Edited version of your private ruling

Authorisation Number: 1012543001950

Ruling

Subject: Deduction for travel expenses

Question 1

Are you entitled to a deduction for your monthly membership fee?

Answer 1

No.

Question 2

Are you entitled to a deduction for the cost of hiring a car?

Answer 2

Yes, in part.

This ruling applies for the following period

Year ended 30 June 2013

The scheme commenced on

1 July 2012

Relevant facts

You are a worker and work for different employers at their workplace and also see private clients.

You do not own a car and when you are not able to travel by public transport from home to work and between workplaces you will hire a car. You will hire a car for whole or part of a day. You pay a month fee to participate in the car hire scheme and pay a charge for use of the hire car.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Income Tax Assessment Act 1997 Section 25-100

Reasons for decision

Membership

Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a taxpayer to deduct from their assessable income any loss or outgoing that is incurred in gaining or producing their assessable income.

You pay a monthly fee to be a member of the sharecar arrangement. This allows you to participate in the scheme. You pay this fee irrespective of whether you hire a car.

We acknowledge under section 8-1 that there is a nexus between the payment of the monthly fee and the expense incurred when hiring a car.

 However, your payment of sharecar monthly fee is to obtain membership and gives you the right to participate, it is not an expense incurred in producing your assessable income.

These payments are not sufficiently connected with your income producing activities and you are not entitled to claim a deduction for this expense.

Travel

Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) generally allows a deduction for any loss or outgoing to the extent that it is incurred in gaining or producing assessable income.

It is settled law that expenses of travelling to work are not deductible as they are not incurred in gaining the assessable income, but as a pre-requisite to gaining assessable income (Lunney v FC of T; Hayley v FC of T (1958) 100 CLR 478).

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).

In your case when you are travelling to and from work the expenditure incurred is not an allowable deduction under section 8-1 of the ITAA 1997. Your travel expenses are as a result of living in one place and working in another, and so are private in nature.

Section 25-100 of the ITAA 1997 allows a deduction of expenses incurred in travelling between workplaces.

In your case, you are travelling from home to work, between workplaces and from work to home.

You are entitled to a deduction for costs incurred for travelling between workplaces; you are not entitled to a deduction for the cost of travelling from home to work and from work to home.

You incur a charge for the use of the hire car for the day that you hire it and you would need to apportion this cost between your travelling to and from work and travel between your places of employment and you are entitled to a deduction for the allowable portion.