Edited version of private ruling

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Ruling

Subject: Parking Expenses

Question

Are you entitled to a deduction for a portion of monthly parking expenses?

Answer

Yes.

This ruling applies for the following period

Year ended 30 June 2010

Year ended 30 June 2011

Year ended 30 June 2012

Year ended 30 June 2013

The scheme commenced on

1 July 2009

Relevant facts

You are an employee.

You work at a number of different sites and your office during the day.

You spend between two and three hours per day at the office on most days.

Some days you may not travel to sites and your whole day is spent in the office. These days would include days when it is raining.

Your car is provided by your employer.

You are required to carry equipment which weighs approximately 10 kilograms (kgs) and the longest piece of equipment measures about 900 mm in length.

You incur a monthly car parking fee. The car parking is near your work but not provided by your employer.

You do not receive an allowance for parking.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Reasons for decision

Section 8-1 of the Income Tax Assessment Act 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.

A deduction is generally allowable for parking fees incurred while travelling in circumstances where the travel expenses are deductible.

We therefore, need to consider whether your travel expenses are deductible.

Generally the expenses of travel to and from work are not deductible. This is either because such expenditure is private in nature, or because it is not an expense incurred in gaining or producing assessable income.

The case of Lunney & Hayley v. Federal Commissioner of Taxation (1958) 100 CLR 478; (1958) 7 AITR 166; (1958) 11 ATD 404 settled the principle that travel to and from work is ordinarily not deductible. The Full High Court held that costs incurred by a taxpayer in travelling to the place where they work are expenses incurred in order to enable them to earn income but are not expenses incurred in the course of earning that income. The travel is considered to be of an essentially private or domestic nature.

Taxation Ruling TR 95/34 states that there are some situations where it has been accepted that travel by employees between home and work is deductible. These situations are: 

· where the employment can be construed as having commenced at the time of leaving home, for example a doctor on call

· where you travel between home and shifting places of work, that is, an itinerant occupation, and

· if you transport bulky equipment that you use in your work and cannot leave at your workplace.

Your work commences at the time you either reach the site or your office. It is therefore, not commenced at the time of leaving home.

Bulky equipment

The question of what constitutes bulky equipment must be considered according to the individual circumstances in each case. To establish if the equipment you carry is bulky, consideration must be given to its size and weight. 

In Crestani v. FC of T 98 ATC 2219; (1998) 40 ATR 1037, a toolbox which measured 57 x 28 x 25 centimetres and weighed 27 kilograms was considered as bulky, in the sense of cumbersome, and the transport cost was attributable to the transportation of such bulky equipment rather than private travel between home and work. The employer did not provide a secure storage area for the toolbox and the use of public transport was not a viable option.

In your case, the equipment you are required to carry weighs approximately 10 kgs and the longest piece of equipment measures about 900 mm in length. It is not considered that the size and weight of this equipment make it sufficiently heavy or bulky to be regarded as bulky equipment. Therefore, this exception does not apply in your circumstances.

Itinerant

TR 95/34 discusses the characteristics of itinerancy. Indicators of itinerancy that are relevant in your case include:

· travel is a fundamental part of the employees work

· the existence of a web of work places in the employees regular employment, that is, the employee has no fixed place of work

· the employee continually travels from one work site to another.  An employee must regularly work at more than one work site before returning to his or her usual place of residence; and

· the employee has a degree of uncertainty of location in his or her employment (that is, no long-term plan and no regular pattern exists).

Whilst the above characteristics are not exhaustive, they provide guidelines for determining whether an employee's work is itinerant. It is considered that no single factor on its own is necessarily decisive.

In your case, it is accepted that travel is a fundamental part of your work duties as you usually have to travel to more than one client each day. It is also accepted that you have a web of work places as your duties require you to travel to a number of different sites during the day.

You are considered to be engaged in itinerant work on the days that you travel between different work sites, your employer and home. Therefore, travel on those days is considered to be deductible. As stated above, as the travel is considered to be deductible on those days that you travel to different locations, your parking expenses are similarly deductible.

On days that you travel from home to work and do not travel to different sites, your travel is considered to be private in nature and not deductible. This is because your work has not started before leaving home, you are not carrying bulky equipment and your work is not considered to be itinerant on those days. Consequently, your parking expenses on the days where travel is considered to be private are also considered to be private and not deductible.  

As your parking near work is paid on a monthly basis, you will need to apportion the cost between the deductible and private components using a fair and reasonable method. One acceptable method is to apportion the expense based on the days used in a deductible manner and days used for private purposes.

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