Edited version of private ruling

Authorisation Number: 1011620576108

This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.

Ruling

Subject: Work related travel expenses

1. Are you entitled to claim a deduction for travel between two places of employment?

Yes.

2. Are you entitled to claim a deduction for travel between your second place of employment to directly home?

Yes.

Relevant facts

You have stated that you work as an employee cleaner for two separate shopping centres.

Your routine is the same each week.

You work six days a week for 50 weeks of the year.

You do not need to carry bulky equipment as these are supplied at each workplace.

You travel from workplace number one to workplace number two and then you travel home.

You know that the travel from home to workplace number one is not deductible.

You have stated that the distance from workplace one to workplace X kilometers and from workplace two to home is a distance of Y kilometers.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Reasons for decision

Under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) you can deduct from your assessable income expenses that you incur to produce your assessable income. Under that section, you cannot deduct expenses that are private in nature.

Motor vehicle expenses are a "specific deduction" provided for in Division 28 of the Act. You can only claim a deduction if you have travelled "business kilometres". Business kilometres are defined within the division to mean:

Business kilometres are kilometres the car travelled in the course of producing your assessable income.

Taxation Ruling 95/8 (TR 95/8) deals specifically with allowances, reimbursements and work-related deductions for employee cleaners.

Paragraphs 131, 132, 135 and 136 of the ruling are of particular relevance to the issues raised in this ruling request.

Travel from the normal work place to an alternative work place while still on duty and back to the normal work place or directly home

131. A deduction is allowable for the cost of travel from an employee cleaner's normal work place to other work places. The cost of travel from the alternative work place back to the normal work place or directly home is also an allowable deduction. This travel is undertaken in the performance of the cleaner's duties. It is incurred in the course of gaining assessable income and is allowable as a deduction.

132. Example: David, a cleaning supervisor, travels from his normal work place to his employer's head office to attend a meeting. After the meeting he travels directly home. The cost of each journey is an allowable deduction to David.

Travel between two places of employment or between a place of employment and a place of business

135. A deduction is allowable for the cost of travelling directly between two places of employment or between a place of employment and a place of business. This is provided that the travel is undertaken for the purpose of engaging in income-producing activities.

136. Example: When Abdul finishes work as an employee cleaner, he travels directly to a restaurant to commence work as a cook. The cost of travel from his cleaning job to the restaurant is deductible as the cost is incurred in travelling between two places of employment.

Travelling from one work place to another workplace

As quoted above from TR 95/8, "A deduction is allowable for the cost of travelling directly between two work places".

In the example provided in the ruling, where a person travels directly from one place of employment to the next place of employment to commence a shift, the cost of the travel is an allowable deduction.

You have stated in your application that you travel from workplace one to workplace two six days a week for 50 weeks and that this routine is the same for each week.

The kilometres that you travel in these situations are business kilometres. As such you are entitled to claim a deduction for the kilometres travelled between workplaces.

Travel from the normal work place to an alternative work place while still on duty and back to the normal work place or directly home

As quoted above from TR 95/8, "The cost of travel from the alternative work place back to the normal work place or directly home is also an allowable deduction".

You have stated in your application that you travel from workplace one to workplace two six days a week for 50 weeks and then you travel home. You have also stated that this routine is the same for each week.

The kilometres that you travel between workplace two and home in these situations are business kilometres and therefore an allowable deduction. As such you are entitled to claim a deduction for the kilometres travelled between workplace two and home.

Motor vehicle expenses

Pursuant to section 28-12 of the ITAA 1997, in order to claim car expenses using any of the D1 methods, you must own or lease a car. However the Commissioner will consider you to be the owner or lessee of a car where a family or private arrangement exists in that you are the owner and use the car as your own and pay all expenses for the car even though the ownership papers show a different name.

Section 28-12 of the ITAA 1997 allows a deduction for car expenses using one of four methods contained in Division 28. These are:

· the 'logbook' method (Subdivision 28-F of the ITAA 1997)

· the 'one-third of actual expenses' method (Subdivision 28-E of the ITAA 1997)

· the '12% of original value' method (Subdivision 28-D of the ITAA 1997), and

· the 'cents per kilometre' method (Subdivision 28-C of the ITAA 1997).

Section 28-15 of the ITAA 1997 provides that you may choose the method that best suits your situation and needs. For substantiation purposes, each method has different requirements that must be met. This means that your substantiation requirements will vary depending upon which method you decide to use to calculate your deduction for work-related car expenses in a particular financial year.

Motor vehicle expenses one third of actual expenses 

To use the 'one-third of actual expenses' method, you must have travelled more than 5,000 business kilometres (section 28-75 of the ITAA 1997) and you must be able to substantiate the car expenses (section 28-80 of the ITAA 1997) by provided receipts for all expenses.

However, for oil and fuel costs you can either:

· supply receipts for these costs, or

· keep odometer records and make a reasonable estimate based on those records.

Logbook method 

To use this method, you must have a logbook with the following features:

· a logbook is a document in which an entry is recorded in respect of each business journey made during the applicable log book period, and section 28-125 of the ITAA 1997 requires that each entry must state: 

o the date the journey began and ended

o the odometer readings at the start and end of the journey

o the number of kilometres travelled, and

o the purpose of the journey.

This would mean listing details for all travel each day such as:

· travel to work

· what travel you do during work and a listing for each

· travel back home, and

· any private travel.

Further, to use this method you must:

· hold the vehicle, that is, own or lease the vehicle

· keep a logbook for a minimum of 12 continuous weeks

· determine the number of business related kilometres travelled as a percentage of total kilometres travelled

· calculate the deduction by multiplying the amount of each eligible car expense by the business use percentage

· retain receipts to substantiate car expenses, and

· record and retain the vehicles odometer readings at the start and end of each financial year.

Motor vehicle expenses 12% of original value 

To use the '12% of original value' method, you deduct 12% of the cost of the car when you acquired it (section 28-45 of the ITAA 1997) and must have travelled more than 5,000 business kilometres to use this method (section 28-50 of the ITAA 1997). The maximum deduction you can claim is 12% of luxury car limit for that particular income year.

Motor vehicle expenses - cents per kilometre 

To use the 'cents per kilometre' method, you multiply the number of business kilometres the car travelled in the income year by the number of cents based on the car's engine capacity. However, you can only use this method for a maximum of 5,000 business kilometres (section 28-25 of the ITAA 1997). You do not need to substantiate the car expenses to use this method (section 28-35 of the ITAA 1997).

Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).