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Edited version of your private ruling
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Ruling
Subject: Work related expenses
Question
Are you entitled to a deduction for costs incurred as a result of damage caused to a vehicle in an accident that happened during the course of your employment?
Answer
Yes.
This ruling applies for the following period
Year ended 30 June 2011
The scheme commenced on
1 July 2010
Relevant facts
As part of your employment you load goods into customers' vehicles.
While loading a customer's vehicle you accidently damaged it.
As it was your fault, you paid for repairing the damage to the vehicle using your own funds.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1.
Reasons for decision
Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for all losses or outgoings to the extent that they are incurred in gaining or producing assessable income, or are necessarily incurred in carrying on a business for the purpose of gaining or producing assessable income. However, no deduction is allowable where the losses or outgoings are of a capital, private or domestic nature or another provision prevents the deduction.
Expenditure in the form of compensation or damages paid to third parties will be an allowable deduction under section 8-1 of the ITAA 1997 to the extent that it is incurred in the course of gaining or producing assessable income, and the expense is not of a capital, private or domestic nature.
In your case an accident occurred during the course of your employment. As the accident occurred in the course of producing assessable income, the expenses associated with the liability to pay for the damage to the customer's vehicle are incidental and relevant to the production of that assessable income and are not of a capital, private or domestic nature.
Therefore, you are entitled to a deduction for costs incurred as a result of damage caused to a vehicle in an accident that happened during the course of your employment.