We are approaching the end of the 2019 FBT year, and it is essential to be aware of potential areas of risk for your business when providing benefits to employees. An area that can easily be overlooked is the provision of car parking fringe benefits. This is particularly relevant to the Sunshine Coast at the moment as more commercial parking stations are established.
What is a Car Parking Fringe Benefit?
A car parking fringe benefit is defined by the ATO to be provided to an employee when the following conditions are met:
- An employees car is parked on the premises (primary place of work)
- The vehicle is used by the employee to travel between home and work at least once in the day
- The employees’ car is parked for more than 4 hours between 7 am and 7 pm
- The vehicle is parked within a one-kilometre radius of a commercial parking station that charges an all-day fee
As all conditions are required to be met for there to be the existence of a fringe benefit, the Sunshine Coast particularly has been able to avoid fringe benefits by the fact there were limited commercial parking stations available, however; this trend is changing.
There is a car parking fringe benefit, what do I do?
You may have read the above and found that you are providing a fringe benefit to your employees but what is the next step? As a fringe benefit has been provided to an employee, there is a requirement to prepare and lodge an FBT return. Fringe benefits tax works a little differently to normal income tax in that the fringe benefits tax year runs from 1 April to 31 March and is required to be lodged and paid by 25 June of each year. The fringe benefits tax legislation provides a number of ways to calculate the taxable value of the fringe benefits offered to employees allowing some flexibility in terms of calculations and record keeping. Further, the legislation allows for additional flexibility in terms of the calculation method which can be adjusted or reviewed each fringe benefits tax year to optimise your tax position.
Fringe benefits tax is a complex area of taxation and can be quite challenging without the right tools. We can help you identify if there is a fringe benefits tax issue from providing car parking to your employees and ensure you comply with the relevant rules when calculating any fringe benefit tax liabilities. If you would like assistance reviewing your business’s situation, please get in touch on (07) 5413 9300 for a confidential chat.