Car park FBT

Most businesses pay too much fringe benefits tax on staff parking

More Australian employers providing staff parking could be liable to pay parking fringe benefits tax (FBT) from April 2020. In November, the Australian Taxation Office (ATO) released a draft rewrite of the car parking fringe benefits Taxation Ruling, which could increase taxes for a huge number of Australian employers.

Scroll down to read more about the changes, or find out how much parking FBT your company could save with Parkable.

What is fringe benefits tax?

In Australia, any benefit that an employer provides to staff outside of their salary can potentially lead to a fringe benefits tax obligation. Under certain criteria, that includes providing employees with workplace parking.

Broadly, staff parking is deemed a fringe benefit when...

• The employer provides parking for their employee(s) near the workplace;
• The duration of the benefit provided exceeds 4 hours;
• The business has a turnover of $10m or more per annum;
• A commercial car park is located within a 1km radius;
• The lowest fee charged by said commercial car park exceeds the car parking threshold (which for the 2020 FBT year is $8.95 per day).

The importance of the proposed changes

The key feature of the ATO draft is that far more car parks could be defined as “commercial” for FBT purposes, significantly increasing the number of Australian employers liable for parking FBT.

From April, “commercial” car parks could include shopping centres, hotels, universities, hospitals, and airports - any car park that offers paid parking to the public during typical work hours. In effect, the changes will make parking FBT applicable to more employers, including a large increase in employers located in the suburbs.

Luckily, both employers currently paying parking FBT and employers concerned about the changes may be less out of pocket than they expected.

Chances are… you’re overpaying on parking FBT

If your company is located within 1km of a commercial car park, you could be paying a huge amount of fringe benefits tax for providing parking to your staff. Most companies tend to pay the full FBT liability owed, however, the amount of fringe benefits tax a company is liable for is in fact dependent on how much of the parking space is actually used by staff, and how often.

We’ve found that the average commercial car park is underused by 20 - 35% on any given workday. That means that if you’re paying parking FBT assuming full car park occupancy, you’re likely overstating the fringe benefit provided to employees, and making far higher tax payments than required.

You could save 20-35% on your parking FBT liability

Instead of assuming full car park occupancy, consider using a parking management tool like Parkable that automatically captures car park usage. Parkable records car park activity and provides a tax-compliant audit system, typically saving businesses 20-35% on their parking FBT liability.

With Parkable, you can monitor and record car park usage accurately - and only pay for the parking benefit that is used by your staff.

To find out how much FBT liability your business could save with Parkable, click here!