Private ruling: Expenses for a motorhome and trailer
Published: June 2014
Ruling period: Year ended 30 June 2014 | Year ended 30 June 2015 | Year ended 30 June 2016 | Year ended 30 June 2017 | Year ended 30 June 2018
Date scheme commenced: 1 July 2013

Ruling: Q1: Are you entitled to a deduction for expenses in relation to a motorhome and trailer? | A1: Yes.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1 | Income Tax Assessment Act 1997 Section 40-25

Reasons for decision: Summary: Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) deals with general deductions and allows a deduction for all losses or outgoings to the extent to which they are incurred in gaining or producing assessable income, except to the extent that they are outgoings of a capital, private or domestic nature. Section 40-25 of the ITAA1997 allows a deduction for the decline in value of a depreciating asset to the extent that it is used for a taxable purpose. Generally expenditure incurred for accommodation expenses is private in nature and the use of a depreciating asset for accommodation would not be for a taxable purpose. An exception to this principle for expenses of a similar nature is where they are incurred by an employee whose work is itinerant. Taxation Ruling TR 95/34 deals with employees carrying out itinerant work and their deductions, allowances and reimbursements for transport expenses. It is considered that the guidelines provided in that ruling may also be applied to a taxpayer carrying on a business to assist in determining when the use of an asset is private in nature and not for a taxable purpose. Paragraph 7 of TR 95/34 sets out a number of indicators of itinerancy including: • travel is a fundamental part of the taxpayer's work, • the existence of a 'web' of work places, and • the taxpayer continually travels from one work site to another. You will be travelling around promoting your product in major cities and regional towns. Therefore, travel is a fundamental part of your income earning activities as you travel from one site to the next to see clients. You also have a 'web' of work places. That is, there are a number of different sites to which you will travel on a regular basis. You will also travel continually from one site to another not stopping at only one site for the whole period away but will move between a number of sites usually staying in one site for only one or two nights. It is considered that travel is integral to the business and the motorhome and trailer are used for a taxable purpose. You would therefore be entitled to claim a deduction for expenses such as leasing or hiring costs and travel expenses relating to the motorhome and trailer. If you were to purchase a motorhome you would be entitled to a decline in value deduction for the business use percentage.

Relevant facts: You are based in a major capital city. | The duration of these trips will be approximately one to two days but may extend when you need to see more clients. | You initially intend hiring or leasing a motorhome and trailer which will be your accommodation and will carry your product. You will incur leasing or hiring costs and travel expenses. | You may purchase a motorhome at a later stage which could create a decline in value amount.