Claiming parking expenses on tax can be a tricky subject, as it depends on various factors such as the purpose of travel, the nature of your work, and whether the expenses are directly related to work. Understanding the Australian Taxation Office (ATO) rules can help ensure you claim what you’re entitled to without falling foul of the ATO.
When Can You Claim Parking on Tax?
Parking fees may be tax-deductible in certain situations, including:
- When You Are Travelling for Work
If you incur parking expenses while travelling for work-related duties (e.g., visiting clients, attending meetings, or travelling between job sites), these costs may be deductible. This applies to employees and self-employed individuals whose work requires them to travel. In other words, you can claim parking costs provided you incur your parking expense once you have begun working. It is important to understand that the ATO does not deem work to have started until you do something work related. For example, if you are travelling to the office, then the ATO deems that work has not started until you arrive to the office. This means that travelling to the office and parking before you enter the office is not tax deductible. However, if you leave the office, drive to the client and pay for parking at the client’s premises, then this parking expense will be tax deductible because you have incurred the parking expense after you started working (you are deemed to have started working once you entered the office).
- If You Run a Business
If you operate a business and pay for parking while conducting business-related activities, you may be able to claim these costs as business expenses. This is especially relevant for tradespeople and consultants. Don’t hesitate to call a business accountant who will best be able to run through your scenario with you.
- When Using Your Car for Work Purposes
If you claim work-related car expenses under the logbook method, parking fees incurred during work-related trips can be included as part of your deduction. However, if you use the cents per kilometre method, parking expenses are not separately claimable. Again, by contacting a tax accountant Melbourne, like Nobel Thomas, they can explain the difference for you.
When Can’t You Claim Parking on Tax?
Not all parking expenses are tax-deductible. Some situations where you cannot claim include:
- Commuting to and from Work
The ATO considers daily travel between home and your regular workplace (and from work back to home) as private travel, meaning parking expenses incurred during this commute are not deductible.
- Parking Fines and Infringements
Even if you receive a parking fine while on a work-related trip, fines and penalties are not tax-deductible under ATO rules.
- Employer-Reimbursed Parking
If your employer reimburses you for parking costs, you cannot claim these expenses as a deduction.
How to Claim Parking on Your Tax Return
If you are eligible to claim parking as a tax deduction, follow these steps:
- Keep Detailed Records – Maintain receipts, invoices, and a logbook of work-related travel.
- Use the Correct Method – If claiming car expenses under the logbook method, ensure you record relevant parking costs (i.e. how much you spent, where you parked and the purpose of the trip).
- Lodge Your Claim Correctly – Claim parking expenses in the work-related travel expenses section of your tax return. Alternatively, a tax accountant Melbourne can help with preparing your tax return for you.
Final Thoughts
Parking can be tax-deductible if it’s directly related to earning your income, but it must be incurred after you start working in order to be tax deductible, with fines not tax deductible. Understanding these rules ensures compliance with the ATO and maximises your deductions. If you’re unsure, consult a tax accountant Melbourne or a business accountant, like Nobel Thomas, who can help clarify your specific situation.
