Small Businesses have access to numerous tax benefits, many of which haven’t changed for several years. The decision by the government to change the definition of a small business earlier this year means many more businesses now fall into the category of “Small Business”. This change brings with it a number of tax advantages previously not available. One of the tax advantages not getting any media attention is the Car Parking Fringe Benefit Exemption.
A Car Parking Fringe Benefit can arise where an employer offers employees a car park at or close to their place of employment. This is most commonly the case in urban areas and city centres where it’s normal to pay for all day parking. Offering a car park to employees either for free or at a discounted rate can result in employers having an additional administrative burden and potentially a sizeable Fringe Benefits Tax (FBT) bill.
However, small businesses have had a Car Parking Fringe Benefits Exemption available to them for several years and this exemption will have a wider reach now that a small business for FBT purposes is a business with aggregated turnover of up to $10 million, up from the previous limit of $2 million.
If an employer fits the above small business classification, and is not a government body, a publicly listed company or a subsidiary of a listed company, the exemption may be available to that employer. The only other requirement is that the car park must not be provided in a “commercial car park”. A commercial car park is defined as “a permanent commercial car parking facility, where car parking spaces are available in the ordinary course of business to members of the public”.
Thus, a private car park at or under the employer’s building for example, can be used to provide an Exempt Car Parking Fringe Benefit. This means employers who would normally have to charge employees for car parking in their car park, or else be hit with an FBT bill, could now provide cheaper or free parking to employees with no FBT to worry about.
If you wish to further discuss the Small Business Car Parking Fringe Benefit Exemption, or any other small business tax advantages, please contact your Altitude Adviser.