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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.
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