Previously exempt? From 1 April 2020 you could have extra FBT to pay.

A recent draft taxation ruling, TR 2019/D5, extends the Tax Office’s interpretation of what constitutes a “commercial car parking station” as a result of a Full Federal Court decision regarding airport car parks.

In particular, whereas previously, car parks designed for shorter term parking that charged penalty rates to people who parked all day were not considered “commercial car parking stations”. From 1 April 2020 such parks will be considered to fall within the definition (provided the parking station is run with a view to profit!).

How might this affect you?

If you have a hospital, shopping centre, hotel, university or airport near you, that charges a fee for parking, and you provide parking to your people on your site or in car parks that you lease, you may be triggering car parking fringe benefits.

What can you do about this?

  1. Check if you’re in the ‘FBT net’

The ‘FBT net’ applies if the lowest fee for all day parking charged by a parking station, within 1km of your car parks, at the start of the FBT year is more than $8.95 (2019/20 FBT year).  

  1. Consider obtaining a market valuation

If you’re in the ‘FBT net’, consider obtaining a market valuation. Valuations can often result in a much lower value than the lowest fee being charged within 1km and are not expensive to obtain. We can arrange such valuations on your behalf. For example, if a valuation reduces the taxable value of a car park by $9 per day and you have 20 car parks, you could save FBT of around $40,000. 

To discuss the potential impact on your business and what to do about it, please contact Elizabeth Lucas or another member of your Grant Thornton team.