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Will paragraph 51AGA(1)(d) of the Income Tax Assessment Act 1936 (ITAA 1936) operate to deny a deduction for car parking expenses incurred in relation to a primary place of employment, where a taxpayer's travel from home to their primary place of employment is broken by travel to a different place of employment?

No. Paragraph 51AGA(1)(d) of the ITAA 1936 will not operate to deny a deduction for car parking expenses incurred in relation to a primary place of employment, where a taxpayer's travel between home and a non primary place of employment is not considered to be part of travel between home and their primary place of employment.

The taxpayer is employed at two unrelated places of work.

The taxpayer travels from home to a place of part time employment in the morning of each working day where they work for approximately an hour.

The taxpayer then travels to their primary place of employment where they incur car parking expenses.

When the taxpayer leaves their primary place of employment they travel back to the place of part time employment where they work for approximately one and a half hours. They then travel from their place of part time employment to their home.

Subsection 51AGA(1) 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 in certain situations.

Paragraph 51AGA(1)(d) of the ITAA 1936 provides that one of the conditions that must be satisfied for a deduction for car parking expenses to be denied is that the car is used in connection with travel by the employee between their place of residence and their primary place of employment.

The taxpayer undertakes a number of journeys in the course of a working day to enable them to undertake work at two separate places of employment. To determine whether paragraph 51AGA(1)(d) of the ITAA 1936 operates to deny a car parking expense it is necessary to consider whether the series of journeys which the taxpayer undertakes to enable them to engage in their various employment activities, is considered to be travel between their place of residence and their primary place of employment.

Miscellaneous Tax Ruling MT 2027 which deals with home to work travel for the purposes of fringe benefits tax, indicates that the nature of travel between home and work will not change where incidental tasks are undertaken en-route in the travel from home to work.

The taxpayer completes a range of duties at their part time employment, both before and after their work at their primary place of employment. These duties are totally separate and distinct from those undertaken at the taxpayer's primary place of employment and are clearly more than incidental tasks in the sense indicated in MT 2027.

It is considered that the overall journey between the taxpayer's home and their primary place of employment and the return trip to their home is broken into a number of distinct and separate journeys, such that each is in effect a separate travel event. The travel from home in the first instant, therefore ends at the place of their part time employment and not at the primary place of employment. A similar outcome applies to the travel that occurs after the taxpayer leaves the primary place of employment.

Therefore, it is considered that in these circumstances, the car has not been used in connection with travel by the taxpayer between their place of residence and their primary place of employment for the purposes of paragraph 51AGA(1)(d) of the ITAA 1936.

Accordingly, paragraph 51AGA(1)(d) of the ITAA 1936 will not operate to deny a deduction for car parking expenses incurred in relation to the taxpayer's primary place of employment.