Issue
Is the taxpayer entitled to claim a deduction for sub-leasing and running costs of a truck under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Decision
Yes. The taxpayer is entitled to claim a deduction for sub-leasing and running costs of a truck under section 8-1 of the ITAA 1997.
Facts
The taxpayer was contracted to provide services to a transport company as a contractor.
As part of this contract, the taxpayer was required to supply a suitable vehicle to carry out the work and pay all associated costs.
The taxpayer sub-leased a truck to perform the work.
Reasons for Decision
As a contractor, the taxpayer would be regarded as carrying on a business. In carrying on the business the taxpayer was required to supply a truck and pay associated costs. These costs consisted of sub-lease and running expenses. The sub-leasing and running expenses would meet the requirements of paragraph 8-1(1)(b) of the ITAA 1997 as being necessarily incurred in carrying on a business for the purpose of gaining or producing assessable income.
The taxpayer is entitled to claim a deduction under paragraph 8-1(1)(b) of the ITAA 1997 for the sub-leasing and running costs incurred in operating the truck.