Private ruling: Work Related Expenses - Vehicle
Ruling period: Year ended 30 June 2011
Date scheme commenced: 1 July 2010

Ruling: Q1: If you have used your vehicle for work related purposes for only part of the year, are you entitled to claim a deduction for a portion of your vehicle expenses for the entire financial year? | A1: Yes. | Q2: In calculating your deduction, are you required to use the percentage of work related use for the entire financial year rather than the percentage of work related use during the period in the financial year you were employed in a position where you used your vehicle for work? | A2: Yes.

Relevant facts and circumstances: You were required to use your own vehicle to travel to different sites as part of your job. You travelled to multiple sites each day. You maintain a logbook for your vehicle. Your work, involved you attending the main office once every few months to download work. The rest of the time, your work involved you travelling from home to the various work locations. You used your vehicle for the first X weeks of the 2010-11 year of income for work purposes. You then left this employment The only vehicle expense that you have paid for during this period of employment is fuel. You were not reimbursed by your employer for any expenses. You have travelled less than 5000km for work during this financial year. For the remainder of the 2010-11 year of income, you do not foresee employment in a position providing entitlement to claim further work related vehicle expenses. You have vehicle expenses including registration, insurance, depreciation and possible repairs and maintenance yet to be paid for the 2010-11 year of income.


Reasons for decision: Summary: As your employment is considered to be itinerant work, you are entitled to claim a deduction for the work related use of your vehicle. As you have been using a logbook to substantiate the work related use of your vehicle, you will need to use the odometer reading from the start and end of the 2010-11 year of income to determine the percentage of eligible work related use for your vehicle. That is, you need to calculate your work related use of the vehicle for the entire year , not the work related use for the period you were employed doing itinerant work during the year. You then apply your percentage of work use of the vehicle for the entire year to the total of all the car expenses you incurred during the 2010-11 year of income to determine your deduction for that year. | Detailed Reasoning - Detailed reasoning: Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for a loss or outgoing to the extent to which it is incurred in gaining or producing assessable income, except where the loss or outgoing is of a capital, private or domestic nature, or relates to the earning of exempt income. A deduction is generally not allowable for travel by an employee between home and their normal workplace as it is considered to be a private expense (Lunney v. Federal Commissioner of Taxation (1958) 100 CLR 478; 11 ATD 404) (Taxation Ruling IT 112). The cost of travelling between home and work is generally incurred to put the employee in a position to perform duties of employment, rather than in the performance of those duties. Put at its simplest, travel to work is private; travel on work is business. It should be noted that the mode of transport, the availability of transport, the lack of suitable public transport, the erratic times of employment, the time of travel, the distance of travel and the necessity of travel does not alter the essential character of travel between home and work as being private in nature. However, a deduction for car expenses between home and work may be allowed if a person's job is itinerant. Itinerancy The question of whether an employee's work is itinerant is one of fact, to be determined according to individual circumstances. It is the nature of each individual's duties and not their occupation or industry that determines if they are engaged in itinerant work. Further, itinerant work may be a permanent or temporary feature of an employee's duties. Taxation Ruling TR 95/34 provides guidelines for establishing whether an employee is carrying out itinerant work. The ruling states that the following characteristics are indicators of itinerancy: 1. travel is a fundamental part of the employee's work 2. the existence of a 'web' of work places in the employee's regular employment, that is, the employee has no fixed place of work 3. the employee continually travels from one work site to another. An employee must regularly work at more than one work site before returning to his or her usual place of residence 4. other factors that may indicate itinerancy (to a lesser degree) include: o the employee has a degree of uncertainty of location in his or her employment (that is, no long term plan and no regular pattern exists) o the employee's home constitutes a base of operations o the employee has to carry bulky equipment from home to different work sites o the employer provides an allowance in recognition of the employee's need to travel continually between different work sites. Whilst the above characteristics are not exhaustive, they provide guidelines for determining whether an employee's work is itinerant. It is considered that no single factor on its own is necessary decisive. In your case, you were employed in a position which had no permanent place of work and as a fundamental part of carrying out your duties you were required to use your own vehicle to travel between various work locations. As such your employment during the financial year satisfies the requirements of itinerant work. Therefore you are entitled to claim a deduction for a portion of your vehicle expenses under section 8-1 of the ITAA 1997. Apportionment of Work Related Vehicle Expenses Division 900 of the ITAA 1997 provides the rules relating to substantiating work related deductions. Subsection 900-15(1) of the ITAA 1997 states that in order to deduct a work expense you need to substantiate it by getting written evidence. Deductible vehicle expenses include decline in value (depreciation), fuel, registration, insurance, interest, repairs, maintenance and other costs of running the vehicle. In your case, you have used your vehicle for work related purposes for the first X weeks of the 2010-11 financial year. However, throughout the financial year you have continued to accumulated vehicle expenses outside of your period of employment. As the additional expenses have been accrued in the same financial year that you were using the vehicle for work related purposes, you are entitled to claim a deduction for a portion of these vehicle expenses for the 2010-11 year of income under section 8-1 of the ITAA 1997. It should be noted that, as you have been using a logbook to substantiate the work related use of your vehicle, you will need to use the odometer reading from the start and end of the 2010-11 year of income to determine the percentage of eligible work related use for your vehicle. That is, you need to calculate your work related use of the vehicle for the entire year , not the work related use for the period you were employed doing itinerant work during the year.

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