Car and Travel costs focus of the ATO

Car and travel costs continue to be one of the largest categories of work-related expenses claimed by individuals (e.g., employees, sole traders, contractors).

As a result, the ATO continues to focus on incorrect car and travel expenses, particularly where they involve travel between a taxpayer’s home and place of work.

Generally, home to work travel costs are not deductible under S.8-1 of the ITAA 1997 as they are incurred at a point that is too preliminary to an individual taxpayer’s income-earning activities.

Also, the essential character of such expenditure is considered to be private or domestic  in nature.

Two important exceptions to this general rule are where an individual is engaged in ‘itinerant’ work, or where the travel is attributable to the transport of bulky equipment.

In either case, a deduction for car and travel expenses relating to home to work travel will be allowed.

Check with your tax agent before claiming these expenses.