Car parking benefits: primary place of employment
Employers that have provided car parking benefits for the 2022-23 FBT year should be aware that the ATO has finalised the changes to its ruling on car parking fringe benefits (TR 2021/2) to address the concept of “primary place of employment” in light of the Full Federal Court’s decision in Commissioner of Taxation v Virgin Australia Regional Airlines Pty Ltd [2021] FCAFC 209 (Virgin). A broad test of “primary place of employment” now applies.
Considerations of whether a place is an employee’s primary place of employment may include the place from or at which duties are performed and the place which is primary to the employee’s conditions of employment. This updated ATO view applies both before and after its date of issue (22 February 2023).
Updated ruling on car parking fringe benefits
The FBT ruling on car parking fringe benefits has finally been updated to include changes to address the concept of “primary place of employment” as a result of the Full Federal Court’s decision in Virgin. A draft addendum was previously issued by the ATO late last year on the topic and this has now been finalised, largely unchanged from the draft.
Determining the primary place of employment for car parking benefit purposes is important because among other things, car parking benefits are only fringe benefits where a car is used by an employee to travel between home and their primary place of employment and is then parked at or in the vicinity of that primary place of employment.
In Virgin, the Full Federal Court determined that the “home base” airport of various flight and cabin crew was their primary place of employment and this was the case even on days when the employee did not attend the home base airport at all. As a result, the Court found that car parking fringe benefits were provided as the employees’ cars were parked at, or in the vicinity of, the primary place of employment. Hence, FBT was payable by the company for providing the car parking benefit.
The updated ruling now states that an employee’s primary place of employment on a particular day will either be:
- the business premises of an employer which are, or were, the “sole or primary place of employment of the employee”; or
- the business premises of an employer that are, or were, “otherwise the sole or primary place from which, or at which the employee performs duties of his or her employment”.
Primary place of employment: a broad test now applies
A broad test of primary place of employment has been used in this context, and “primary” has been given its ordinary meaning of first or highest in rank or importance, chief, principal. Considerations of whether a place is an employee’s primary place of employment may include the place at which duties are performed, and the place which is primary to the employee’s conditions of employment as contained in employment contracts or industrial instruments (e.g. rostering, allowances, and car parking entitlements).
Specifically, the update confirms that where an employee’s conditions of employment indicate that a particular business premises are primary to their employment, those premises may satisfy the definition of primary place of employment even if the employee performs duties principally at another place on a particular day.
In addition, where an employee performs duties from, or at, more than one business premises on a day, the employee’s primary place of employment may be identified through a quantitative and qualitative analysis of the duties performed from, or at, the different business premises.
This updated ATO view applies both before and after its date of issue, so employers will need to take care in particular when preparing for the end of the 2022-23 FBT year which is fast approaching.
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Disclaimer: The information on this page is for general information purposes only and is not specific to any particular person or situation. There are many factors that may affect your particular circumstances. We advise that you contact Mathews Tax Lawyers before making any decisions.