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The Federal Court (Jagot J) has held that the Melrose Car Park is “in the vicinity of” Melbourne Airport’s Terminal 3 within the meaning of s 39A(1)(f) of the Fringe Benefits Tax Assessment Act 1986 (Cth), notwithstanding that the distance between the two was some 1.9 to 2.0 kilometres by the shortest practicable route. Employees of the taxpayer parked their cars at the car park at the taxpayer's expense and caught a shuttle bus to a bus stop located near the terminals.

The taxpayer argued that the distance between the two places and the existence of the shuttle bus service between the two places demonstrated the lack of close physical proximity.

In rejecting the taxpayer's arguments, the Court said, at para 20:

"(I)t cannot be said that, in s 39A(1)(f) of the Fringe Benefits Tax Assessment Act, “in the vicinity of” means sufficiently close to be comparable to on-site parking, within a reasonable walking distance or within a 1 kilometre radius. The phrase means “near”, “proximate” or “close” having regard to the actual locations of the Melrose Car Park, Terminal 3, the distance between those two places and what is located between them. On the facts of this case the distance between the two locations (2 kilometres) is not necessarily a disqualifying factor. The locations are about 20 to 25 minutes apart if traversed on foot and 15 to 20 minutes apart if traversed by vehicle (including the time it takes to walk from the Terminal 4 bus stop to the Terminal 3 entrance and excluding any waiting time for the shuttle bus service which operates between the two locations). Importantly, the two locations are part of the same functional space – Melbourne Airport. While that space is large the two locations in question are both within a relatively small part of that space. According to photographic evidence the land between the two locations is generally flat and physically accessible by vehicle and on foot."

Virgin Blue Airlines Pty Limited v FCT [2010] FCA 631 (18 June 2010).


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