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Edited version of private ruling
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Ruling
Subject: Parking
Are you entitled to a deduction for the cost of monthly parking of your employer's car near your residence?
No.
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 during the day.
Your car is provided by your employer.
You pay for car parking near your apartment as there is no free parking available.
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 number of significant court decisions have determined that for an expense to be an allowable deduction:
· it must have the essential character of an outgoing incurred in gaining assessable income or, in other words, of an income-producing expense (Lunney v. Federal Commissioner of Taxation (1958) 100 CLR 478; (1958) 11 ATD 404; (1958) 7 ATR 166 (Lunney's case)),
· there must be a nexus between the outgoing and the assessable income so that the outgoing is incidental and relevant to the gaining of assessable income (Ronpibon Tin N.L.Tongkah Compound N.L. v. Federal Commissioner of Taxation (1949) 78 CLR 47; (1949) 8 ATD 431; (1949) 4 AITR 236), and
· it is necessary to determine the connection between the particular outgoing and the operations or activities by which the taxpayer most directly gains or produces his or her assessable income (Charles Moore & Co (WA) Pty Ltd v. Federal Commissioner of Taxation (1956) 95 CLR 344; (1956) 11 ATD 147; (1956) 6 AITR 379 and Federal Commissioner of Taxation v. Hatchett (1971) 125 CLR 494; 71 ATC 4184; (1971) 2 ATR 557).
A deduction is generally allowable for parking fees incurred while travelling in circumstances where the travel expenses are deductible, for example, while travelling between two places of work.
In your case, you incur parking fees for parking your employer's car near your apartment. The parking expenses relate to your overnight parking after the completion of your day's work. Parking costs incurred for parking at or near your place of residence is of a private nature. Furthermore, the expenses are not incurred in carrying out your employment duties.
We acknowledge that the private use of your employer's car is limited to home to work travel and you would not otherwise have a car. However, this does not change the nature of the expense. The car parking expenses are not an outgoing incurred in gaining your assessable income. That is, there is an insufficient connection between the car parking expenses and your employment duties. Therefore, no deduction is allowable under section 8-1 of the ITAA 1997.
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