Private ruling: Towing fees
Date of advice: 3 August 2015
Published: August 2015
Ruling period: Year ended 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Are you entitled to a deduction for your towing fees? | A1: Yes.

Relevant facts and circumstances: As part of your work duties you were using your car to make deliveries. You parked in a tow away zone. Your car was subsequently towed and removed. You had to pay towing fees to retrieve your vehicle. You did not receive a fine or infringement.

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, or are necessarily incurred in carrying on a business for the purpose of gaining or producing assessable income. However, no deduction is allowable where the losses or outgoings are of a capital, private or domestic nature or another provision prevents the deduction. In Ronpibon Tin NL and Tongkah Compound NL v. Federal Commissioner of Taxation (1949) 78 CLR 47; (1949) 4 AITR 236; (1949) 8 ATD 431, the Court established that, for a loss or outgoing to be an allowable deduction, there must be a nexus between the outgoing and the assessable income so that the expenditure is incidental and relevant to the taxpayer's income-producing or business operations. In your case you were using your vehicle for work purposes and it was towed away. You incurred towing fees to retrieve your vehicle. As the fees were occurred in the course of producing assessable income, the expenses 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 expenses under section 8-1 of the ITAA 1997.