Edited version of private ruling

Authorisation Number: 1011547367923

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Ruling

Question

Are you entitled to a deduction for your motor vehicle expenses to travel between home and work?

Answer

No.

This ruling applies for the following period

Year ended 30 June 2010

The scheme commenced on

1 July 2009

Relevant facts and circumstances

You are a registered worker with a nursing agency.

You have provided a copy of relevant sections of your employment deed and terms of employment.

The agency provides nursing services to hospitals and various other institutions (clients) which employ registered nurses, enrolled nurses and care workers (nursing staff).

You have registered with the agency as being prepared to perform nursing duties for clients of the agency. You have nominated the types of nursing duties which you are prepared to perform, the institutions in which you are prepared to work, and the times when you are prepared to work.

The agency does not guarantee if or when any work will be available, and is under no obligation to offer any work to you. You are free to accept or reject any shifts offered to you.

There is no permanent or ongoing employment relationship between you and the agency. You perform work as a casual employee on a shift by shift basis, when you accept offers of work made to you by the agency.

You are only an employee of the agency when you are working an agreed shift.

You do not work for the same client every day.

Most days you only work at one location, but on occasions you may travel to work at a second location before returning home.

On occasions, a client of the agency may request your booking in advance; however, those shifts may also be cancelled without notice just prior to the commencement of the shift.

Majority of times you are notified of an available shift the day prior to the shift, but on occasions you are only given an hours notice.

Shifts vary in length from 3.5 hours to 12 hours, with the average being 5 hours.

You can travel 1.2km to 77km one way on any given day to commence your shift.

Your home to work travel in the recent income year exceeded 7,000 km.

You have kept a travel diary which list all shifts and distances travelled.

You receive a travel allowance when you travel to one particular location; the amount is calculated on a return bus fare. The amount is shown on your payslip and on your payment summary as a separate allowance.

Reasons for decision

Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for a loss or outgoing to the extent to which it is incurred in gaining or producing assessable income, except where the loss or outgoing is of a capital, private or domestic nature, or relates to the earning of exempt income.

In considering whether you are entitled to a deduction for car expenses, it is necessary to consider whether the expenses are incurred in travelling in the course of producing your assessable income.

Travel between home and work

A deduction is generally not allowable for the cost of travel by an employee between home and their normal workplace as it is considered to be a private expense (Lunney v. Federal Commissioner of Taxation (1958) 100 CLR 478; 11 ATD 404 and Taxation Ruling IT 112).

The cost of travelling between home and work is generally incurred to put the employee in a position to perform duties of employment, rather than in the performance of those duties. This principle is not altered by the performance of incidental tasks en route or use of a car because using public transport is impracticable.

However, a deduction for car expenses between home and work may be allowed if a person's job is itinerant.

Itinerancy

The question of whether an employee's work is itinerant is one of fact, to be determined according to individual circumstances. It is the nature of each individual's duties and not their occupation or industry that determines if they are engaged in itinerant work. Further, itinerant work may be a permanent or temporary feature of an employee's duties.

Taxation Ruling TR 95/34 provides guidelines for establishing whether an employee is carrying out itinerant work. The ruling states that the following characteristics are indicators of itinerancy:

(a) travel is a fundamental part of the employee's work

(b) the existence of a 'web' of work places in the employee's regular employment, that is, the employee has no fixed place of work

(c) the employee continually travels from one work site to another. An employee must regularly work at more than one work site before returning to his or her usual place of residence

(d) other factors that may indicate itinerancy (to a lesser degree) include:

i. the employee has a degree of uncertainty of location in his or her employment (that is, no long term plan and no regular pattern exists)

ii. the employee's home constitutes a base of operations

iii. the employee has to carry bulky equipment from home to different work sites

iv. the employer provides an allowance in recognition of the employee's need to travel continually between different work sites.

Whilst the above characteristics are not exhaustive, they provide guidelines for determining whether an employee's work is itinerant. It is considered that no single factor on its own is necessary decisive.

Agency Nurses

The question of whether agency nurses are itinerant workers was considered in the Federal court case of FC of T v Genys 87 ATC 4875; (1987) 19 ATR 356. In that case the taxpayer was a nurse who worked casual relief shifts for various hospitals. When she was needed, an employment agency with whom she was registered contacted her by telephone, often at very short notice. The nurse used her car to travel to work. No deduction was allowed for the travel. The courts held that the nurse was not an itinerant worker. She did not travel between two places of employment once she commenced her duties and the mere receipt of telephone calls from the agency did not constitute the nurse's home as her place of work; her duties commenced when she arrived at the relevant hospital.

A similar decision was reached in the Board of Review Case R8 84 ATC 157 where the taxpayer was actually employed by the agency. The Board held that the taxpayer's employment did not involve sufficient travel to be considered itinerant, as the taxpayer was doing no more than travelling from home to their various places of employment.

Taxation Ruling TR 95/34 which deals with itinerant workers gives the following example:

Eleni is an agency nurse who travels to several hospitals to relieve staff shortages. She is employed by the hospital for whom she performs the duties. Eleni remains at the one hospital until completion of her shift. Travel is not a fundamental part of Eleni's employment, as she is not required to travel in the performance of her work once she commences duty. Eleni's employment is not considered to be itinerant.

Taxation Ruling TR 95/15 which deals with nursing industry employees states that no deduction is allowable for agency nurses' travel from home to work. However, if the nurse is regularly required to work at several different locations within a single shift, he or she may be an itinerant employee.

Your situation

Travel is a fundamental part of the employee's work

In your case, you are registered with an agency and perform work on a shift by shift basis at nominated sites, within a given area. You have indicated that on most days you only work at one location, and you remain at that location until completion of your shift.

Accordingly, it is considered that travel is not a fundamental part of your work

Existence of a web of work places

A web of work places exists when an employee earns income by performing his or her duties at several work sites before returning home.

In your case, you usually do not work at more than one location on any given day. Your duties commence when you start your shift at each location and finishes at the end of the shift. Although you work in a number of different locations, your duties do not require you to go from one location to another in the one shift.

Accordingly, it cannot be considered that you have a web of work places.

Continual travel from one work site to another once you commence your duties at the chosen work site

Continual travel refers to the frequency with which an employee moves from one work site to another. It envisages that the employee regularly works at more than one work site before returning to his or her usual place of residence.

While you do perform your duties at more than one work location, you have indicated that on most days you only work at the one location, and you remain at that location until completion of your shift.

Therefore continuous travel between work sites is not considered a part of your regular employment duties.

Degree of uncertainty of location

Another factor that may indicate itinerancy (to a lesser degree) is if the employee has a degree of uncertainty of location in his or her employment. The element of uncertainty of location is generally another distinct characteristic of itinerant employment. 'Uncertainty' in this context, relates only to uncertainty of location, and not to uncertainty of employment. This can be contrasted with a worker who has a fixed place of employment and is aware of the location of the work place.

In your case, you are either notified in advance or on the morning of the location you are required to work. Given this fact there may be a degree of uncertainty of location in your employment; however, this degree of uncertainty surrounding your employment, is not enough to counter the above indicators of itinerancy in your case.

Home constitutes a base of operations

Whether an employee's home constitutes a base of business operations depends on the nature and the extent of the activities undertaken by the employee at home. An employee's home may constitute a base of business operations if the work is commenced at or before the time of leaving home to travel to work and the responsibility for completing the work is not discharged until the taxpayer attends the worksite (FC of T v. Collings 76 ATC 4254; (1976) 6 ATR 476).

In your case, your work does not commence before or at the time of leaving home, but when you commence your shift. Therefore, your home cannot be considered to be your base of income producing operations.

Bulky equipment

A deduction may be allowable for home to work travel if the transport costs can be attributed to the transportation of heavy, bulky or cumbersome equipment, rather than to private travel between home and work.

You have not indicated that you are required to carry bulky equipment for your work, so the transport of bulky equipment is not relevant in your case.

The employer provides an allowance in recognition of the employee's need to travel continually between different work sites

Official recognition by an employer may indicate that travelling is a necessary element of the employment. However, receipt of an allowance does not, in itself, indicate that the employee's work is of an itinerant nature or that the travel is deductible. A particular employer may pay an allowance irrespective of whether the employee is required to travel in the course of their duties. Alternatively, an allowance may be paid to compensate the employee for the time or distance involved in travelling to and from work, the lack of public transport or for travel at inconvenient times. The payment of an allowance in such circumstances would not indicate that the employment is itinerant in nature, but may add weight together with other characteristics of the employees work.

You are not paid a regular travel allowance, but do receive an amount equivalent to a return bus fare when you travel to one particular location only. We consider the allowance is paid to compensate you for the time and distance involved in travelling to and from this particular location, and not an indication that travelling is a necessary element of your employment.

Conclusion

In considering all the factors provided in TR 95/34, it is viewed that in your particular circumstances, while there is a degree of uncertainty of the location of your shifts, your travel is not a fundamental part of your work. You are not required to travel from one site to another as a consequence of your duties, and you do not operate through a web of work places.

Accordingly, your job is not considered to be itinerant, and your travel from home to work is private in nature. Your travel is merely a prerequisite to the earning of assessable income; it is not incurred in the course of gaining of producing your assessable income. Therefore you are not entitled to a deduction for travel on the basis of itinerancy, under section 8-1 of the ITAA 1997.

This decision applies regardless of whether you are considered to be an employee or an independent contractor.

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