Private ruling: Income - motor vehicle allowance
Published: September 2011
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: A1: Yes. | Q1: Are you entitled to a deduction for motor vehicle expenses when you travel between your home and the airport for work? | A2: Yes.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You are employed. You undertake official travel approximately once every X weeks. Usually, you are away from home for 1 or 2 nights. You contend that approximately X0% of the time you travel from your home to the airport. Otherwise you go directly from work to the airport. You receive a travel allowance in cash using a travel card. When travelling to and from the airport for work purposes, the taxi fare is approximately $XXX each way. A per kilometre rate of XX cents is payable for the use of your own vehicle. You receive around $XXX for each trip and these amounts have not been included in you income tax return. You have also not claimed any deductions for the kilometres travelled.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 15-2 | Income Tax Assessment Act 1997 section 28-25

Reasons for decision: Summary: Under section 15-2 of the Income Tax Assessment Act 1997 (ITAA 1997) your assessable income includes the value to you of all allowances, gratuities, compensation, benefits, bonuses and premiums provided to you in respect of you employment. Therefore any car/motor vehicle allowance that is paid to a taxpayer under a cents per kilometre method would be classified as part of the overall income that the taxpayer receives. Taxation Determination TD 93/196 states at paragraph 2 that motor vehicle expenses payments are included in the assessable income of an employee if: · they are received as an allowance; or · they are received as a cents per kilometre reimbursement In your case, you receive an allowance from your employer for your motor vehicle expenses on a cents per kilometre basis and therefore the payment will be included as part of your assessable income. | Detailed Reasoning - Travel expenses: Section 28-25 of the ITAA 1997 allows a deduction for car expenses based on the number of business kilometres travelled in your own car during the income year. Business kilometres are kilometres you have travelled in the course of producing your assessable income. Under subsection 28-25(2) of the ITAA 1997 this method can only be used if the taxpayer travels five thousand business kilometres or less and restricts the claim to five thousand business kilometres or less in the income year. You calculate your deduction by multiplying the total number of business kilometres your car travelled in the income year by the number of cents based on your car's engine capacity. The cents per kilometre rate is published for each income year and can be obtained from our website www.ato.gov.au. In considering the deductibility of travel expenses a distinction is made between travel to work and travel on work. It is only if the duties of the job require a taxpayer to travel that the taxpayer's expenses can be deducted ( Taylor v Provan 1975 AC 194). In your case, you are travelling on work because your travel is a fundamental part of your employment. Therefore, the costs associated with you motor vehicle when travelling between your home or workplace and the airport for work are deductible under section 28-25 of the ITAA 1997.

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. | Subject: Income - motor vehicle allowance: Should an amount you receive as a motor vehicle allowance be included in your assessable income?