Parking as an expense

A common question that we are asked is whether or not the monthly parking pass or the day rate parking is allowed to be deducted from income for the business. In short, the answer is unlikely. There was a recent case involving one of the airlines where the employer provided parking to its employees. In this case, which dragged through the courts for a number of years, the question was who was the primary beneficiary of the parking. Was it the employee or the employer?

To determine this, it was questioned whether the employer benefited from the employee parking their car at the airport. In this case, the answer was no.

When considering if the parking is a taxable benefit to the employee, consider if the employee who takes an Uber/cab, transit or bikes to work is able to perform their job just as well as an employee who drives. In many cases, the answer will be yes.

When may the answer be different? Consider a business where the employer is expecting the employee to be using a car – the easiest example would be a pizza delivery person while the more difficult example may be an employee who is having to go between regular locations regularly during the day.

Consider a situation where you are a fee for service Doctor and you need to go between multiple locations in a day to visit patients and of course the more time it takes to commute between locations, the higher risk that you will not earn as much as you could have. As a result, the employer would likely encourage you to drive and get convenient parking to maximize the patients you can see in a day. But, what if you just go between two locations and driving is no faster than another form of transport? Well, now it is up for discussion.

NOTE – just because parking may not be a business expense, it does not mean that travel is not. These are not necessarily dependent on each other, but there is definitely a high level of correlation. In addition, the above does not mean paying for parking when seeing a client/patient is not a legitimate business expense as this case dealt with a situation of a parking pass at a regular place of employment.