understanding that car parks that effectively charge penalty rates for all-day parking (to encourage shorter stays) would not represent genuine alternative parking arrangements for commuters, and should not trigger FBT liabilities as a result. However, the recent ruling has overturned this, which means that any alternative paid parking would trigger the liability.
This ruling came into effect on 1 April 2022.
This recent ruling on how car parking is treated as an FBT liability should assist in reducing the potential FBT burden on some employers (which should assist them in turn in incentivising employees back into the workplace with benefits).
Other FBT benefits that employers may be able to claim back on in their FBT return could include COVID-19 related benefits (such as office equipment, technology, etc), company cars, meals, entertainment, living away from home allowances, and more. As a result of the impact
If you need assistance with preparing your FBT return for lodgement, consult with a professional as soon as possible so that we can assist you with preparing your return.