Toowoomba Regional Council has won a battle with the Australian Tax Office over Fringe Benefit Tax (FBT) applied in relation to a CBD car park.
In the Federal Court, the council appealed a private ruling of the Commissioner of Taxation that its 4000-space Grand Central facility was a “commercial parking station” under Section 136 and Section 39A of the Fringe Benefits Tax Assessment Act 1986 (Cth) (FBTAA).
In a judgment delivered in the Brisbane registry last month, Justice Logan allowed the appeal, set aside the objection decision made on 26 September 2024 and ruled the car park was not a “commercial parking station”.
In June 2023, the council had applied for the private ruling under the Taxation Administration Act 1953 (Cth) over its liability for FBT on the car spaces it provided for its employees at Grand Central.
The centre offers discounted or free parking for shoppers and staff in various scenarios, including after 6pm, for cinema patrons, for shoppers with a disability, and for shoppers who spend more than $150 at the centre.
Its ticketless parking system uses licence plate recognition, with payment machines located at mall entrances.
Subsection 136(1) of the FBTAA defines a “commercial parking station” to mean: “In relation to a particular day a permanent commercial parking facility where any or all of the car parking spaces are available in the ordinary course of business to members of the public for all-day parking on that day in payment of a fee but does not include a parking facility on a public street, road, lane, thoroughfare or footpath paid for by inserting money in a meter or by obtaining a voucher.”
“The difficulty here and the essence of what divides the parties is 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 FBTAA,” Justice Logan said.
“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.
“The parties are agreed – in my view, correctly – 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 meaning he assigned to “commercial”, in a permanent commercial parking facility, was “intended to make, or aimed at, or having the potential for financial success intended to make a profit”.
He pointed to the fact that parking at Grand Central was free for the first three hours, then there was an escalation of fees to a maximum of $20 for more than seven hours. He contrasted this with various council-operated car parks in the Toowoomba CBD, which offered all-day parking fees up to a maximum of $9 per day.
“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,” he said.
“It is obvious from the range of fees that it is 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.
“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.”
Justice Logan ordered the parties to file and serve submissions as to costs.
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