July 20, 2024

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FBT: car parking fringe benefits no longer up in the air

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The Comprehensive Federal Court has authorized the Commissioner’s attraction from the selection reported at 2021 ATC ¶20-793, holding that fringe positive aspects tax (FBT) used in respect of auto parking fringe gains presented by the taxpayers to its workers on the basis that the employees’ “primary place of employment” was their house foundation airport terminal and not the aircraft on which they carried out the bulk of their duties.


The taxpayers each operated passenger airline companies in Australia. They owned or leased all the plane they operated and carried on organization at several premises, together with airport terminals at Sydney, Brisbane and Perth. The taxpayers entered into contracts with the professional auto park operators at all those terminals to provide them with car parking areas. They then delivered those automobile parking amenities to their flight and cabin crew workers (FCC staff members) by supplying them entry cards to the car park at the airport nearest to where by the worker lived.

The taxpayers were assessed to FBT for auto parking fringe gains offered to FCC workers for the FBT years finished 31 March 2013 to 31 March 2016 on the foundation that the employees’ “primary location of employment” was their residence foundation airport terminal in Sydney, Brisbane or Perth. The taxpayers’ objections to the assessments ended up disallowed and they appealed to the Federal Court docket.

The taxpayers’ provision of auto parking facilities to its workers was exempt except if s 39A of the Fringe Added benefits Tax Assessment Act 1986 (Cth) utilized. At challenge was no matter if, pursuant to s 39A(1), the FCC workforce had a “primary put of employment” on every single suitable doing work working day, exactly where that primary location of employment was, and no matter if, on each operating day, the employee’s car or truck was parked at, or in the vicinity of, their main location of work.

The Commissioner submitted that on each individual doing the job working day the FCC staff experienced a “primary area of employment”, which was the property base airport terminal at which they typically signed on for a shift. The major location of employment for FCC employees was not an plane on which they were operating due to the fact an unique plane was no extra than a short-term and transient workplace for an staff and therefore could not constitute a “primary put of employment”. The Commissioner also contended that the employee’s car was parked at, or in the vicinity of, their major spot of employment.

The expression “primary area of employment” in s 136(1) referred to “organization premises”. In accordance to s 136(2), the definition of “organization premises” in s 136(1) provided that “premises” provided a ship, vessel, floating construction, aircraft or coach. The taxpayers relied on the truth that s 136(2) included aircraft as a sort of premises for the applications of the definition of “small business premises” in s 136(1), which opened the doorway to the probability that an employee’s “primary spot of employment” could include an plane and not be confined to a fastened structure, these as an aircraft terminal.

First instance determination

At very first occasion the taxpayers’ charm was allowed (2021 ATC ¶20-793). In accordance to Griffiths J, an plane would be a key area of employment if it was both “the sole or key put of employment” (ie para (c) of the definition in s 136(1)) or “the sole or major location from which or at which the personnel performs responsibilities of his or her employment” (ie para (d) of the definition in s 136(1)). The appropriate staff did not have a sole place of employment as the taxpayers’ “business premises” involved not only the plane applied in their small business but also all those parts of the airport terminals used for their enterprise. This intended that a qualitative and quantitative training essential to be conducted of the obligations carried out by the employees at their various locations of employment to identify the primary place of employment.

The primary choose considered that the everyday this means of “primary” invited attention to which place of work was the initial or best in rank or relevance. In the circumstance of domestic flights, the place the FCC employees operated on only just one aircraft for the duration of the unique day, their primary put of employment on that working day was that plane. In these kinds of a situation, most of the pertinent employees’ time was invested executing their obligations on board the aircraft and whilst it was in flight. The placement was even more powerful in the scenario of an global flight, the place the time used on board was possible to be for a longer time all over again. The taxpayers’ competition that the duties carried out by FCC employees at terminals have been ancillary to the principal duties done on board the plane was to be recognized.

In the long run Griffiths J concluded that, where by the FCC personnel operated on only one particular plane all over a individual day, that was their major place of employment. That position of employment was plainly not in the vicinity of any of the auto parks. The place a lot more than a single aircraft was concerned on a particular working day, there was no major put of work and s 39A(1)(f) did not crop up.

Entire court docket determination

The Commissioner then appealed to the complete courtroom, which authorized the attractiveness. In a joint judgment, the courtroom found that the principal choose erred in dealing with paras (c) and (d) of the definition of “principal put of employment” in s 136(1) as involving the very same “qualitative and quantitative exercise”, particularly a comparison of the obligations performed by personnel at their distinct locations of employment in the course of the training course of a unique working day. The 2 paragraphs contained various assessments. Paragraph (d) demanded concentrate on the put of effectiveness of “duties” but para (c) did not. The examination in para (c) was broad and not constrained or exhausted by an inquiry into the destinations from which or at which the worker undertook their duties.

In accordance to the total court docket, it was suitable but not determinative to the inquiry essential underneath para (c) that on any unique working day an personnel carried out central responsibilities on plane absent from the property foundation. Other proof suitable to the investigation essential by para (c) ended up the ailments of work of the FCC workforce, which were controlled by several organization agreements. All those agreements had various applicable very similar features, ie personnel were allocated a household foundation and various rights and obligations of employer and personnel were described by reference to that residence base, such as rosters, relaxation durations amongst “Tours of Duty” (ie the interval between signing on and signing off at house foundation), allowances and car parking entitlements.

Taking the other evidence into account led to the conclusion that each individual employee’s dwelling foundation airport was their “key spot of employment” inside the that means of para (c) of the definition of that phrase in s 136(1) (browse with s 136(2)), even on times in which the worker did not attend the residence base at all. The ailment in s 39A(1)(e) (that the worker had a most important position of work, ie the house foundation) was content. As the related parking amenities were being supplied “in the vicinity of” that most important spot of work, it followed that the issue in s 39A(1)(f) was also contented.

In obiter dicta, the court went on to locate that, experienced it been needed to reach a conclusion on the software of para (d) of the definition of “primary location of employment” in s 136(1) to the facts, the conclusion would have been that the pertinent household foundation of each individual personnel was not the primary place “from which or at which” the duties of the FCC personnel were performed. The main judge’s complete evaluation and comparison of the responsibilities executed at the numerous locations of employment showed that the predominant place from which or at which flight and cabin responsibilities were executed was on the pertinent aircraft.

Supply: FC of T v Virgin Australia Regional Airlines Pty Ltd & Anor 2021 ATC ¶20-807 [2021] FCAFC 209, 22 November 2021.

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