Edited version of private ruling

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Ruling

Subject: Motor vehicle expenses

Are you entitled to a deduction for motor vehicle expenses when travelling from home to your place of employment and return while carrying bulky equipment?

Yes.

This ruling applies for the following period

Year ended 30 June 2010

The scheme commenced on

1 July 2009

Relevant facts

You are employed as a truck driver. You travel in your car from your home to the work depot, a distance of over one hundred kilometres (km).

At the depot, you take over the driving of a truck that you share with another employee, and you:

· depart the depot early in the morning and drive a distance of several hundred kilometres

· arrive at your destination several hours later and wait for the truck to be unloaded during which time you sleep in the truck as required under legislation for drivers and for security purposes, and

· leave in the afternoon returning to the depot that night before returning home.

In order to carry out your duties you transport the following items from home to the depot, and load them into the truck:

· One tool box: 30 cm wide x 50 cm long x 30 cm high and weighing 25 kilograms (kg).

· One portable fridge: 40 cm wide x 75 cm long x 50 cm high weighing 32 kg.

· One bag containing bedding: 60 cm x 100 cm x 60 cm weighing 20 kg.

You require the tools to carry out emergency repairs on the vehicle. You cannot rely on any assistance with repairs due to the isolated nature of the trip. Your employer does not supply any tools.

The fridge contains food and drink needed during the many hours that you are on duty for your employer.

The bedding is required as you sleep in the vehicle.

Your employer does not provide any secure storage for the equipment at the depot and it cannot be left in the vehicle as the relief driver needs the space to store his own equipment when taking over. As a result you are required to transport the equipment from home to the depot and return, for each shift.

You wish to claim for travelling in excess of 5,000 km during the year in your car, transporting bulky equipment to and from your workplace.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

Reasons for decision

Summary

You are entitled to a deduction for motor vehicle expenses when you travel to and from work while carrying bulky equipment that you use in the course of your employment.

Detailed reasoning

Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997), allows a deduction for any loss or outgoing if it is incurred in producing your assessable income except where the outgoing is of a capital, private or domestic nature.

A deduction is generally not allowable for the cost of travel between home and work because the expenses are not considered to be incurred in producing assessable income. These expenses are incurred to enable a taxpayer to commence their income earning activities and are therefore considered private in nature.

However, it has been accepted that travel by employees from home to work is deductible when:

· the employee's home constitutes a place of employment and the travel is to a workplace to continue work

· the employee's employment is itinerant

· travel is between two places of employment, or

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

The first three circumstances are not relevant in your case; however, the fourth circumstance is relevant and is discussed below.

Bulky equipment

There is no definition in the taxation legislation of 'bulky' for the purpose of considering the transportation of equipment between home and work. Therefore, courts have considered whether a deduction for the cost of travel between home and work may be allowable as a deduction if a taxpayer is required to carry bulky equipment (FC of T v. Vogt 75 ATC 4073; (1975) 5 ATR 274). 

The question of what constitutes 'bulky equipment' must be considered according to the individual circumstances in each case and the following factors should be considered:

· the security of the storage facilities

· the taxpayer's personal choice to carry the tools (is there a reasonable alternative), and

· the size and weight of the tools and alternative forms of transportation.

In Crestani v. FC of T 98 ATC 2219; (1998) 40 ATR 1037 (Crestani's case), a toolbox which measured 57 cm x 28 cm x 25 cm and weighing 27 kg was considered 'bulky', in the sense of 'cumbersome', and the transport cost was 'attributable' to the transportation of such bulky equipment rather than private travel between home and work. The employer did not provide a secure storage area for the toolbox and the use of public transport was not a viable option.

As 'bulky equipment' is not limited to toolboxes, any equipment that is used in deriving assessable income would be taken into consideration.

Taxation Ruling TR 95/18 discusses the items on which truck drivers may claim deductions for the decline in value (depreciation) of work-related equipment. In particular, paragraph 116 states that:

A deduction is allowable for depreciation on the cost of a sleeping bag used by a truck driver when travelling away from home for income-producing purposes.

Logically, this would also extend to bedding, other than sleeping bags, used for the same purpose. Paragraph 82 of TR 95/18 also allows for the decline in value on the cost of a portable fridge purchased for the storage of food and drink while travelling for income-producing purposes.

As a deduction is allowable for the decline in value on these items, it is accepted that they have the necessary connection with the earning of your assessable income. Therefore, your toolbox, fridge and bedding can be taken into account when considering if you are transporting 'bulky equipment'.

Although your toolbox is slightly smaller and lighter than the toolbox that was the subject of Crestani's case, the toolbox was the only item involved in Crestani's case. When considered as a whole, your toolbox, portable fridge and bedding compare favourably to Crestani's case in terms of being 'bulky' and 'cumbersome'. Your employer also did not provide a secure storage area for the equipment and the use of public transport would not be a viable option.

Therefore, the equipment that is used to derive your assessable income is considered to be 'bulky' and you have not used your vehicle to transport the equipment as a matter of convenience or personal choice.

You are entitled to a deduction under section 8-1 of the ITAA 1997 for expenses incurred in travelling to and from work when you are carrying the bulky equipment.

Note:

The ATO website www.ato.gov.au and TaxPack 2010 provide information on the methods you can use to calculate your motor vehicle expenses. You can claim a maximum of 5,000 business kilometres per year under the cents per kilometre method.

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