Edited version of private ruling

Authorisation Number: 1011579523319

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Ruling

Subject: Motor vehicle expenses

1. Are you entitled to a deduction for the cost of using your motor vehicle when travelling from home to an alternative work site for work-related purposes and then to your normal work place or directly home?

Yes.

2. Are you entitled to a deduction for the cost of using your motor vehicle to transport your response equipment to and from your normal work place while on call?

No.

3. Are you entitled to a deduction for the cost of using your motor vehicle to transport your on-call response equipment when you are using your vehicle for what would otherwise be private travel (that is, when you are off duty)?

No.

This ruling applies for the following periods

Year ended 30 June 2010

Year ending 30 June 2011

The scheme commenced on

1 July 2009

Relevant facts

You are an employee. You are also on call at various times. While on call you are required to retain equipment in your possession 24 hours a day to ensure your prompt response to a call out.

This equipment is contained in a hard case the size of a small suitcase, and weighs approximately 15 kilograms (kgs).

You are also required to carry your own personal equipment for call outs. This equipment is contained in a sports bag and weighs approximately seven kgs.

For the days you are on call you are required to have both bags with you at all times including:

· to and from work

· whilst undertaking your primary duties

· in your normal daily activities on your days off.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

Reasons for decision

Home to work travel

Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income, except where the outgoings are of a capital, private or domestic nature.

A deduction is generally not allowable for the cost of travel between home and work as it is considered to be a private expense. Expenditure incurred in travelling to work is a prerequisite to the earning of assessable income rather than being incurred in the course of producing that income.

The fact that the travel may be outside normal working hours, or involves a second or subsequent trip, does not change the above principle.

However, a deduction may be allowed for home to work travel expenses in certain exceptional circumstances, for example:

· the employee's home constitutes a place of employment and travel is between two places of employment

· the employee's employment is inherently of an itinerant nature, and

· the employee has to transport by vehicle bulky equipment necessary for employment.

In your situation, your work has not commenced before leaving home and you are not considered itinerant. You do carry some response work equipment in your vehicle, therefore the issue of bulky equipment will be addressed further.

Transporting bulky equipment

As stated in Taxation Ruling TR 95/19, a deduction may be allowable if the transport costs can be attributed to the transportation of bulky equipment rather than to private travel between home and work.

If the equipment is transported to and from work as a matter of convenience or personal choice, it is considered that the transport costs are private and no deduction is allowable.

A deduction is not allowable if a secure area for the storage of equipment is provided at the work place (AAT Case 59/94 94 ATC 501; Case 9808 (1994) 29 ATR 1232).

Furthermore, the equipment must be bulky and used in the earning of assessable income.

Whether equipment is regarded as bulky is a question of fact after considering the size and weight of the equipment. In FC of T v. Vogt 75 ATC 4073; (1975) 5 ATR 274 (Vogt's case), a professional musician transported several instruments (trumpet, flugelhorn, acoustic bass, electric bass) and amplifiers from his residence, to various clubs where he worked. The instruments and equipment were very bulky and it was found that Vogt's income was earned not only by performing as a musician but also by providing valuable musical instruments. Vogt kept the instruments at home in order to practice and have them available to take to his next place of work. He used his motor vehicle to transport himself and his instruments between his place of residence and the various places where he worked. The expenditure was said to be attributed to the carriage of equipment, rather than to his personal travel and a deduction was allowable.

In Vogt's case it was determined that where:

· a taxpayer keeps necessary equipment at home

· which they need for performing work

· and by reason of their bulk

· such equipment needs to be transported by vehicle from the home to places of work, and

· the equipment is used at home

then the expenses may be characterised as travel 'on work' and therefore may be deductible.

In another case (AAT Case 43/94 94 ATC 387; Case 9654 (1994) 29 ATR 1031) involving a RAAF electronics engineer, a deduction was denied for travel by car between home and work even though the taxpayer transported items weighing some 20 kg required while on duty and kept in the boot of the taxpayer's car. The tribunal held that the travel was of a private nature and the items were not sufficiently bulky to impede easy transport.

Whether equipment could be considered bulky within the ordinary meaning of the word has been addressed in various other court cases. In Re Byrne and FCT (1998) 39 ATR 1244, the applicant's toolbox weighed 52 kg and was considered to be bulky. In another case ([2001] AATA 694), the Commissioner of Taxation submitted that the toolbox in question could not be considered bulky if it weighs approximately 15-20 kg.

In your case, the equipment you transport consists of a small suitcase and a sports bag. We consider the items you carry are not sufficiently cumbersome or heavy to be considered bulky. Based on the decisions in the above cases these items are not considered to be of a size or weight that would make their transportation difficult.

Therefore, the equipment carried is not considered to be of such bulk that it would change the primary purpose of your journey from one of transporting yourself to and from work to one of transporting the equipment. We acknowledge that you are not able to store your equipment at your work place and that it must be in your possession at all times when you are on call; however, this fact alone is not sufficient to allow a deduction.

The equipment is carried so that it is available if an emergency incident arises while you are on call. You do not use this response equipment in your day to day employment.

Your case differs from Vogt's case as:

· your home to work travel expenses are not incurred as part of the operations in which you earn your income

· your equipment is not essential to the carrying on of your daily income earning operations

· you carry your response equipment in case there is an incident

· your home to work travel expenses are not attributed to the carriage of your work equipment, and

· you do not use the equipment at home.

Travel between home and an alternative work place

A deduction is generally allowable for the cost of travel from home to an alternative work place. The cost of travel from the alternative work place to the normal place of employment or directly home is also generally an allowable deduction (MT 2027). Taxation Ruling TR 95/13 Income Tax: Employee Police Officers, provides the following example:

224. Example: Jane is a police officer who is on call. She is called out to co-ordinate the handling of a siege. She has to immediately contact police negotiators over the telephone, and then travel to the site of the siege. A deduction is allowable for her transport costs as Jane is travelling to an alternative work place.

Your situation is similar to the above example. When you are on call and are required to travel in your vehicle between your home and a location that is not your regular place of employment, your travel expenses are an allowable deduction. For example, if you use your car to travel from home to a work related incident to perform your duties and then return to your normal work place or home again, this travel is an allowable deduction.

Travel while on call when off duty

When you are on call you are required to carry your work response equipment in your car whilst off duty (that is, in case you are called out). This is not considered sufficient to change your travel from private to business in nature. For example, if you had the equipment in the car while you were driving to the beach, the nature of the travel would remain inherently private and no deduction would be allowed.

Methods of claiming car expenses

Division 28 of the ITAA 1997 provides taxpayers with a choice of four methods to calculate their allowable car expenses. Information on the four methods is available on the ATO website: www.ato.gov.au and in TaxPack 2010.

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