Income Tax Regulations (Amendment)

Overview

The Income Tax Regulations (Amendment) 1993 No. 159, issued under the authority of the Assistant Treasurer, seeks to amend both the Fringe Benefits Tax Regulations and the Income Tax Regulations by introducing specific exemptions related to car parking benefits for employees who are entitled to park in designated disabled person parking spaces. Enacted by the Australian Parliament, the primary purpose of these regulations is to address a gap in the tax framework by providing tax relief for employees with disabilities who use designated parking spaces. The policy objective is to ensure that these employees do not incur additional tax liabilities for car parking benefits or related expense payments, thereby providing a practical and equitable solution that recognises the unique needs of disabled individuals.

Scope and Application

The Income Tax Regulations (Amendment) 1993 No. 159 and Fringe Benefits Tax Regulations (Amendment) amend the existing legislative framework by inserting new regulations specifically targeting car parking benefits provided to employees. The new regulations apply to employees who are legally entitled to park in spaces reserved for disabled persons under state or territory laws. These amendments extend to instances where the employee is either the driver or a passenger in a vehicle displaying identification authorising parking in designated disabled parking spaces. The application of these regulations is restricted to situations where the car parking benefit or expense payment directly relates to parking privileges for disabled individuals, thereby excluding other forms of parking benefits. These amendments are part of a broader effort to provide targeted tax relief and ensure that the benefits are appropriately aligned with the needs of disabled individuals.

Key Provisions

The Income Tax Regulations (Amendment) 1993 No. 159 introduces several significant changes, primarily by amending existing regulations under the Fringe Benefits Tax Assessment Act 1986 and the Income Tax Assessment Act 1936. New Regulations 3A and 13A are inserted into the Fringe Benefits Tax Regulations, while a new Regulation 12 is introduced into the Income Tax Regulations. These changes focus on the tax treatment of car parking benefits provided to employees, particularly those who are entitled to park in spaces reserved for disabled persons. Regulation 3A specifies that a car parking benefit provided to an employee will not be subject to fringe benefits tax (FBT) if the employee is entitled to park in a space reserved for disabled persons under state or territory law and is either the driver or a passenger in a vehicle that displays identification authorising it to park in a public car parking space reserved for disabled persons (FBT Regulation 3A). Similarly, Regulation 13A exempts expense payment fringe benefits related to car parking for employees who meet these criteria from FBT (FBT Regulation 13A). These amendments impose specific obligations on employers who provide car parking benefits to employees. Employers must ensure that any car parking benefits provided to employees who are entitled to use disabled parking spaces are not subject to FBT if the employee or their vehicle meets the identification criteria. For expense payments related to car parking, the same conditions apply to avoid FBT liability. Additionally, under Regulation 12, individuals who are entitled to park in disabled parking spaces can claim a deduction for car parking expenses related to a vehicle displaying the appropriate identification, notwithstanding the general rule in section 51AGA of the Income Tax Assessment Act 1936 (ITAA) (Income Tax Regulation 12). The regulations do not explicitly outline specific offences, penalties, or consequences for non-compliance. However, the failure to adhere to these provisions could result in the misapplication of tax laws, potentially leading to retrospective tax assessments, penalties, or interest charges for any underpaid FBT or income tax. Employers and employees should ensure compliance with these regulations to avoid any adverse tax consequences.