Edited version of private ruling

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Ruling

Subject: Deduction- travel bulky equipment

Question

Are you entitled to a deduction for the cost of transporting work related equipment 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

The arrangement that is the subject of the private ruling is described below. This description is based on the following documents. These documents form part of and are to be read with this description. The relevant documents are:

· application for this private ruling

· a letter from your tax agent in response to a request for information letter sent by the Tax Office.

You are employed in the construction industry.

You are required to work at town A.

You carry tools and equipment to carry out your duties.

You use the tools and equipment during your shift.

You carry tools and equipment in a tool box weighing less than 20 kilograms (kg).

There are no secure storage facilitates provided by your employer.

You use your private motor vehicle to transport the tools and equipment.

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 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 by an employee between home and their normal workplace as it is considered to be a private expense (Lunney v. Federal Commissioner of Taxation (1957-1958) 81 ATC 186 ALR 225; 1958). The cost of travel 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.

The 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. A deduction is only allowable if:

· the taxpayer requires the equipment to perform their employment duties

· the cost is attributed to the transportation of the bulky equipment rather than private travel between home and work

· the transportation of the equipment is essential and is not done as a matter of personal choice or convenience, and

· there is no secure storage provided at the workplace.

This view is confirmed at paragraphs 136 and 141 in Taxation Ruling TR 95/22 which provides guidelines about the types of deductions that can be claimed by construction workers.

To determine whether the equipment you carry is bulky is a question of fact and degree, and consideration must be given to the size and weight of the equipment. Since the ITAA 1997 does not define what constitutes bulky equipment we must refer to the relevant case law to assist us.

In Crestani v. Federal Commissioner of Taxation 98 ATC 2219; (1998) 40 ATR 1037 (Crestani's Case), a toolbox which measured 57cm x 28cm x 25cm and weighing 27 kg was considered as 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.

In Case 43/94 94 ATC 387; AAT Case 9654 (1994) 29 ATR 1031 (Case 43/94) a flight sergeant with the Royal Australian Air Force was denied a deduction for the cost of transporting his flying suit and other items used for work purposes. The items were carried in:

· a duffle bag measuring 75cm long x 55cm wide x 50cm deep and weighing 20 kilograms when packed

· a suit bag which weighed 10 kilograms when packed, and

· a briefcase sized navigational bag which contained charts, work manuals and study materials.

It was held that the travel was private in nature and the items were not sufficiently bulky to impede easy transport. It was held that the mode of transporting the duffle bag, the navigational bag and the suit bag was simply a consequence of the means adopted in conveying himself to and from his place of employment.

In your case, you are employed in the construction industry and to carry out your duties you carry your tools and other equipment to earn your assessable income. The tools and equipment are all items needed for each shift. You are not provided with secure storage at town A. Your tool box weighs less than 20kg.

However, when comparing the tool box to the size and weight of that in Crestani's Case and Case 43/94 the weight of your tool box is considerably less. Consequently, your work related equipment is not considered cumbersome or bulky in nature.

Therefore, your journey between home and work is not specifically related to the transport of the equipment, but rather transporting yourself with the relevant equipment being incidentally transported. You are not entitled to a deduction under section 8-1 of the ITAA 1997 for the travel expenses incurred when transporting your work equipment between home and work.

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