Claiming Car Expenses

Discussion in 'Accounting & Tax' started by coins, 6th Feb, 2020.

Join Australia's most dynamic and respected property investment community
  1. coins

    coins Well-Known Member

    Joined:
    9th Jan, 2020
    Posts:
    79
    Location:
    Right Here
    If someone is working as a face to face field interviewer for a market research company where every weekend that company gives you a set suburb to inverview residents and this is the only job that person does (no other work), are car expenses claimable via the logbook method?

    The employee drives from his/her home to that suburb, parks the car then walks from house to house and doorkocks residents asking them to participate in a survey. The trips are not for private purposes, they are for work purposes. There is no regular workplace as every week there is a different suburb assigned. The market research company pays a cents per km to the employee where the employee needs to declare and pay tax on this amount.
     
  2. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    23,319
    Location:
    Sydney
    Possibly a deductible issue under the itinerant work rule. The ATO would take into consideration additional income to offset the expected costs. If none is paid I question is the travel a job requirement or a convenience ?

    Itinerant work
    If you do itinerant work (or have shifting places of work) you can claim the cost for transport expenses you incur when travelling between workplaces and your home.

    The following factors may indicate you do itinerant work:

    • Travel is a fundamental part of your work, as the very nature of your work, not just because it is convenient to you or your employer.
    • You have a 'web' of work places you travel to, throughout the day.
    • You continually travel from one work site to another.
    • Your home is a base of operations – if you start work at home and can't complete it until you attend your work site.
    • You are often uncertain of the location of your work site.
    • Your employer provides an allowance in recognition of your need to travel continually between different work sites and you use this allowance to pay for your travel.
    It is important to also note that the travel needs to be fundamentally tied to your employment income. If the travel is merely a matter of convenience for you or your employer it will still be considered a private expense and not deductible.
     
  3. coins

    coins Well-Known Member

    Joined:
    9th Jan, 2020
    Posts:
    79
    Location:
    Right Here
    To add to that, employee is required to carry a certain type of sturdy heavy tablet computer provided by the employer (as the questions are all recorded electronically), where the tablet computer is in a strong heavy case as well, plus 4 backup batteries. Also need to carry a whole bunch of booklets (which is quite heavy) to leave with the person to complete the 2nd part of the interview. Would this come under the "bulky tools & equipment your employer requires you to use at work"? I would imagine this all up would be about 20kgs in total.
     
  4. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    23,319
    Location:
    Sydney
    It may. It may lead the ATO to ask if any why you arent receiving additional income (even as part of your hourly rate) to offset the expectation that you incur these not insignificant costs. Often the employer then provides a letter that confirms that view. eg a generous rate of $ZZ per hour is paid and includes an expectation that all employees conduct field work in a consistently changing location and carry bulky goods as a key element of their role. One of the issues the ATO could attack is your description : parks the car then walks from house to house and doorkocks residents asking them to participate in a survey. If the goods are bulky incl documents etc the car should be close by the person perhaps ? The explanation sounds like convenience not necessity.

    Beware. If the employer pays a allowance of say $100 a week and its not on a PAYG summary there is still a obligation to include the allowance AND claim the offsetting costs. You cant just claim the costs. This is a common employee mistake for travel and overnight travel allowances. The ATO often find it when they call or check with the employer.

    And of course the ATO has it greatest attack weapon. They pick apart your logbook. If its non compliant the rate is 0% x costs. The ways they will do this:
    - They ask and it looks contrived or doesnt exist.
    - You didnt comply with ALL the logbook rules esp the odometer requirement.
    - Your pattern of use changes and they consider the logbook is not valid now eg You start working two jobs or start going to uni 2 nights
    - You change cars...That doesnt make the logbook wrong but lets assume you and wife had a car each and then she sells hers and you buy a better one. Your pattern of use means a new logbook is needed.
     
  5. Ross Forrester

    Ross Forrester Well-Known Member

    Joined:
    30th Oct, 2016
    Posts:
    2,085
    Location:
    Perth, Western Australia
    Most likely.

    Most likely. I would struggle with 20kg on public transport.
     
    Terry_w likes this.
  6. coins

    coins Well-Known Member

    Joined:
    9th Jan, 2020
    Posts:
    79
    Location:
    Right Here
    Ok, thank you both Paul & Ross for your replies.
     
  7. Hosko

    Hosko Well-Known Member

    Joined:
    21st Jun, 2015
    Posts:
    293
    Location:
    Victoria
    Question please Ross - Would it be claimable even though the OP states?
     
    Last edited by a moderator: 11th Feb, 2020
  8. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    23,319
    Location:
    Sydney
    Given that the employee receives a payment for the work related use it largely supports and given purpose to the deduction. While receipt of an allowance isnt a essential criteria it does add weight.

    If a employee received a allowance of 1,000 km x .1.00 it means the deduction is likely limited to 1,000km unless there is a purpose to the unpaid element of travel. eg Employer only pay from the office to client return not home to client and return. The deduction would be limited to the ATO rate not the $1 per Km received. eg You cant just claim a offsetting deduction.
     
  9. Pash81

    Pash81 Well-Known Member

    Joined:
    22nd Feb, 2016
    Posts:
    305
    Location:
    Brisbane
    If a doctor is working on an ABN and travels in his own car to a town 250kms away from his home every fortnight to attend a clinic, will the car expenses be deductible?
     
  10. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    41,675
    Location:
    Australia wide
    no
     
  11. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    23,319
    Location:
    Sydney
    If the Doctor has a surgery at and works from home = Yes
    If the Doctor travels from home to his local clinic then to the second clinic = Yes

    Travel to / from work is non-deducible
    Travel between two workplaces is deductible

    You can claim the cost of travelling:

    • directly between two separate workplaces – for example, when you have a second job (if one of these places isn't your home)
    • from your normal workplace to an alternative workplace that is not a regular workplace (for example, a client's premises) while still on duty, and back to your normal workplace or directly home
    • if your home was a base of employment – you're required to start your work at home then travel to a workplace to continue your work for the same employer
    • if you had shifting places of employment – you regularly work at more than one site each day before returning home
    • from your home to an alternative workplace that is not a regular workplace for work purposes, and then to your normal workplace or directly home. This doesn't apply where the alternative workplace has become a regular workplace
    • if you need to carry bulky tools or equipment that your employer requires you to use for work which you can't leave at your workplace – for example, an extension ladder or a cello.
     
    Stoffo likes this.
  12. Pash81

    Pash81 Well-Known Member

    Joined:
    22nd Feb, 2016
    Posts:
    305
    Location:
    Brisbane
    Thanks Paul.

    So if the doctor have home in brisbane, works one day/week in a Brisbane hospital as a PAYG employee and travels to Gold Coast 1 day/week for a private clininc (ABN work), then no car expenses can be claimed?
     
  13. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    23,319
    Location:
    Sydney
    Probably not deductible. Its travel TO work. Not travel ON work or between workplaces. There may be considerations not mentioned of course.

    eg what does he NEED to take with him to work at the clinic ? I had a client who worked at two jails. At each he was part of the incident response team and required all sorts of gear to be in his car (The state govt paid to install a secure cage and paid him ONLY for travel between each site which was rare) None was permitted to be stored within the jail (or his home) in the event a event occurred 24/7 and he was paid a call out allowance. His travel to and from both jobs required a private ruling which agreed his car use was deductible based on the bulky goods rule.

    Take care with misuse of the bulky goods rule. The ATO seem to oppose more than they accept. Often as the goods are thinks like a laptop and a handbag or very minor items etc for someone in a office role
     
    Last edited: 11th Feb, 2020
    Terry_w likes this.
  14. Ross Forrester

    Ross Forrester Well-Known Member

    Joined:
    30th Oct, 2016
    Posts:
    2,085
    Location:
    Perth, Western Australia
    Yes. The person is generating assessable income (the allowance) and they are incurring costs (the car) that is directly related to the production of the allowance. None of the car costs as shown in the log book (except maybe depreciation cost limit) is expressly precluded from becoming a tax deduction.
     
    Hosko likes this.
  15. The Y-man

    The Y-man Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    13,443
    Location:
    Melbourne
    How about environmental isolation suit, oxygen tanks, thermometer, test kits - I may need that at my work soon..... :eek:

    The Y-man
     
  16. Pash81

    Pash81 Well-Known Member

    Joined:
    22nd Feb, 2016
    Posts:
    305
    Location:
    Brisbane
    Thanks Paul. One more question if you dont mind answering:

    Scenario: Doctor is registered with a locum agency. Agency got a job for 5 days working at a hospital in Toowoomba at a set rate of $1,000 per day. Agency is saying that they will pay the doctor as a PAYG employee. So $5000 less super less tax payable.

    Now the locum agency is saying that there is a choice of getting paid thorugh an external payroll management compaby, GNA as this will end up more money in the doctors pocket.

    Reason: GNA is paying a travel allowance pre tax which they say won't be reported on the payment summary and no requirement of any substantiation etc. where as the locum agency is saying that it's not allowed to pay a travel allowance. Obviously, GNA is charging a 10% (pretax) fee for this.

    The doctor is actually not spending any money on accomodatuon for 5 days as the hospital is providing the accomodation and also reimbursing that travel exoenses.

    Does the above sound legal and correct?
     
  17. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    41,675
    Location:
    Australia wide
    If you are earning $1000 per day surely you could afford to pay for some advice?
     
  18. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    23,319
    Location:
    Sydney
    Plutus payroll MkII
     
  19. Pash81

    Pash81 Well-Known Member

    Joined:
    22nd Feb, 2016
    Posts:
    305
    Location:
    Brisbane
    Does anyone know anything about ATO community? If i've got an answer on the ATO community which is "ATO certified", can i use that answer to rely on for the deductions i claim?

    ATO Community
     
  20. Mike A

    Mike A Well-Known Member

    Joined:
    24th Jun, 2015
    Posts:
    2,656
    Location:
    UNIVERSE
    If you provided all the facts it might help you in arguing a reduction in penalties and interest if the claim was denied in an audit.