The identification and calculation of car parking fringe benefits can be one of the most tiresome features of the fringe benefits tax (FBT) compliance process for employers.
Many employers have sought to manage their workload in this respect by applying the statutory formula to calculate the number of benefits they provide over the course of the year. This has had the advantage in the past of being a “safe harbour” that provides a reasonable tax outcome for the least amount of work.
However, strictly, a car parking fringe benefit only arises where a car is parked in the space for at least 4 hours between 7am and 7pm on a working day (s39A of the FBT Act).The ‘statutory formula’, however, broadly assumes that one benefit is provided on each working day for each available space (s39F and following). Potentially, therefore, there could be a substantial advantage in being able to easily calculate the right amount of tax.
In-vehicle tracking technology, in some cases combined with boom-gate records, now makes it possible to accurately record when cars have been parked in the employer’s spaces, and for how long. This presents the opportunity for the employer to calculate the actual number of benefits that has occurred, rather than relying on the safe harbour.
Technology can assist further in establishing the taxable value of the spaces, based on the lowest rate for all-day parking offered by a commercial car park within one kilometre of the employer’s parking location.
Where an employer is able to obtain boom-gate or in-vehicle data for previous FBT years, it may possible to revise the FBT assessments and get refunds.
FJM 19.8.18
[KPMG, 3/8/18; Tax Month – August 2018]
Comprehension questions (answers available)
- Can technology potentially reduce the amount of FBT employers pay on car parking benefits?
- Does a ‘car parking fringe benefit’ arise, at any time an employee parks for four hours or more – at any time of day?
- Does the ‘statutory formula’ method assume one benefit for each space?
