Car Parking and FBT: What Australian Employers Need to Know

What is a Car Parking Fringe Benefit?

As an employer, you offer a car parking fringe benefit on any day that all following occur:

• Your employees park their car in a place that
  • you own, control or lease (your business premises)
  • is near or at their primary place of employment
  • is within 1 kilometre of a commercial parking station that charges an all-day parking fee greater than the car parking threshold on both the
    • first day of the FBT year
    • day the benefit is offered.
  • The time duration for car parking is more than 4 hours between 7.00 am and 7.00 pm.
  • Your employees drive their car between work and home, or vice versa, at least once.
  • You are not exempt from car parking fringe benefits.

Exemptions from Car Parking Fringe Benefits

You may not be required to pay Fringe Benefits Tax (FBT) on employee car parking if any of the following conditions apply:

• The employee has a disability.
• Your business qualifies as a small business.
• You are classified as an exempt employer.

In addition, occasional car parking benefits may fall under the minor benefits exemption where both of the following criteria are met:

• The value of the benefit is less than $300; and
• It would be unreasonable to treat the benefit as a fringe benefit, taking into account factors such as frequency and total value provided.

Employees with Disabilities

You are not required to pay FBT on car parking provided to an employee with a disability, provided both of the following conditions are met:

• The employee is legally entitled to use a parking space marked with the international symbol of access; and
• A valid accessibility parking permit is displayed on the vehicle.

Small Business Car Parking Exemption

Your business may be exempt from paying FBT on car parking benefits if all of the following criteria are satisfied:

• The parking is not provided in a commercial car park;
• In the income year preceding the relevant FBT year, either:
  • Your gross total income was less than $10 million; or
  • Your aggregated turnover was less than $50 million (calculated using the same method as for small business CGT concession eligibility); and
• You are not a government body, a listed public company, or a subsidiary of a listed public company.

Types of Exempt Employees

You don’t have to pay FBT on car parking benefits if you are one of the following:

• A charity registered with the Australian Charities and Not-for-profits Commission (for example, a public benevolent institution, health promotion charity, or religious institution)
• A scientific institution, provided it is not operated for the profit or gain of its shareholders or members
• A public educational institution
• A public or not-for-profit hospital, as long as the benefit falls within the employee capping threshold
• A public ambulance service, as long as the benefit falls within the employee capping threshold.

What to do when you provide a car parking fringe benefit

If you provide car parking to employees and it qualifies as a fringe benefit, you must:

• Calculate the taxable value of the parking benefit
• Keep the required records
• Work out how much Fringe Benefits Tax (FBT) you need to pay
• Lodge your FBT return
• Pay the FBT liability
• Check whether you need to report the benefit through Single Touch Payroll (or on your employee’s payment summary)

You can engage Accountant Port Melbourne to ensure that you are meeting FBT requirements.

Calculating the taxable value of car parking

To determine the taxable value:

1. Select the valuation method you will use.
2. Calculate the value of each car parking benefit.
3. Multiply that value by the total number of parking benefits provided.
4. Subtract any amount the employee paid towards the parking cost.

You can choose from five valuation methods:

• Commercial parking station method
• Market value method
• Average cost method
• 12-week register method
• Spaces method

Record-keeping requirements

For FBT purposes, you are required to keep records that:

• Show how you calculated the taxable value of the car parking fringe benefit
• Support any exemption or concession you have claimed

You can also opt for bookkeeping services Melbourne to ensure meeting record-keeping requirements.