FBT: parking for airline employees exempt from FBT

The Federal Court ruled that an aircraft could be (and was) the primary place of employment of the flight attendants and cabin crew of 2 air operators, which resulted in the taxpayers’ provision of parking to these employees is exempt from employee benefit tax. (FBT).


The taxpayers (subsidiaries of Virgin Australia Holdings Ltd) both operated passenger air transport services in Australia. They owned or leased all of the aircraft they operated and operated from multiple premises including terminals at Sydney, Brisbane and Perth airports.

Taxpayers have entered into contracts with commercial car park operators at Sydney, Brisbane and/or Perth airports 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 (home airport ).

The taxpayers were assessed against FBT for parking benefits provided to FCC employees for the FBT years ended March 31, 2013 through March 31, 2016 inclusive on the basis that the employees’ “primary place of employment” was their terminal. base airport in Sydney, Brisbane or Perth. When the taxpayers’ objections to the assessments were overruled, they appealed to the Federal Court.

Since the taxpayers entered into a contract directly with the operators of the relevant car parks where their employees parked their cars, the benefit was not an “expense payment benefit” within the meaning of Article 20 of the Law of 1986 on the Tax Assessment of Employee Benefits (the Act) and therefore not a “benefit qualifying for the payment of parking charges”. The taxpayers’ supply of parking facilities for their employees would therefore be exempt unless section 39A of the Act applies. The issue was whether, pursuant to Section 39A(1), the Taxpayers’ FCC employees had a “principal place of employment” on each relevant business day. If so, where was this “main place of employment”? A third question was whether, each working day, the employee’s car was “parked at or near [the employee’s] main place of work.

The commissioner argued that, on each business day, FCC employees had a “primary place of work,” which was the “home” airport terminal where each employee generally signed in for a shift. The primary place of employment of FCC employees was not an aircraft on which the employee worked because an individual aircraft was no more than a temporary and transitory place of employment for an employee and therefore did not constitute a “main place of work”. Alternatively, the Commissioner held that an employee’s principal place of work was the airport where he started his shift on a given day — which may have been somewhere other than the “home base”.

With respect to the third issue, the Commissioner argued that the employee’s car was “parked at or near [the employee’s] main duty station” either each day the employee used the car park at his home base (if the main case of the second question was accepted) or each day the employee used the car park at the airport where he started his change (if the alternative submission on the second question was accepted). In the latter case, the appeal should be allowed, but only for each day on which the employee started his shift at a terminal other than his home base.

The phrase “principal place of employment” in subsection 136(1) referred to “business premises”. According to section 136(2), the definition of “business premises” in section 136(1) provided that “premises” included a ship, vessel, floating structure, aircraft or train. The taxpayers relied on the fact that subsection 136(2) included aircraft as a type of premises for the purposes of the definition of “business premises” in subsection 136(1), which opened the door to the possibility that the “an employee’s principal place of employment” could include an aircraft and not be limited to a fixed structure, such as a terminal building.


In allowing the ratepayers’ appeal, the court held that an aircraft would be a principal place of employment if it was either “the sole or principal place of employment” (i.e. paragraph c ) of the definition) or “the sole or principal place from which or from which the employee performs the functions of his employment” (i.e. paragraph (d) of the definition). The taxpayers’ “business premises” included not only the aircraft used in their business, but also the parts of the 3 air terminals used in their business.

The employees concerned did not have a “single workplace”. However, according to Griffiths J., the ordinary meaning of “primary” invited determination of which workplace was first or highest in rank or importance. In the case of domestic flights, where FCC employees operated only one aircraft on any given day, their primary place of work that day was that aircraft. In such a case, the major part of the time of the employees concerned was devoted to the performance of their duties on board the aircraft and during the 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’ contention that the duties performed by FCC employees at the terminals were properly described as incidental to the primary duties performed on board the aircraft had to be accepted.

These findings led to the determination of the third question. When FCC employees flew in only one aircraft on any given day, that was their primary workplace, and that workplace was clearly not nearby from one of the car parks. When more than one aircraft was involved on a single day, there was no primary place of employment and section 39A(1)(f) did not apply.

Source: Virgin Australia Airlines Pty Ltd & Anor v FC of T 2021 ATC ¶20-793; [2021] FCA 523, May 18, 2021.

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