The Federal Court has ruled in favour of the Toowoomba Regional Council in a case examining whether it was liable to pay fringe benefits tax for car parking.

Toowoomba Regional Council has successfully challenged a private ruling made by the Commissioner of Taxation regarding whether a car park facility was considered a commercial parking station under sections 136 and 39A of the Fringe Benefits Tax Assessment Act 1986.

The decision, Toowoomba Regional Council v Commissioner of Taxation [2025] FCA 161, involved a private ruling issued by the Commissioner in November 2023.

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.

The council decided to appeal against the objection decision. It submitted that the Commissioner should have determined that the car parking facility was not a commercial parking station.

Justice John Logan said the difficulty in this case was that there is no one natural and ordinary meaning in respect of the adjective 'commercial' as used in the definition of commercial parking station in s 136(1) of the Fringe Benefits Tax Assessment Act 1986.

"That adjectival word is not to be read in isolation, either from the term of which it forms part “permanent commercial car parking facility” or from the wider context of the Act or its purpose," Justice Logan said.

The parties agreed that the clause which follows “permanent commercial car parking facility” in the definition of “commercial parking station” does not define the content of what is or is not a permanent commercial car parking facility.

"Rather, that clause narrows the focus of the definition to a particular kind of permanent commercial car parking facility. That term is not itself defined," Justice Logan said.

The court, therefore, referred to the explanation provided in the Explanatory Memorandum for the Taxation Laws Amendment (Car Parking) Bill 1992:

"Some car parking facilities have a primary purpose to provide short-term shopper parking. To discourage all-day parking, the operators of these facilities charge penalty rates for all-day parking. These rates are significantly greater than the rates that would be charged by a similar facility which encouraged all-day parking. For the purposes of these provisions, short term shopper parking facilities, using penalty rates for all day parking, will not be treated as a “commercial parking station”."

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

"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," he 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.