The Toowoomba Regional Council (Council) had sought a Private Binding Ruling (PBR) from the Commissioner as to whether car parking provided to its employees at the Grand Central Shopping Centre parking facility created a Fringe Benefits Tax (FBT) liability — centrally, whether that car park was a 'commercial parking station' under the FBTAA. The Commissioner ruled that it was and maintained that position on objection.
The FBTAA defines a ‘commercial parking station’ to mean ‘in relation to a particular day … a permanent commercial car parking facility where any or all of the car parking spaces are available in the ordinary course of business to members of the public for all - day parking on that day on payment of a fee, but does not include a parking facility on a public street, road, lane, thoroughfare or footpath paid for by inserting money in a meter or by obtaining a voucher’.
At first instance, Logan J found in favour of the Council, holding that the term 'commercial' in the definition of ‘commercial parking station’ meant 'intended to make, or aimed at, or having the potential for financial success intended to make a profit'. The Commissioner appealed on two grounds: first, that the primary judge erred in his construction of 'commercial parking station'; and second, that he erred in his factual finding that the Grand Central car park was not operated commercially for profit.
The majority allowed the appeal on the first ground alone (construction of 'commercial parking station'), finding it unnecessary to address the second ground. Feutrill J agreed but arrived via a different analytical route.
Statutory construction principles
The majority emphasised the settled position that the starting point of statutory construction is the text of the statute understood in context, with simultaneous regard to purpose. Whilst extrinsic materials may be useful to identify the mischief the statute is intended to remedy, it cannot displace the clear meaning of the text nor be substituted for it. Their Honours also cautioned that while dictionaries can be useful, 'no dictionary will provide guidance as to which of those meanings the legislature intended, that is the process of statutory construction which the Court must undertake'.
Feutrill J emphasised that it is 'an error to construe a composite phrase or expression by dividing the phrase and giving separate meaning to each word. That is not the way that language works'. Citing the High Court, Feutrill J observed that Courts should not ‘make a fortress out of the dictionary', but rather should approach interpretation by focusing on the statute’s purpose or object.
Textual analysis
Noting the Macquarie Dictionary provides a range of meanings to the term ‘commercial’ — from the broad ('of, or of the nature of, commerce' and 'engaged in commerce') to the narrower ('capable of returning a profit') — the majority reasoned that the statutory text 'support[s] a general commercial undertaking, but not requiring that next level of specificity that the facility be operated to make or be aimed at making a profit'.
In coming to this view, their Honors also examined the three prescribed methods for calculating the taxable value of car parking fringe benefits (sections 39C, 39D, 39DA of the FBTAA), observing that the 'text of the provisions are not focused upon whether a particular car parking facility operates a profitable operation'. The majority also opined that the broad definitions of 'benefit' and 'fringe benefit' in the FBTAA further reflect a legislative intent not to give these concepts a narrow or confined construction.
In reviewing the context and purpose of the car parking provisions, the majority viewed that the express purpose of the provisions was to calculate the value of the benefit by reference to ‘the cost to the public, not the cost to the operator of the facility and therefore not whether it is profitable'. Their Honors had credence to the applicable Explanatory Memorandum (EM), observing that it explains that 'permanent' and 'commercial' were intended to have their ordinary/dictionary meanings — and that the most common dictionary meaning of 'commercial' supports a meaning of being in the nature of, or engaged in, commerce.
Finally, the majority highlighted a critical practical consideration: 'it could not be known by the employer in each FBT year, save in the most unusual of circumstances, whether a commercial car parking station within the one kilometre radius is or is not conducted profitably or with a view to profit'. As such, the provisions are intended to operate based on 'objectively determinable facts by reference to information that is publicly available', and therefore, ascertaining a profitability motive (or otherwise) could not be the basis of the provisions.
Feutrill J also concluded that the primary judge’s construction of ‘commercial parking station’ was incorrect, however, rather than selecting between 'engaged in commerce' or 'profitable', His Honor construed the composite phrase 'permanent commercial car parking facility' as a whole – concluding it means a permanent car parking facility at which 'fees are paid in exchange for licenses to use car parking spaces in amounts agreed between a licensor and a licensee dealing with each other at arm's length'.
With respect to the definition of ‘commercial parking station’, Feutrill J reasoned that 'the object of the definition … is to identify a potentially comparable substitute for a car parking space an employer provides to an employee'. The concept of comparability in location, type, and use is embedded in the definition and Division 10A of the FBTAA. This, he viewed, is exemplified by the examples in the EM of non-commercial facilities which share a common feature, being that the fees charged do not reflect the market value of a car parking space.
Further, Feutrill J observed that it was not 'obvious' from the ruled facts that the Grand Central facility was not operated 'commercially for profit' on a stand-alone basis. The $500 million redevelopment, introduction of paid parking, and sophisticated ticketless infrastructure were all 'indicative of a car parking facility operated, at least in part, to generate revenue from parking fees', and the ruled facts did not disclose sufficient information to draw the inference the primary judge drew.
