On 6 February 2025, the Federal Court handed down its decision in Toowoomba Regional Council v Commissioner of Taxation [2025] FCA 161, ruling in favour of the taxpayer. The Court found that a parking facility provided by the Council to its employees did not constitute a “commercial parking station” under fringe benefits tax (FBT) law, as it was not operated for profit.
This case challenges the ATO’s current interpretation, which treats most paid parking as “commercial” and potentially subject to FBT. Although the Commissioner has lodged an appeal and maintains his existing position, this ruling introduces considerable uncertainty for employers about whether they are correctly reporting their FBT obligations.
Below, we break down the case, the Court’s reasoning, the ATO’s response, and what this means for you as an employer.
Background: What Was the Dispute About?
The Toowoomba Regional Council applied for a Private Binding Ruling (PBR) to determine whether the Grand Central Shopping Centre car park, used by its employees, triggered an FBT liability. Central to the matter was whether the car park was a “commercial parking station” under section 39A of the Fringe Benefits Tax Assessment Act 1986 (FBTAA).
The ATO said yes—it considered the car park to be commercial and subject to FBT. However, the Council argued the car park’s purpose was not to generate profit, but rather to attract shoppers to the centre, and therefore it should not be considered commercial.
Key Finding: Profit-Making Purpose is Crucial
Justice Logan agreed with the Council, concluding that the facility was not operated with a view to profit, and thus did not meet the definition of a commercial parking station.
The car park’s structure included:
- Free parking for the first three hours;
- Escalating fees thereafter, capped at $20/day;
- Discounted all-day parking for staff at $7.50;
- Various free or reduced-rate parking offers for shoppers.
Justice Logan focused on the ordinary meaning of “commercial” and turned to the Explanatory Memorandum (EM) from the 1992 legislation. The EM clearly stated that facilities not run with a profit-making intent—such as shopping centre car parks designed to support retail activity—should not be treated as commercial.
The Judge concluded that a commercial parking station must be a permanent parking facility intended to generate financial profit, which the Grand Central facility was not.
ATO’s Response: Holding Its Ground (For Now)
Despite the Court’s ruling, the ATO has issued an Interim Decision Impact Statement (IDIS), stating that:
- The ATO does not intend to revise its current guidance (TR 2021/2) until the appeal is finalised;
- Employers should continue to follow TR 2021/2 and Chapter 16 of the FBT – A Guide for Employers;
- Private rulings will continue to be issued in line with existing guidance;
- Objection decisions involving this issue will be put on hold pending the appeal outcome.
Impact on Employers: Why This Case Matters
The ruling could have significant implications for many employers, especially those who:
- Provide parking within shopping centres, hospitals, or other retail precincts;
- Offer subsidised or free employee parking in non-profit-oriented facilities;
- Operate in government, education, or not-for-profit sectors;
- Lease or use private facilities that don’t charge market rates.
Under current FBT rules, if parking is provided at or near a “commercial parking station”, employers may face significant FBT costs. This case highlights that not all paid parking qualifies as commercial, particularly if the intent is to support business operations rather than earn profit from parking itself.
What Should Employers Do Now?
While this decision offers hope for more reasonable interpretations, the ATO’s guidance remains unchanged. We recommend the following steps:
- Continue to follow TR 2021/2 when preparing your 2025 FBT return;
- Identify any parking arrangements that may resemble the Grand Central case;
- Avoid changing reporting methods until the appeal decision is released;
- Consider applying for a Private Binding Ruling (PBR) to gain certainty for your specific situation;
- Prepare documentation and supporting evidence if your parking is non-commercial in nature.
Let Boa & Co. Help You Stay Compliant
FBT on car parking remains one of the most complex and high-risk areas of tax compliance for Australian employers. If your organisation:
- Provides staff parking in shopping centres, hospitals, or leased premises;
- Offers discounted or subsidised parking as part of employee benefits;
- Operates mixed-purpose facilities that may not meet the ATO’s strict “commercial” test;
Then now is the time to seek professional advice. At Boa & Co. Chartered Accountants, we have deep expertise in FBT and employment taxes and can assist you with:
- Assessing whether your parking benefits fall within the FBT net;
- Preparing Private Binding Ruling applications;
- Reviewing your current arrangements and mitigating potential FBT liabilities;
- Representing you in case of disputes with the ATO.
If you’d like to discuss your situation or get a tailored FBT car parking review, reach out to us today. Contact Boa & Co. Chartered Accountants at 1300 952 286, email [email protected], or visit our website at www.boanco.com.au.
We’re here to help you drive your business forward—while staying on the right side of the ATO.