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Ruling

Subject: Deduction- parking expenses

Question 1:

Are you entitled to a deduction for monthly parking expenses to park your employer's car near your main residence?

Answer: No.

Question 2:

Are you entitled to a deduction for parking expenses while travelling on work?

Answer: Yes.

This ruling applies for the following period:

Year ended 30 June 2010
Year ended 30 June 2011

The scheme commenced on:

1 July 2009

Relevant facts

Your employment require you to travel to work at a number of different sites each day.

You had undertaken the following travel from home:

· directly to your employer's office to undertake your employment duties

· directly to a number of sites and then on to your employer's office or home.

Your employer advises you by telephone, email or when you attend your employer's office as to where you are required to travel.

Your employer provides you with an office to undertake your duties.

Some days you may not travel to sites and your whole day is spent in the office.

You work from home as a matter of personal choice.

You work a number of hours a week from home.

Before leaving home to travel to a site you may undertake some work activities.

Your employer provides you with a car.

You park your employer's car at a secure car park near your main residence when you are at home.

You carry work related equipment.

Your employer does not provide secure storage for this equipment.

Your employer does not provide for car parking at their office.

When you arrived at your employer's office you park your employer's car near their office.

You do not receive an allowance for parking.

You paid parking fees.

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.

Taxation Ruling TR 95/22 discusses the deductibility of parking fees. Although this ruling deals with building workers, the ruling offers guidance on this issue for all employees. 

TR 95/22 states at paragraph 106:

A deduction is not allowable for parking fees and tolls incurred when building workers are travelling between their home and their normal place of employment (see Case C47 71 ATC 219; 17 CTBR (NS) Case 44 ). The cost of that travel is a private expense and the parking fees and tolls therefore have that same private character.

A deduction is allowable for parking fees and tolls if the travel is not private i.e., travel between home and work - transporting bulky equipment; travel between home and work where home is a base of operations and work is commenced at home; travel between home and shifting places of work (paragraphs 136 to 164 of TR 95/22).

This means that parking expenses may be deductible if the parking is related to travel on work such as visiting clients and parking is at the client's premises.

Where parking expenses are incurred for overnight parking at a person's place of residence or near a person's primary place of residence, these expenses are private in nature as the taxpayer is not considered to be travelling on work. This type of expense is considered to be a prerequisite to earning assessable income.

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).  

Taxation Ruling IT 2543 describes the special circumstances where travel from home to work is deductible. These situations are as follows:

· the taxpayer's home constitutes a place of employment and travel is between two places of employment or business  

· the taxpayer's employment can be construed as having commenced before or at the time of leaving home

· the taxpayer's employment is inherently of an itinerant nature  

· the taxpayer has to transport, by vehicle, bulky equipment necessary for employment  

· the taxpayer is required to break his or her normal journey to perform employment duties (other than including incidental duties such as collecting newspapers, mail, etc.) on the way from home to the usual place of employment, or from the place of employment to home.

The fifth circumstance is not relevant in your case; however, the first four are relevant and are discussed below.

Application to your circumstances

Home as a place of employment or business

Taxation Ruling IT 2199 considers the deductibility of travelling expenses between places of employment and/or places of business. It states that, whether a taxpayer's home constitutes a place of business depends on the nature and the extent of the activities undertaken at home. The fact that a room in the person's home is used in association with employment or business conducted elsewhere will not be sufficient to establish entitlement to a deduction for travel between home and the place of work.

In these circumstances the area of the home where the work is undertaken retains it's private or domestic character and is considered not to be a place of employment or business. Similarly, in your case although you may undertake some duties at home for your employer, the work you carry out at home is done as a matter of convenience as your employer has provided a place to undertake your employment duties. Therefore, your home is not considered to be a place of employment or business and this exception does not apply in your circumstances.

Employment commencing before or at the time of leaving home

A deduction may be allowed for travel where the employee is considered to be on-call and on-duty from the moment of receiving the call in terms of their duties (Taxation Ruling IT 112). In Federal Commissioner of Taxation v. Collings 76 ATC 4254; 6 ATR 476, the taxpayer attended call-outs out of hours and was providing supervision at home and during the journey, after the call-out on a technical problem they had the responsibility to attend. It was held that any travel that was solely outside the normal daily journeys to and from work was deductible.

In your case, you are not on call and are not required to make any journeys outside your normal daily journey to work. Although on some mornings you commence your duties at home before travelling to work, the travel is part of your regular daily journey to work. Therefore your employment is not considered to have commenced at the time of leaving home and this exception does not apply in your circumstances.

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 circumstances, it is not considered that the size and weight of your 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 and 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 from home to the different work sites and your employer's office. Therefore, the travel on those days is considered to be deductible as you are travelling on work. As the travel is considered to be deductible, your parking expenses are similarly deductible.

However, any parking expenses incurred at your main residence as a result of parking your employer's car overnight is not deductible as this parking expense is private in nature. Similarly the parking expenses for parking your employer's car near your main residence during the day is also not deductible as this parking expense is private in nature.

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 on call, you are not carrying bulky equipment and your work is not considered to be itinerant. Consequently, your parking expenses on the days where travel is considered to be private are 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 you are required to travel on work and those days when your travel is private.