Taxes applied for providing car parking for your employees

Taxes applied for providing car parking for your employees

If you provide car parking for your employees, you may have to pay fringe benefits tax (FBT) on those benefits.

A car parking fringe benefit will generally arise if an employer provides car parking to an employee and various conditions are satisfied, including:

• The car is parked at premises owned or leased by, or otherwise under the control of, the provider (usually the employer);
• The car is parked for a total of more than 4 hours between 7am and 7pm on any day of the week;
• The car is parked at or near the employee’s primary place of employment on that day – in one case a car park that was almost 2 km from the primary place of employment was considered not to be near the place of employment;
• The car is used by the employee to travel between home and work (or work and home) at least once on that day;
• There is a commercial parking station that charges a fee for all-day parking within one kilometre of the premises on which the car is parked; and
• At the beginning of the FBT year (1 April 2022 for the current FBT year), the commercial parking station fee for all-day parking was, generally speaking, more than the car parking threshold ($9.72 for the current FBT year).

“All-day parking” basically means parking for a continuous period of 6 hours or more during the period from just after 7 am to just before 7 pm (on the same day). So a fee charged after 1 pm is not a fee for “all-day parking”, as there cannot be a continuous period of at least 6 hours ending before 7.00 pm.

Exemptions

Car parking benefits are exempt from FBT where the benefits are provided:

• By employers who meet the conditions of the small business car parking benefits exemption (see below);
• By certain research, education, religious and charitable institutions; and
• For employees with a disability (irrespective of the type of employer).

The small business car parking benefits exemption applies if the following conditions are satisfied:

• The parking is not provided in a commercial car park; and
• For the last income year before the relevant FBT year, either the employer’s gross total income was less than $50 million or their turnover was less than $50 million.

This exemption is not available to listed public companies, subsidiaries of listed public companies and government bodies.

Tip!

As from 1 April 2022, the ATO has updated guidance on what qualifies as a commercial car parking station. Talk to your tax adviser if you provide car parking for employees as you may be affected.