Private ruling: Work related expenses
Date of advice: 15 June 2016
Published: July 2016
Ruling period: Year ended 30 June 2014 | Year ended 30 June 2015
Date scheme commenced: 1 June 2014

Ruling: Q1: Are you entitled to claim work related the expense of a car park as a deduction against your assessable income? | A1: Yes.

Relevant facts and circumstances: You work in the real estate industry as an employee and work in an office outside the city. After travelling to work at the office you then arrange appointments and travel to various surrounding suburbs as required by your clients. Your travel is not subject to any regular pattern of activity as client needs determine where you are required to travel. You frequently travel into the City to meet clients and find it difficult to locate suitable car parking in the city. Accordingly you have rented a single car space in the City. You park in this car park when you need to visit clients in the city for meetings to discuss their real estate needs.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 8-1 | Income Tax Assessment Act 1997 section 900-B

Reasons for decision: Summary: An expense is deductible under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) if and to the extent to which it is incurred in gaining or producing your assessable income or in carrying on a business for that purpose. However you cannot claim a deduction for an expense that is of a capital, private or domestic nature. A deduction is only allowable if an expense: • is actually incurred • meets the deductibility tests • satisfies the substantiation rules. Work-related travel expenses you incur that are directly related to your work as an employee include: • public transport, including air travel and taxi fares • bridge and road tolls, parking fees and short-term car hire • meals and incidental expenses you incur while away overnight for work • expenses for motorcycles and vehicles with a carrying capacity of one tonne or more, or nine or more passengers, such as utility trucks and panel vans • actual expenses (such as any petrol, oil and repair costs) you incur to travel in a car that is owned or leased by someone else. You are an employee with a primary place of employment outside the city. Your car is being used for travel between your residence and your primary place of employment before you travel on from your place of employment to other destinations. Your travel is determined by the needs of your clients and you may be required to travel to many nearby suburbs in order to meet clients after attending your suburban office. You advise that you have sufficient client demand for meetings in the city to require that you arrange a parking space in the city. Parking in this city is difficult to locate on short notice. In order to reliably schedule client meetings and in order to ensure that you can attend such meetings on time you have rented a car space in the city. You argue that this parking is a necessary expense incurred in gaining or producing your business income as your ability to attend client meetings reliably and on-time is an essential criteria in order for you to obtain client listings and hence to generate a business income from real estate sales. Accordingly, as you meet the conditions of the Income Tax Assessment Act 1997 section 8-1 you are entitled to claim these car parking costs against your assessable income to the extent that this expense is apportioned between personal and business usage as per normal requirements for business expenses. | Detailed Reasoning - Substantiation: Under subdivision 900-B of the ITAA 1997, a deduction is not allowable for a work expense, unless the expense qualifies as a deduction under a provision of the Act and written evidence of the expense has been obtained and retained by the employee taxpayer. To assist with apportionment between personal and business usage of your car parking space in the city, you may wish to retain your business diary and other business records in order to allow proper calculation of any personal use to be made. | Detailed Reasoning - Other references (Non ATO view - example court cases, etc.):: Macquarie Dictionary, version 5.0.0, 1/10/01