Private ruling: Work related expenses
Published: September 2011
Ruling period: Year ended 30 June 2011
Date scheme commenced: 1 July 2010

Ruling: Q1: Are you entitled to a deduction for costs incurred as a result of damage caused to a vehicle 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, 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. 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 the customer's vehicle 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 a vehicle in an accident that happened during the course of your employment.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Relevant facts: As part of your employment you load goods into customers' vehicles. | While loading a customer's vehicle you accidently damaged it. | As it was your fault, you paid for repairing the damage to the vehicle using your own funds.