Edited version of your written advice

Authorisation Number: 1012759416398

Ruling

Subject: Car parking expenses

Question

Are you entitled to a deduction for your car parking expenses?

Answer

No.

This ruling applies for the following periods:

Year ended 30 June 2014

The scheme commences on:

1 July 2013

Relevant facts and circumstances

You were an employee.

You began your working day at home and spent an hour or more each morning dealing with email etc.

Some days of the week you worked from home all or most of the day.

To facilitate easy transition between home office, work office and customers, you deemed that the most productive and efficient means was to take a carpark in the city on a continuing monthly basis.

The time spent parked at your primary place of employment varied and could be greater or less than four hours per day.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Income Tax Assessment Act 1936 Section 51AGA.

Reasons for decision

Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 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, or relate to the earning of exempt income.

It is the Commissioner's view that a deduction is allowable for parking fees (but not fines) and tolls if the expenses are incurred by an employee while travelling:

(a) between two separate places of work;

(b) to a place of education for self-education purposes (if the self-education expenses are deductible); or

(c) in the normal course of duty and the travelling expenses are allowable deductions.

A deduction is not allowable for parking fees and tolls incurred when employees are travelling between their home and their normal place of employment. The cost of that travel is a private expense and the parking fees and tolls therefore have the same private character. A deduction is allowable for parking fees and tolls if the travel is not private, for example if your home is a base of operations.

An employee's home may constitute a base of operations if the work is commenced at or before the time of leaving home to travel to work and the responsibility for completing it is not discharged until the taxpayer attends at the work site. Whether an employee's home constitutes a base of operations depends on the nature and the extent of the activities undertaken by the employee at home.

In FC of T v. Collings 76 ATC 4254; (1976) 6 ATR 476 (Collings) the taxpayer was a highly trained computer consultant whose employment required her to be on call 24 hours a day. The taxpayer was provided with a portable terminal that was connected to the computer through the telephone line. It was common for her to receive telephone calls at home and give advice to workers at the office any time a problem arose. If she was unable to resolve the problem over the telephone or through the portable computer she would return to the office in order to get the computer working.

In allowing the taxpayer the expenses incurred to travel from home to work on the occasions that that taxpayer had to return to work after hours, the court in Collings held that:

a) the taxpayer had commenced performance of her duties before leaving home and travelled to work to complete those duties. Her obligation was more than just being on stand-by duty at home, and

b) the taxpayer did not choose to do part of the work in two separate places. The two places of work were a necessary obligation arising from the nature of the special duties of her employment.

Collings can be contrasted with Case R61 84 ATC 454; 27 CTBR (NS) Case 118 (Case R61). In that case the taxpayer was employed as a part-time tutor at three colleges. Due to facilities not being available at the colleges, the taxpayer maintained a study at her home where she prepared tutorials and stored teaching materials. The Commissioner allowed a deduction for expenses relating to the study but disallowed the taxpayer's claim for travel between her home and the colleges. The taxpayer contended that her home was her base for her employment as a tutor and therefore she was travelling between two places of income earning activity.

The Board of Review considered that although the taxpayer prepared her tutorials at home and carried out the tutoring at the colleges, the taxpayer was not commencing employment at home then completing it at her workplace in the same way as in Collings. It was held that her travel was merely travel between home and work and was not undertaken in the course of earning assessable income. Consequently, her claim for the travel was disallowed by the Board of Review.

In your case you begin your working day at home by spending an hour or more each morning dealing with email etc. It is considered that your situation is closer to that in Case R61 rather than Collings. Although you undertake work activities at home, your home is not considered to be a base of operations.

As your travel between home and work is private in nature, the monthly car parking expenses you incurred to allow you to park your car near to your place of work are also considered to have a private character. Although it is acknowledged that at times you would travel between clients' premises and your office, it is considered that the predominant purpose of the expenses is for home to work travel.

Therefore, you are not entitled to a deduction under section 8-1 of the ITAA 1997 for the car parking expenses incurred.

Furthermore, even if the car parking expenses were deductible under section 8-1 of the ITAA 1997, the expenses would be specifically made not deductible in certain circumstances under section 51AGA of the Income Tax Assessment Act 1936 (ITAA 1936).

Section 51AGA of the ITAA 1936 specifically deals with the deductibility of car parking expenses and provides that a deduction will not be allowed to an employee for car parking expenses incurred on a particular day if, on that same day:

• the employee has a primary place of employment

• the car is parked for one or more daylight periods exceeding four hours in total at, or in the vicinity of, that primary place of employment

• the expenditure is in respect of the provision of the car parking facilities, and

• the car was used for travel between the place of residence and that primary place of employment.