ATO Interpretative Decision

ATO ID 2001/425 (Withdrawn)

Income Tax

• This ATO ID is a straight application of the law and does not contain an interpretative decision.
  This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Can the taxpayer claim a deduction for car parking expenses under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) when they park their car at their primary place of employment for more than four daylight hours in a day?

Decision

No, the taxpayer cannot claim a deduction for car parking expenses under section 8-1 of the ITAA 1997 when they park their car at their primary place of employment for more than four daylight hours in a day.

Facts

The taxpayer is an employee and is on occasions required to travel by car to various sites as part of their employment.

The taxpayer is required to use their own car for this purpose and is paid an allowance by their employer.

The taxpayer uses the car for travel between their place of residence and their primary place of employment on those days when they are required to travel to the other sites.

The office building, which contains the employer's offices and is the taxpayer's primary place of employment, charges full commercial rates for parking facilities.

The taxpayer incurs parking expenses on the days they are required to bring their car to work.

The taxpayer generally only uses their car for one or two hours for work purposes on the days when they are required to travel to the other sites. Therefore on the days the taxpayer incurs parking expenses, the car remains in the car park for one or more daylight periods exceeding 4 hours in total between 7.00 am and 7.00 p.m.

Reasons for decision

Section 8-1 of the ITAA 1997 allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income except where the outgoings are of a capital, private or domestic nature.

Further, paragraph 8-1(2)(d)of the ITAA 1997 provides that a deduction will not be allowable if another provision of the Act prevents the taxpayer from deducting it. Section 995-1 of the ITAA 1997 defines 'this Act' to include the Income Tax Assessment Act 1936 (ITAA 1936).

Section 51AGA of the ITAA 1936 specifically deals with the deductibility of car parking expenses and provides that a deduction will not be allowed to an employee for car parking expenses incurred on a particular day if:

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on that day, the employee has a primary place of employment; and

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on that day, the car is parked for one or more daylight periods exceeding 4 hours in total at, or in the vicinity of, that primary place of employment; and

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the expenditure is in respect of the provision of the car parking facilities; and

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on that day, the car was used for travel by the employee between their place of residence and their primary place of employment

Section 51AGA of the ITAA 1936 will not apply if its operation is excluded under the regulations or the expenditure was incurred prior to 1 July 1993. Neither of these circumstances applies to the taxpayer.

Under subsection 51AGA(2) of the ITAA 1936 the terms 'primary place of employment' and 'daylight hours' are to have the same meaning as in the Fringe Benefits Tax Assessment Act 1986 (FBTAA).

Section 136 of the FBTAA provides that 'primary place of employment' means the employer's business premises, or associated premises, on which an employee would normally carry out his/her employment duties. This section also provides that 'daylight hours' means those hours between 7.00am and 7.00pm.

The taxpayer is required to bring their car to work on certain days in order to fulfil the requirements of their employment. The taxpayer incurs car parking expenses in doing so. These expenses were incurred in order to earn their assessable income and would be deductible under section 8-1 of the ITAA 1997.

However on the days that the taxpayer incurs those car parking expenses they have used their car to travel between their place of residence and their primary place of employment. In addition the car is parked at the taxpayer's primary place of employment for more than four hours a day between the hours of 7.00am and 7.00pm.

The taxpayer meets all of the conditions required for the operation of section 51AGA of the ITAA 1997. The taxpayer is therefore precluded from claiming a deduction for car parking expenses under section 8-1 of the ITAA 1997 by virtue of section 51AGA of the ITAA 1936.

Legislative References:
Income Tax Assessment Act 1997
   section 8-1
   subsection 8-1(2)
   paragraph 8-1(2)(d)
   section 995-1

Keywords
Deductions & expenses
Parking expenses

Business Line:  Small Business/Individual Taxpayers

Date of publication:  4 October 2001

ISSN: 1445-2782