ATO to appeal Federal Court's FBT decision on council car park

The ATO will appeal the Federal Court of Australia's decision in Commissioner of Taxation v Toowoomba Regional Council after the court ruled in favour of the council in a recent fringe benefits tax (FBT) case.

The decision involved a private ruling issued by the Commissioner in November 2023, which the council successfully challenged in the Federal Court.

In the private ruling, the Commissioner stated that the Grand Central Shopping Centre parking facility was a commercial parking station. This view was also maintained in the objection decision by the Tax Office.

In his decision, Justice Logan relied on the explanation of permanent commercial parking facility provided in the Explanatory Memorandum for the Taxation Laws Amendment (Car Parking) Bill 1992.

Justice Logan said there were various council-operated car parking facilities in the Toowoomba CBD, which offered all-day parking fees up to a maximum of a range between $6 and $9 per day, which was in stark contrast to the Grand Central car parking facilities.

"One also sees in respect of car parking at Grand Central, a range of other scenarios in which free parking is available, or parking at a flat rate, which bears comparison with the range for all day parking which is within the range of all-day parking offered by the Council at its facilities," Justice Logan said added.

"These facts, in my view, make it obvious that the Grand Central car parking facility is being operated to a different end to a commercial car parking facility."

Justice Logan said it was obvious from the range of fees that the car park was being operated to the end of "complementing the operation of the shopping centre".

"It is being operated to the end of being an attractive force that brings in business to the shopping centre, and more particularly its tenants," he said.

"It is certainly, for those reasons, being operated in trade or commerce, but considered as a car parking facility alone, the range of free parking is inconsistent with it being operated commercially for profit, as opposed to commercially in the context of a shopping centre, not a standalone car parking facility."

The court concluded that the Grand Central shopping centre parking facility was not a commercial parking station as defined by section 136 of the Fringe Benefits Tax Assessment Act 1986 and was therefore not a commercial parking station under section 39A of that act.

The Commissioner of Taxation filed a notice of appeal in the Federal Court of Australia against the decision last week. The Tax Office is yet to issue an interim decision impact statement regarding the decision.