The decision challenges the ATO's interpretation of what constitutes a commercial parking station.
The Federal Court of Australia on February 6, 2025, issued a decision finding that a Toowoomba shopping center car park is not a "commercial parking station" under section 39A of the Fringe Benefits Tax Assessment Act 1986 (FBTAA). This decision challenges the Australian Taxation Office's (ATO) interpretation of what constitutes a commercial parking station.
The case is:
Background
For a car parking fringe benefit to arise, an employee must park their car for at least four daytime hours in an employer-provided space near their primary workplace. Additionally, a commercial parking station charging more than the threshold amount ($10.77 for the year ending March 31, 2025) must be within one kilometer of the employer-provided car park. The ATO's view (), effective April 1, 2022, is that car parking facilities that usually charge penalty rates significantly higher than the rates chargeable for all-day parking at commercial all-day parking facilities are commercial parking stations. This interpretation expanded the scope to include many shopping centers and hospitals with penalty rate fee structures.
Court's decision
The court found that the car park in question was not a commercial parking station, as it was operated to attract customers to the shopping center rather than for profit. The decision emphasized the range of fees, including free parking for the first three hours, as inconsistent with a profit-driven operation.
Implications
This decision may reduce the number of car parking locations subject to fringe benefits tax by considering the operational purpose and fee structure of the car park. The decision aligns with the previously accepted definition of a commercial parking station, contrasting with the ATO's broader interpretation. The ATO may consider appealing the decision, and forthcoming fringe benefits tax (FBT) return instructions are expected to provide guidance during this period of uncertainty.
For more information, contact a 乐鱼（Leyu）体育官网 tax professional in Australia:
Hayley Lock | hlock@kpmg.com.au
Stacey Biggar | sbiggar@kpmg.com.au
Sam Gathercole | sgathercole@kpmg.com.au