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Ruling
Subject: Car expenses
Question
Are you entitled to a deduction for the cost of car repairs, insurance excess and the cost of a loan car?
Answer
Yes.
This ruling applies for the following period
Year ended 30 June 2011
The scheme commenced on
1 July 2010
Relevant facts
You had an accident while on the way to visit a client while driving your employer's car.
As a result of the accident, the car sustained damage and you also ran into your neighbour's garage door and it sustained damage.
You made a claim on your employer's insurance for the damage to the car and garage door.
You paid the excess on the policy and an additional repair cost for the car.
Your employer made you pay for the damage to the car and the excess on the insurance policy.
You paid for a loan car while your company's car was being repaired.
The company car was usually parked at your workplace overnight. This car and the loan car were only used by you for work purposes.
Relevant legislative provision
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 any losses or outgoings to the extent to which they are incurred in gaining or producing assessable income except to the extent outgoings are of a capital, private or domestic nature.
You were travelling in the course of your work when you had an accident. As the accident occurred in the course of producing assessable income, the expenses associated with the liability to pay for the damage to the car, the neighbour's garage door and the cost of the loan car 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 of repairs to the company car, the insurance excess and the cost of the loan car.