Edited version of private ruling

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Ruling

Are you entitled to claim the additional travel expenses you incurred when you worked at town C?

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 work as a plant operator.

You usually work at town A and town B.

On separate occasions you were requested to work at town C to cover staffing shortages.

You are advised in advance of the location of your work.

You travel from home directly to the location that you have been requested to work.

You are not paid a travel allowance by your employer.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

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.

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; (1958) 11 ATD 404; (1958) 7 ATR 166) (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. Put at its simplest, travel to work is private; travel on work is business.

It should be noted that the mode of transport, the availability of transport, the lack of suitable public transport, the erratic times of employment, the time of travel, the distance of travel and the necessity of travel does not alter the essential character of travel between home and work as being private in nature.

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:

· travel is a fundamental part of the employee's work

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

· 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

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

· 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)

· the employee's home constitutes a base of operations

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

· 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.

Your situation

Travel is a fundamental part of the employee's work

Travel is an essential feature of an employee's duties if that employee is to be considered an itinerant worker. In FC of T v. Wiener 78 ATC 4006; (1978) 8 ATR 335 (Wiener's case), Smith J (ATC at 4010; ATR at 339) highlighted that the taxpayer would not have been able to perform her duties without the use of her motor vehicle. Wiener's case involved a teacher who was required to teach at a minimum of four different schools each day, and comply with a strict timetable that kept her on the move throughout each of these days. In Federal Commissioner of Taxation v. Genys (1987) 17 FCR 495; 87 ATC 4875; (1987) 19 ATR 356 (Genys' case), the taxpayer, a registered nurse, was not considered an itinerant worker as she did not travel after the commencement of her duties.

Your case is distinguishable from Wiener's case, and similar to Genys' case. You are not required to travel when performing your employment duties. You are only required to travel, from your residence, to and from the one work location per day.

Therefore, travel is not a fundamental part of your employment.

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 Case U97 87 ATC 584; AAT Case 68 (1987) 18 ATR 3491, the taxpayer was employed as a fireman. He was attached to a fire station located close to his home in a northern suburb of Sydney, but for some years worked as a relief fireman. In that capacity, he was commonly sent to other fire stations in the Sydney fire district. The only distinguishing feature of his claim was that he travelled to one outer station regularly for a number of days then another outer station for another period. As he was not required to travel to more than one of his work locations each day he did not have a web of work places and was therefore not itinerant.

In your case, you attend only one work location each day. Although you work in a number of different locations, your duties do not require you to travel from workplace to workplace before returning to your home.

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.

Paragraph 36 of TR 95/35 gives the following example:

Susan works as a repairer for a manufacturer of office equipment. She is advised by mobile phone throughout the day of further clients to visit, and attends the employer's office weekly to complete paperwork and re-stock spare parts. Susan's work involves continuous travel from one location to another and her work is itinerant.

Unlike the above example, while you do perform your duties at more that one work location, you travel to only one work location in a work day. You are not required to continually travel during the day to various worksites.

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 notified in advance of which location you are required to work. Given this fact there may be a degree of uncertainty of when you are required to cover a sick leave absence at town C, 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 arrive at your workplace. 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.

Allowance provided by employer

You are not in receipt of any allowance from your employer indicating that there is no recognition by your employer that travelling is a necessary element of your employment.

Summary

Therefore, in view of the above, your employment is not considered itinerant in nature as you travel to only one location to work on any given day. Although you are required to travel some distance to get to town C, the character of the travel remains private.

The expenses you incurred are considered private in nature and are incurred to put you in a position to perform the duties of your employment, rather than in the performance of those duties. As such you are not entitled to a deduction for travel expenses under section 8-1 of the ITAA 1997.

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