Car park is not ‘in the vicinity of’ for FBT purposes

In July this year we reported on a ruling from the ATO requiring Virgin Blue to pay additional Fringe Benefits Tax on a subsidised employee car park located 2km away from Melbourne Airport’s terminal. The car park was ruled to be ‘in the vicinity’ of the airport, and thus liable for additional tax. Read more about this case here.

On November 30, Virgin Blue’s appeal was upheld by the Full Federal Court; dismissing the case on the basis that the Tax Office’s claim that the Car Park and the Terminal were in vicinity of each other was based on the use of shuttle buses (provided by Virgin Blue) to transport their staff between the two places (deemed by the ATO to be within the same “functional space”).

Virgin Blue’s victory means that they are no longer liable to pay the additional Fringe Benefit Tax and sets a precedent for other employers providing car parking in other airports in Australia, ensuring greater clarity around the interpretation of the Fringe Benefits Tax for the provision of employee parking.

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