Edited version of private advice

Authorisation Number: 1051883702588

Date of advice: 16 August 2021

Ruling

Subject: FBT - car benefits and business journeys

Question 1

Is the provision of a chauffeur a residual benefit under section 45 of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

Answer

Yes

Question 2

Will a car benefit arise under section 7 of the FBTAA if a car that is part of the fleet is garaged at or near the residence of the chauffeur?

Answer

Yes

Question 3

Will a car benefit arise under section 7 of the FBTAA if a car that is part of the fleet applied to a private use by either the chauffeur or the passenger?

Answer

Yes

Question 4

Which of the journeys specified in the ruling application will be considered to be a business journey for the purposes of calculating the taxable value of car fringe benefits under section 10 of the FBTAA?

Answer

Where the chauffeur is the only person using the car, the classification of the journey will be determined by whether the journey is a business journey for the chauffeur.

Where the chauffeur is driving a passenger, the classification will depend upon whether it is a private journey for either the passenger or the chauffeur. If the journey involves private travel for either the chauffeur or the passenger it will not be a business journey.

In applying this principle, the journeys in scenarios 1, 3, 5, 9, 10, 11, 12, 13, 14 will be business journeys.

This ruling applies for the following periods:

Year ended 31 March 20XX

Year ended 31 March 20XX

Year ended 31 March 20XX

Year ended 31 March 20XX

Year ended 31 March 20XX

The scheme commences on:

1 April 20XX

Relevant facts and circumstances

The employer provides Chauffeur services to certain employees.

The allocated vehicles are garaged overnight at each of the chauffeurs' homes.

The employer has a policy which prohibits chauffeurs using the vehicle for their private use. This policy is enforced.

Should both the designated employee and chauffeur be on leave simultaneously, the vehicle is garaged on the employer's premises.

Other aspects

•         The role of the chauffeur includes but is not limited to:

­   driving the designated employee and other persons as directed by the employee

­   mapping out driving routes / scouting the location of upcoming travel destinations

­   couriering duties and other specific tasks as directed by the designated employee.

•         The chauffeur may be directed by the designated employee to travel to numerous locations on any given day.

•         The chauffeur is also responsible for ensuring the vehicle is serviceable, clean and has fuel etc.

•         Generally, the designated employee will inform the chauffeur of his/her driving requirements the day before (including pickup and drop off locations). Unless directed otherwise by the designated employee, the driver will identify an appropriate travel route / course based on this notification.

•         Chauffeurs are considered to start work (that is, their "time clock" starts) upon leaving their personal home to collect the employee as directed by the employee (generally this is the employee's private home, but it may vary). Accordingly, the driver is paid for his/her time while travelling to collect the employee at the start of the day.

•         After initial collection, the designated employee is driven to their desired location.

•         Chauffeurs are considered to finish work (that is, their "time clock" stops) once they arrive home after driving the designated employee to his/her private home or another location as directed by the designated employee at the end of the day. Accordingly, the chauffeur is paid for his/her time while travelling home at the end of the day.

•         Chauffeurs are required to be available to their designated employees outside of their starting and finishing times and on weekends.

•         On the days when the allocated drivers are not used or needed by the designated employee:

­   The driver reports for garage duty.

­   They clock on after arriving at the room.

­   They clock off when they leave the room.

­   Upon reporting for garage duty, the driver takes direction as required. Such direction may include:

o   Car maintenance

o   Training / reviewing updated policies and procedures

o   Completing required paperwork including applications and claims

o   Attending to client duties, requested by absent employees

o   Chauffeur duties for an employee who is performing relieving duties on behalf of an absent employee; and

o   Assigned to other employees where the regular driver is unavailable.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 Section 7

Fringe Benefits Tax Assessment Act 1986 Section 10

Fringe Benefits Tax Assessment Act 1986 Section 45

Fringe Benefits Tax Assessment Act 1986 Section 53

Fringe Benefits Tax Assessment Act 1986 Subsection 136(1)

Fringe Benefits Tax Assessment Act 1986 Subsection 148(1)

Reasons for decision

1.    Is the provision of a chauffeur a residual benefit under section 45 of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

Summary

The provision of a chauffeur is a benefit that is a separate benefit to any car benefits that arise in relation to the car.

As the benefit does not come within Subdivision A of Divisions 2 to 11 (inclusive) it will be a residual benefit under section 45 of the FBTAA.

Detailed reasoning

In general terms, the definition of 'fringe benefit' in subsection 136(1) of the FBTAA provides that a fringe benefit will arise when the following conditions are satisfied:

(i) a benefit is provided to an employee (or an associate of an employee);

(ii) the benefit is provided by the employer, an associate of the employer, or in a situation that comes within either paragraph (e), or (ea) of the fringe benefit definition;

(iii) the benefit is provided in respect of the employment of the employee; and

(iv) the benefit is not one of the benefits specifically excluded from being a fringe benefit by virtue of paragraphs (f) to (s) of the fringe benefit definition.

The definition of 'benefit' in subsection 136(1) of the FBTAA provides that a benefit will include:

any right (including a right in relation to, and an interest in, real or personal property), privilege, service or facility and, without limiting the generality of the foregoing, includes a right, benefit, privilege, service or facility that is, or is to be, provided under:

(a) an arrangement for or in relation to:

(i) the performance of work (including work of a professional nature), whether with or without the provision of property;

(ii) the provision of, or of the use of facilities for, entertainment, recreation or instruction; or

(iii) the conferring of rights, benefits or privileges for which remuneration is payable in the form of a royalty, tribute, levy or similar exaction;

(b) a contract of insurance; or

(c) an arrangement for or in relation to the lending of money.

The provision of a chauffeur to drive a car at the direction of an employee comes within this definition.

In determining the type of benefit that is being provided, section 45 of the FBTAA provides that:

A benefit is a residual benefit for the purposes of this Act if the benefit is not a benefit by virtue of a provision of Subdivision A of Divisions 2 to 11 (inclusive).

As the benefit does not fall within any of the categories covered by Subdivision A of Divisions 2 to 11 (inclusive) of the FBTAA the provision of a chauffeur will be a residual benefit.

The provision of the chauffeur will also not come within the exemption contained in section 53 of the FBTAA for certain benefits provided in respect of a car where a car fringe benefit arises in relation to the car.

Subsection 53(1) states:

For the purposes of this Act:

(a) a car expense payment benefit;

(b) a car property benefit; or

(c) a car residual benefit;

in respect of a car, being a benefit that is attributable to a period when a car fringe benefit was provided, or would but for subsection 8(2) have been provided, in relation to the car, is an exempt benefit.

A 'car residual benefit' is defined in subsection 53(3) to mean:

a residual benefit where, if the recipient had incurred expenditure in respect of the provision of the recipients benefit, that expenditure would have been a car expense.

'Car expense' is defined in subsection 136(1) of the FBTAA to mean:

an expense incurred in respect of:

(a) the registration of, or insurance in respect of, the car;

(b) repairs to or maintenance of the car; or

(c) fuel for the car.

As the listed expenses do not include the provision of a chauffeur the residual benefit that arises from the service of a chauffeur will not be an exempt residual benefit under section 53 of the FBTAA.

2.    Will a car benefit arise under section 7 of the FBTAA if a car that is part of the ministerial fleet is garaged at or near the residence of the chauffeur?

Summary

A car benefit will arise under section 7 of the FBTAA on a day that a car that is part of the fleet is garaged at or near the residence of the chauffeur as the car will be taken to be available for the private use of the chauffeur under subsection 7(2) of the FBTAA.

Detailed reasoning

Subsection 7(1) of the FBTAA explains when a car benefit arises. It states:

7(1) [Car applied to, available for employee's private use] Where:

(a)  at any time on a day, in respect of the employment of an employee, a car held by a person (in this subsection referred to as the "provider"):

(i)            is applied to a private use by the employee or an associate of the employee; or

(ii)           is taken to be available for the private use of the employee or an associate of the employee; and

(b)  either of the following conditions is satisfied:

(i)            the provider is the employer, or an associate of the employer, of the employee;

(ii)           the car is so applied or available, as the case may be, under an arrangement between:

(A)  the provider or another person; and

(B)  the employer, or an associate of the employer, of the employee;

that application or availability of the car shall be taken to constitute a benefit provided on that day by the provider to the employee or associate in respect of the employment of the employee.

Therefore, a car benefit will arise on a day that a car from the fleet is either:

• applied to a private use by an employee or an associate of an employee; or
• taken to be available for the private use of an employee or an associate of an employee.

Under subsection 7(2) of the FBTAA a car will be taken to be available for the private use of an employee on any day that the car is garaged or kept at or near a place of residence of the employee or an associate.

The effect of this provision is that a car benefit will be deemed to arise on each day the car is garaged at the chauffeur's residence.

3.    Will a car benefit arise under section 7 of the FBTAA if a car that is part of the fleet is applied to a private use by either the chauffeur or the passenger?

As set out above a car benefit will arise under subparagraph 7(1)(a)(ii) on a day when the car is applied to a

private use by an employee or an associate of an employee.

The term 'private use' is defined in subsection 136(1) of the FBTAA to mean, in relation to a motor vehicle, any use by the employee or associate that is not exclusively in the course of producing assessable income of the employee.

Subsection 7(5) of the FBTAA provides that a car is 'applied' by a person if it is applied in accordance with the directions, instructions or wishes - that is, it will cover situations where the employee or associate does not personally apply the car to a private use but directs some other person to do so.

In applying these provisions a car benefit will arise if the car is applied to a private use by either the chauffeur or the passenger.

4.    Which of the listed journeys will be considered to be a business journey for the purposes of calculating the taxable value of car fringe benefits under section 10 of the FBTAA?

Summary

Where the chauffeur is the only person using the car, the classification of the journey will be determined by whether the journey is a business journey for the chauffeur.

Where the chauffeur is driving a passenger, the classification will depend upon whether it is a private journey for either the passenger or the chauffeur. If the journey involves private travel for either the chauffeur or the passenger it will not be a business journey.

Detailed reasoning

In general terms the taxable value of a car fringe benefit under the cost method set out in section 10 of the FBTAA will be a percentage of the operating costs of the car. The relevant percentage will be determined by the number of 'business kilometres' travelled by the car during the holding period as compared to the total number of kilometres travelled by the car during the holding period.

'Business kilometre' is defined in subsection 136(1) to mean 'a kilometre travelled by the car in the course of a business journey'.

'Business journey' is defined in subsection 136(1) to mean:

a journey undertaken in a car otherwise than in the application of the car to a private use, being an application that results in the provision of a fringe benefit in relation to the employer.

Therefore, a journey travelled by the car while it is being driven by a chauffeur will be a business journey if the car is not applied to a private use that results in the provision of a fringe benefit in respect of either the chauffeur or the driver. However, if the journey is a private journey for either the chauffeur or the passenger the journey will not be a business journey.

The various scenarios provided are considered below:

Journey between chauffeur's home and work (Scenarios 1, 9 and 13)

The 17 allocated vehicles are garaged overnight at each of the allocated driver's homes. Therefore, each chauffeur will have a journey from home to work in the morning and a separate journey from work to home in the afternoon. For example, as set out in scenarios 1, 9 and 13 the journeys may be to the designated employee's home, or to the chauffeur's place of work.

Guidance for determining whether a journey between home and work is a business journey is provided in Miscellaneous Taxation Ruling MT 2027 Fringe benefits tax: private use of cars: home to work travel.

As set out in paragraphs 14 and 15 of MT 2027 travel between home and a person's regular place of employment is ordinarily private travel. The fact that the car may be used during the day in the course of business operations will not alter this result, unless it is concluded that the office or employment is essentially itinerant in nature.

The circumstances in which the nature of the office or employment will be considered to be essentially itinerant in nature are discussed in paragraphs 25 to 27 of MT 2027. Paragraphs 25 to 27 of MT 2027 state:

25....travel will be business travel where the nature of the office or employment is such that -

(a)          it is inherently itinerant;

(b)          travel is a fundamental part of the employee's work;

(c)           it is impractical for the employee to perform the duties without the use of the car

(d)          the terms of employment required the employee to perform duties at more than one place of employment;

(e)          the nature of the job itself makes travel in the performance of duties essential; and

(f)            it can be said of the employee that he or she is travelling in the performance of the employment duties from the time of leaving home.

26....More common examples of the application of this principle would include commercial travellers and government inspectors whose homes can be seen to be a base of operations from which they travel to one of a number of locations throughout the day, over a continuing period.

27. Commonly, in these cases, the employee will attend at the employer's office periodically (e.g., once a week) to complete or file reports, pick up supplies or organise future trips. Travel from home to the office and back made in these limited circumstances will be accepted as an ordinary incident of the business travel and, as such, will also be treated as business travel.

Further guidance for determining whether the duties of employment can be considered to be itinerant in nature is provided in Taxation Ruling TR 95/34 Income tax: employees carrying out itinerant work - deductions, allowances and reimbursements for transport expenses.

Paragraphs 7 and 8 of TR 95/34 state:

7. There have been a number of cases considered by the Courts, Boards of Review and Administrative Appeals Tribunal where deductions for transport expenses were allowed on the basis of the taxpayers' 'shifting places of work'. 'Shifting places of work' is another term for itinerancy. In these cases the obligation to incur the transport expenses arose from the nature of the taxpayers' work, such that they were considered to be travelling in the performance of their duties from the moment of leaving home. The following characteristics have emerged from these cases as being indicators of itinerancy:

(a) travel is a fundamental part of the employee's work.

(b) the existence of a 'web' of work places in the employee's regular employment, that is the employee has no fixed place of work.

(c) the employee continually travels from one work site to another. An employee must regularly work at more that one work site before returning to his or her usual place of residence.

(d) other factors that may indicate itinerancy (to a lesser degree) include:

(i) 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).

(ii) the employee's home constitutes a base of operations.

(iii)          the employee has to carry bulky equipment from home to different work sites.

(iv)          the employer provides an allowance in recognition of the employee's need to travel continually between different work sites.

8. While 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 considering each of these factors:

(a)  travel is a fundamental part of the employee's work

The travel must be a fundamental part of the employee's duties (FC of T v Weiner 78 ATC 4006; (1978) 8 ATR 335) (Weiner) and it is not sufficient for the employee to choose to perform their duties in another location (Taylor v. Provan [1975] AC 194).

In this case, the travel is a fundamental part of the chauffeur's work. The chauffeur may travel anywhere directed by either the employee, or by the Fleet Co-ordinator. The chauffeur does not choose where they perform their duties.

(b)  the employee has a 'web' of work places - no fixed place of work

TR 95/34 explains that if an employee performs work at single site and then moves to other sites on a regular basis, a web of workplaces exists. In Weiner's case, the taxpayer went to four or five schools a day, and this was considered a web of work places. If the taxpayer in that case had only gone to one school each day, each school would be a regular place of employment and a web of workplaces would not exist because each school would be considered a regular place of employment (TR 95/34, paragraph 31).

In this case, the chauffeur does not have a fixed place of work. On the days when the chauffeur does not report for garage duty, they drive where directed by the designated employee. On the days when they report for garage duty, they may:

•         attend to client duties, requested by absent clients

•         undertake chauffeur duties for a client who is performing relieving duties on behalf of the absent client, or

•         be assigned to other clients where the regular chauffeur is unavailable.

The chauffeur therefore has a web of work places.

(c ) The employee continually travels from one work site to another

TR 95/34 states that:

34. In certain work situations continual unsettled travel from one work place to another is a common factor. In some instances, an employee's ongoing engagement may require him or her to attend various sites in different localities nominated by the employer. In most such cases the need to travel from place to place would be a necessary condition of employment.

...

37. Continual travel refers to the frequency with which an employee moves from one work site to another. It envisages that the employee regularly works at more than one work site before returning to his or her usual place of residence. If an employee stays at a particular work site for a short period (e.g., several days or a few weeks) they may still be regarded as engaged in itinerant employment provided their usual pattern of work involves continual travel to more than one work site before returning to their usual place of residence.

In this case, it is impractical for the chauffeur to perform their duties without the use of a car. The chauffeur usually drives to locations as directed by the designated employee. On the days where the chauffeur reports for garage duty, they may attend to client requests or undertake other chauffeur duties, as well as undertaking other administrative duties as directed by the Fleet Co-ordinator. The time spent undertaking garage duty in the last FBT year was between 0.9% and 11.7% of the chauffeur's total working days. That is, the chauffeur's usual work pattern involves continual travel to more than one work site before returning to their usual place of residence.

(d) Other factors - uncertainty of location

TR 95/34 states:

47. The element of uncertainty of location is generally another distinct characteristic of itinerant employment. Unlike an ordinary worker who makes the daily journey to his or her regular place of work, the itinerant work often cannot be certain of the location their work sites.

48. 'Uncertainty' in this context, relates only to uncertainty of location, and not to uncertainty of employment.

In this case, the chauffeur does not have certainty around the location of their work sites. Their work sites depend on the direction of the designated employee or Fleet Co-ordinator.

These factors indicate that the nature of the chauffeur's work is inherently itinerant in nature. Therefore, the journeys from the chauffeur's home to work will be accepted as being business journeys as the nature of the chauffeur's work is inherently itinerant in nature.

Journey between the Designated employee's home and the Designated employee's usual place of work (Scenario 2)

In scenario 2 the journey is between the designated employee's home and work. As set out in paragraph 14 of MT 2027 generally travel between home and work is private travel.

Taxation Ruling TR 1999/10 Income tax and fringe benefits tax: Members of Parliament - allowances, reimbursements, donations and gifts, benefits, deduction and recoupments discusses home to work travel at paragraphs 231 to 234.

These paragraphs state:

231. Subject to the exceptions discussed below, a deduction is not allowable for the cost of travel between home and the normal work place. It is not incurred in the course of producing assessable income and, in any case, it is considered to be a private expense. This principle is not altered by the performance of incidental tasks undertaken en route, n or is the principle changed if the travel is outside working hours or includes a second or subsequent trip (see Taxation Ruling MT 2027, paragraph 34).

232. Example: A Member normally travels directly to Parliament when it is sitting. She collects her mail at her electorate office on the way to Parliament, but does nothing else at the electorate office. No deduction is allowable for her transport expenses. The incidental nature of picking up the mail does not alter the essential character of her travelling between home and work.

233. The High Court considered the deductibility of transport expenses incurred in travelling between home and work in (Lunney's case). Williams, Kitto and Taylor JJ stated that (CLR 498-499; ATD 412-413):

'The question whether the fares which were paid by the appellants are deductible under section 51 should not and, indeed, cannot be solved simply by a process of reasoning which asserts that because expenditure on fares from a taxpayer's residence to his place of employment or place of business is necessary if assessable income is to be derived, such expenditure must be regarded as "incidental and relevant" to the derivation of such income ... But to say that expenditure on fares is a prerequisite to the earning of a taxpayer's income is not to say that such expenditure is incurred in or in the course of gaining or producing his income.'

234. The fact that travel is outside normal working hours, or involves a second or subsequent trip, does not change this principle.

235. For more information see paragraph 6 of Taxation Ruling IT 2543; Taxation Ruling IT 112 and Taxation Determination TD 93/113.

236. A deduction is allowable for the cost of travelling directly between two separate workplaces.

In applying these paragraphs the journey in scenario 2 will be a private journey for the designated employee. Therefore, it will not be a business journey.

Journey between the designated employee's home and a work location that is not the designated employee's usual place of work (Scenario 3)

The classification of a journey from the designated employee's private residence and an alternative work place is discussed in paragraphs 239 and 240 of TR 199/10.

Paragraphs 239 and 240 of TR 1999/10 state:

239. A deduction is allowable for the cost of travel from home to an alternative work place. The cost of travel from the alternative work place to the normal work place, or directly home, is also an allowable deduction (see Taxation Ruling MT 2027, paragraphs 32 to 35).

240. Example: A Member ordinarily travels from home directly to her electorate office on Monday. On occasions she travels from her home to a radio station to conduct an interview, and afterwards travels to her electorate office. The cost of the travel undertaken from her home to the radio station, and then on to the electorate office, or directly home, is an allowable deduction.

In applying these paragraphs the journey in scenario 3 will be a business journey for the designated employee and the chauffeur. Therefore, it will be a business journey.

Journey between the designated employee's home and a location that is not a work location (Scenario 4)

As a journey to a location that is not a work location cannot be 'exclusively in the course of producing assessable income of the employee' it will involve the application of the car to a private use. Therefore, it will not be a business journey.

Journey between the designated employee's usual work location and an alternative work location where entertainment is not provided (scenario 5)

In scenario 5 the designated employee attends a lunch in his or her role where the meal does not constitute meal entertainment.

Travel between two places of work is considered to be a business journey. This is the Commissioner's long-standing policy as set out in IT 2199 Income tax: Allowable deductions: Travelling expenses between place(s) of employment and/or place(s) of business. At paragraph 4 of that Ruling the Commissioner's view is that:

4. Claims for income tax deduction for expenses incurred in travelling directly between two places of employment, two places of business or a place of employment and place of business should be allowed where the taxpayer does not live at either of the places and the travel has been undertaken for the purpose of enabling the taxpayer to engage in income producing activities.

This point is made again in Taxation Ruling TR 1999/10 at paragraphs 236 to 240:

236. A deduction is allowable for the cost of travelling directly between two separate work places.

237. A deduction is allowable for the cost of travel from a Member's normal work place to other work places. A deduction is also allowable for the cost of travel from an alternative work place back to a normal work place or directly home. This travel is undertaken in the performance of a Member's work-related activities. The cost of the travel is incurred in the course of a Member's income-producing activities and is an allowable deduction.

238. Example: A Member is required to travel from her electorate office to a constituent's home. The cost of the travel undertaken from the electorate office directly to her constituent's home, and then back to the electorate office, or directly home, is an allowable deduction.

239. A deduction is allowable for the cost of travel from home to an alternative work place. The cost of travel from the alternative work place to the normal workplace, or directly home, is also an allowable deduction (see Taxation Ruling MT 2027, paragraphs 32 to 35).

240. Example: A Member ordinarily travels from home directly to her electorate office on Monday. On occasions she travels from her home to a radio station to conduct an interview, and afterwards travels to her electorate office. The cost of the travel undertaken from her home to the radio station, and then on to the electorate office, or directly home, is an allowable deduction.

In scenario 5 the designated employee is travelling from the normal workplace to an alternative place of work. Therefore, in accordance with paragraph 4 of IT 2199 and paragraphs 236 to 240 of TR 1999/10 the journey will be a business journey as it is exclusively in the course of producing assessable income of the designated employee and the chauffeur.

Journey between the designated employee's usual work location and a lunch that is either a private lunch, or a lunch at which meal entertainment is provided to the designated employee (scenarios 6 and 7)

Scenario 6 is similar to scenario 5 as it involves the designated employee attending a work related function. However, in scenario 6 the designated employee is provided with meal entertainment.

In scenario 7 the travel is between the designated employee's usual work location and a social function.

The outcome where entertainment is provided is discussed in paragraphs 174 to 181 of TR 1999/10.

Paragraphs 174 to 181 of TR 1999/10 state:

174. A deduction is not allowable under the general deduction provisions of section 8-1 for the provision of entertainment (see section 32-5). Of the exceptions to this general rule that are set out in Subdivision 32B, only section 32-35 relating to seminar expenses is relevant to Members (see paragraph 138).

175. Broadly, the 'provision of entertainment' means entertainment by way of food, drink, recreation, accommodation or travel. Entertainment includes business lunches and social function, but excluded meals purchased during overnight work-related travel (subsection 32-10(2)).

176. A deduction is not allowable for 'donations' made under an arrangement for the specific purpose of enabling the recipient to provide entertainment, or to compensate or reimburse the recipient for the cost of providing entertainment, whether made for fund raising purposes or otherwise (see section 32-75).

177. In Case Y11 91 ATC 184; AAT Case 6641 (1991) 22 ATR 3063, the Tribunal denied a senior officer in the Australian Defence Force, who was involved in negotiations to buy defence equipment, a deduction for expenditure incurred in attending a range of lunches, cocktail parties, dinners and other forms of social contact relevant to the performance of his duties. The officer did direct business on many of those occasions. The Tribunal held that the entertainment provisions (subsection 51AE(4) of the ITAA 1936 operated to deny the claim. It did not matter that the expenditure was directly relevant to business transactions.

178. In Frankcom v. FC of T (1982) 65 FLR 25; 82 ATC 4599; (1982) 13 ATR 636, a magistrate was denied a deduction under the general deduction provisions for the costs of attending a cocktail party hosted by the Bar Association and Law Society and dinners given by the Queensland Stipendiary Magistrates' Association. The taxpayer's duties as magistrate did not necessitate his attendance at social functions. Hence the expenditure was not incidental and relevant to the taxpayer's income-producing activities and was of a private nature. It should be noted, however, that this case was decided prior to the enactment of the entertainment provisions.

179. Example: A Member provides light refreshments such as tea, coffee, fruit drinks, cakes and biscuits to constituents when they visit her electorate office. A deduction is allowable for the cost of providing those refreshments to the constituents because we do not consider that this amounts to the provision of entertainment, and the expenditure satisfies the general deduction tests.

180. Example: When entertaining constituents and overseas visitors, a Member often invites guests to join him for a meal, at his expense, in the Parliamentary dining room. The provision of these meals amounts to entertainment and the cost is not an allowable deduction.

181. Example: A Member hosts a barbecue at which proposals for government funding programs are debated and voted on by invited members of his local business community. The cost of this function is not an allowable deduction because it represents the provision of entertainment.

TR 1999/10 then provides information about the attendance at a function from paragraphs 185 to 190 as follows:

185. A deduction is allowable for the cost of attending functions where a Member's attendance is for work-related purposes. A deduction is not allowable if a Member is attending a purely social function, such as a football match or family get-together. These expenses are private in nature and may also relate to the provision of entertainment (see Entertainment expenses, paragraphs 174 to 181).

186. A deduction is allowable for the cost of attending a function, such as gathering of parents and citizens who are who are representing schools within a Member's electorate, where a 'meal' comprising finger food, such as sandwiches, cakes, party pies, sausage rolls and the like is served. That is, the 'meal' is incidental to the main purpose of the gathering. The principle is not altered if refreshments such as tea, coffee cool drinks and a glass of wine are also served - the function would not constitute entertainment.

187. A deduction is allowable for the cost of attending a fund raising function if the circumstances are similar to those outlined at paragraph 186, that is, the 'meal' is incidental to the main purpose of the gathering.

188. A deduction is not allowable for the cost of attending functions, such as those outlined at paragraphs 186 and 187, if a more substantial meal, perhaps in the form of a sit-down dinner, is provided. This is because the 'meal' is not merely incidental to the main purpose of the gathering - it is entertainment.

189. A deduction is not allowable for the cost of attending a function, such as a charity ball or cocktail party, whether it is held for fund raising or other purposes. This is because the main reasoning for gatherings of this type is for entertainment.

190. We have based the views outlined at paragraphs 185 to 189 on principles we have considered in Taxation Rulings TR 97/17, IT 2675 and Taxation Determination 94/55. See also Entertainment expenses, paragraphs 174 to 181.

In applying these paragraphs, the application of a car to enable a designated employee to attend a function at which non deductible entertainment is provided is considered to be a private use which is not 'exclusively in the course of producing assessable income of the employee'.

Similarly, the application of the car to attend a purely social function such as a private lunch will be a private use by the designated employee.

Therefore, as both of these scenarios involve the car being applied to a private use by the designated employee the journeys will not be business journeys.

Journey that involves the transport of the designated employee's family (scenario 8)

As discussed above, a journey which is 'not exclusively in the course of producing assessable income of the employee' will be a private use.

The use of the car to transport the designated employee's family to the private residence can not be considered to be undertaken exclusively in the course of producing assessable income of the employee. Therefore, the journey will not be a business journey.

Journey by the chauffeur from the chauffeur's work location to an alternative work location (scenarios 10, 11, 12 and 14)

Scenarios 10, 11, 12 and 14 involve the chauffeur travelling between two places of work. As discussed above in relation to scenario 5, travel between two places of work is considered to be a business journey. Therefore, the journeys undertaken in these scenarios will be business journeys.