Federal Court of Australia sides with Toowoomba council over Australian Taxation Office over carparking fringe benefits

The Toowoomba Regional Council has won a federal court case relating to carparking that they say will save ratepayers $3m over the next 10 years.

A federal court has ruled in favour of Toowoomba Regional Council over its future tax obligations, in an outcome the mayor says will save ratepayers $3m over the next decade.

Federal justice John Logan on February 6 allowed the council’s appeal in its legal fight against the Australian Taxation Office, which clarified the TRC’s fringe benefits requirements around carparking for employees.

Under the ATO’s fringe benefits scheme, employers pay tax for perks offered to employees that are separate from salary, wages or super fund contributions.

They can include parking, gym memberships, free tickets, discounted loans, school fee reimbursements or use of a work car.

In relation to carparking, employers can be determined as providing a fringe benefit if it meets a series of criteria, including that employees parked their cars within 1km of a commercial parking station that charges an all-day fee greater than the ATO’s carparking threshold (set at $10.77 for 2025).

The ATO had questioned the council in late 2023 as to whether Grand Central Shopping Centre’s carparking station, which is not far from the TRC’s main administration spaces, was “commercial parking station”.

Grand Central car park as seen from City Bowls Club, Tuesday, February 6, 2018.

Justice Logan’s ruling ordered the council could respond to that question with “no”, because it was “unnecessary to answer”.

Mayor Geoff McDonald said the result from the complicated tax matter would save the council millions in tax over several years.

“While this was a complex matter, put simply, this will save our region’s ratepayers over $3 million during the next 10 years, which has been factored into our long-term financial forecast,” he said in a statement.

“At a time when the organisation is looking to gain efficiencies wherever we can, this is a great outcome for our community.

“Justice Logan remarked during the hearing that TRC was being a responsible local government in trying to comply with our country’s revenue law.”

Mr McDonald thanked the council’s finance department for building that case to reduce the organisation’s fringe benefits

“Australia’s taxation laws can be complex and so it was important that this matter be progressed and clarified with the outcome proving to be very positive for our community,” he said.

“I thank TRC’s financial services staff who worked hard to seek the clarity of the court with respect to Council’s future tax obligations which will now ultimately save ratepayers about $300,000 per year now and into the future.”