Licensed carparks and fuel cards a fringe benefit liability

These questions and answers were selected from the CCH Question and Answer Service.

Are there any exemptions from Fringe Benefit Tax where an employer provides carparks to employees? In our case, the carparks are merely licensed for the employer's use and are not leased. The employees use their personal vehicles for company business and require ready access to their vehicles.

Unfortunately, no exemptions assist this employer. As the carparks are only licensed for your client's use, they fall outside the exemptions contained in the legislation.

The IRD has issued public ruling BR Pub 99/6 on the FBT implications for carparks provided by employers. The ruling considers the meaning of the term "premises of the employer".

The IRD's view is that the exemption applies only when the employer has an exclusive legal right or interest in the carpark.

What this means in practice is that carparks which are merely licensed for the employer's use will fall outside the exemption, while carparks leased by the employer will qualify for the exemption.

An example would be where an employer arranges parking at a commercial carpark for employees and the employer is allotted a particular area (eg spaces 8-10) and the carpark proprietor bills the employer direct.

The carpark is not owned by the employer and is not subject to a rental or lease agreement between the employer and carpark proprietor.

The IRD's view is that the carparks are not "premises of the employer"; the employer merely has the right to use them.

The arrangement is simply a contractual licence, outside the FBT exemption.

Is FBT payable on a fuel card issued to an employee if the employee does not reimburse the employer? Is there any way to limit the FBT payable on this?

Yes, the fuel card will be subject to FBT. This is based on the assumption that the employer contracts with the fuel company and the invoice is in the company's name.

If the invoice is in the employee's name, the payment is considered expenditure on account of an employee and as such, is subject to PAYE.

* Visit the CCH website or phone 0800 500-224.