FBT: the marginal advantages of parking are no longer in tune with the times
The full Federal Court allowed the Commissioner’s appeal against the decision released in 2021 ATC Â¶20-793, ruling that the Employee Benefits Tax (FBT) applied to the parking benefits provided by taxpayers to its employees on the basis that employees âtheâ principal place of work âwas the terminal at their home base and not the aircraft on which they performed most of their work.
The taxpayers each operated passenger air transport services in Australia. They owned or leased all of the planes they operated and operated from multiple locations, including the Sydney, Brisbane and Perth airport terminals. Taxpayers have contracted with the operators of commercial parking lots at these terminals to provide them with parking spaces. They then provided these parking lots to their on-board and cabin employees (FCC employees) by giving them access cards to the airport parking lot closest to the employee’s place of residence.
Taxpayers were assessed with FBT for the parking benefits granted to FCC employees for the FBT years ended March 31, 2013 to March 31, 2016 on the basis that the employees’ ‘primary workplace’ was their terminal. base airport in Sydney, Brisbane or Perth. The taxpayers’ objections to the assessments were dismissed and they appealed to the Federal Court.
The provision by taxpayers of parking lots to their employees was exempt, unless Section 39A of the Social Benefits Tax Assessment Act 1986 (Cth) applied. The issue was whether, pursuant to subsection 39A (1), FCC employees had a “principal place of work” on each relevant working day, where was that principal place of work, and whether, on each working day, the the employee’s car was parked at, or near, their primary workplace.
The commissioner argued that on each working day, FCC employees had a âprimary workplace,â which was the home base terminal to which they typically signed up for a shift. The primary place of work for FCC employees was not an aircraft they worked on because an individual aircraft was nothing more than a temporary and transitional place of work for an employee and therefore could not constitute a “Principal place of work”. The Commissioner also argued that the employee’s car was parked at or near his main workplace.
The expression “principal place of work” in subsection 136 (1) referred to “business premises”. Under subsection 136 (2), the definition of âbusiness premisesâ in subsection 136 (1) provided that the âpremisesâ included a ship, vessel, floating structure, aircraft or train. Taxpayers relied on the fact that subsection 136 (2) understood aircraft as a kind of premises for the purposes of the definition of “business premises” in subsection 136 (1), which opened the door to the possibility that the âPrincipal place of employment of an employeeâ could include an aircraft and not be limited to a fixed structure, such as an airport terminal.
First instance decision
At first instance, the taxpayers’ appeal was upheld (2021 ATC Â¶20-793). According to Griffiths J., an aircraft would be a primary workplace if it were either “the sole or primary workplace” (i.e. from which or from which the employee performs the duties of his employment “(i.e. that is, paragraph (d) of the definition in Section 136 (1)). The employees concerned did not have a single workplace, as the “business premises” of taxpayers included not only the aircraft used in their activity, but also the parts of the airport terminals used for their activity. This meant that a qualitative and quantitative exercise had to be carried out on the tasks performed by the employees at their different workplaces in order to determine the main job.
The senior judge considered that the ordinary meaning of the word “primary” raised the question of which place of employment was first or highest in terms of rank or importance. In the case of domestic flights, where FCC employees operated only one aircraft on a given day, their primary place of work that day was that aircraft. In such a case, the majority of the time of the affected employees was spent performing their duties on board the aircraft and while it was in flight. The position was even stronger in the case of an international flight, where the time spent on board was likely to be longer again. The taxpayers’ assertion that the duties performed by FCC employees at the terminals were incidental to the primary duties performed on the aircraft had to be accepted.
Ultimately, Judge Griffiths concluded that when FCC employees operated on only one aircraft in a given day, that was their primary place of work. This workplace was obviously not near any of the parking lots. When more than one aircraft was involved on a given day, there was no primary workplace and paragraph 39A (1) (f) did not apply.
Full court decision
The commissioner then appealed to the full court, which allowed the appeal. In a joint judgment, the court found that the senior judge erred in treating paragraphs (c) and (d) of the definition of “principal place of work” in subsection 136 (1) as involving the same “exercise. qualitative and quantitative â, that is, a comparison of the tasks performed by employees at their different workplaces during a given day. The 2 paragraphs contained different tests. Paragraph (d) required focusing on the place of performance of âfunctionsâ, but not paragraph (c). The test in paragraph (c) was broad and was not limited or exhausted by an investigation of the places from or to which the employee performed his duties.
In the view of the tribunal as a whole, it was relevant but not determinative to the investigation required under subparagraph (c) that on any given day an employee was performing central duties on board an aircraft away from his home base. ‘attached. Other evidence relevant to the analysis required by paragraph (c) was the terms and conditions of employment of FCC employees, which were governed by various company agreements. These agreements had several similar characteristics, that is to say that the employees were assigned a home base and that many rights and obligations of the employer and employees were defined by reference to this home port, including lists, rest periods between “tours of duty” (i.e. the period between signing up for registration and logging off at the home base), allowances and parking fees .
Consideration of the other evidence led to the conclusion that each employee’s home airport was their “principal place of work” within the meaning of paragraph (c) of the definition of that term in subsection 136 (1) ) (read with subsection 136 (2)), even on days when the employee does not report to home base at all. The condition of Article 39A (1) (e) (that the employee has a principal place of work, ie the home base) was fulfilled. Since the relevant parking facilities were provided âclose toâ this main workplace, it follows that the condition of Article 39A (1) (f) was also fulfilled.
In obiter dicta, the tribunal then concluded that, if it had been necessary to draw a conclusion on the application of paragraph (d) of the definition of “principal place of work” in subsection 136 (1) to the facts , the conclusion would have been that the relevant home base of each employee was not the primary location âfrom or whereâ the functions of FCC employees were performed. The senior judge’s extensive analysis and comparison of the tasks performed in the various workplaces showed that the predominant location from or from which the flight and cabin tasks were performed was the relevant aircraft.
Source: FC of T v Virgin Australia Regional Airlines Pty Ltd and Anor 2021 ATC Â¶20-807;  FCAFC 209, November 22, 2021.