Private ruling: Vehicle accident
Published: September 2013
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Are you entitled to a deduction for costs incurred as a result of damage caused to work vehicles in an accident that happened during the course of your employment? | A1: Yes


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1

Reasons for decision: Summary: Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for all losses or outgoings to the extent that they are incurred in gaining or producing assessable income. However, no deduction is allowable where the losses or outgoings are of a capital, private or domestic nature. Expenditure in the form of compensation or damages paid to third parties will be an allowable deduction under section 8-1 of the ITAA 1997 to the extent that it is incurred in the course of gaining or producing assessable income, and the expense is not of a capital, private or domestic nature. In your case an accident occurred during the course of your employment. As the accident occurred in the course of producing assessable income, the expenses associated with the liability to pay for the damage to your employer's vehicles are incidental and relevant to the production of that assessable income and are not of a capital, private or domestic nature. Therefore, you are entitled to a deduction for costs incurred as a result of damage caused to the vehicles.

Relevant facts: Part of your employment duties is moving company owned vehicles from one place to another for company customers. | While undertaking your employment duties you accidently backed a company vehicle into another company vehicle, causing damage to both. | In terms of your employment you had to contribute or pay for the vehicle repairs. | This amount has been deducted from your salary by your employer.