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Ruling

Subject: Travel and accommodation expenses

Question 1:

Are you entitled to a deduction for travel between your home and your second work place?

Answer:

No.

Question 2:

Are you entitled to a deduction for accommodation expenses?

Answer:

No.

This ruling applies for the following period

Year ended 30 June 2012

The scheme commenced on

1 July 2011

Relevant facts

You are employed in a particular profession.

You have two separate work locations, one is your primary place of work and the other is your secondary place of work, where you work one week a month.

You have incurred accommodation and travel expenses to stay near your secondary work location

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Reasons for decision

Summary

Your cost of travelling to a second work location is considered to be home to work travel and as such, a deduction is not allowed.

Your accommodation expenses are considered to be private in nature and therefore, not deductible.

Detailed reasoning

Travel costs

According to section 8-1 of the Income Tax Assessment Act 1997 , you can deduct a 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 as a consequence of living in one place and working in another and any expenses incurred to enable a taxpayer to commence their income earning activities are therefore considered private in nature.

The case of Lunney v. Commissioner of Taxation [1958] ALR 225; 1958 - 0311H - HCA;100 CLR 478;(1958) 11 ATD 404;(1958) 32 ALJR 139 settled the principle that travel to and from work is ordinarily not deductible under section 8-1 of the ITAA 1997. This travel is considered to be of an essentially private or domestic nature.

However there are situations where it has been accepted that travel by employees from home to work is deductible:

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

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

· the employees employment is inherently of an itinerant nature, or

· travel is between two places of employment.

In your case, the first two situations do not apply to you as you are not travelling between two places of employment. Rather you are travelling from home to work, albeit to two different locations. Therefore, we will discuss only itinerancy.

Taxation Ruling TR 95/34 provides guidelines for establishing whether an employee is carrying out itinerant work.

The question of whether an employee's work is itinerant is one of fact, to be determined according to individual circumstances. The nature of each individual's duties and not their occupation or industry determines if they are engaged in itinerant work.

 Having regard to the indicators of itinerancy set out in TR 95/34, a taxpayer's work is considered to be of an itinerant nature if:

 i) Travel is a fundamental part of the taxpayer's work, that is, a taxpayer is required to undertake several journeys between different workplaces per day to be able to perform his/her work (Federal Commissioner of Taxation v. Wiener 78 ATC 4006; (1978) 8 ATR 33) (Wieners case).

 ii) There is a 'web' of work places in the taxpayer's regular employment. A web of workplaces will exist where the employee performs work at a single site and then moves to other sites on a regular basis as in Wieners case. However, the existence of a 'web' of work places will not exist if an employee performs work at more than one site and each site is regarded as a regular fixed place of employment.  TR 95/34 states that if the teacher in Wiener's case had attended only one school each day instead of many, each school would be regarded as a regular place of employment.

 iii) The taxpayer continually travels from one work site to another. 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 per day before returning to his or her usual place of residence. The nature of the taxpayer's employment arrangements, that is, whether they have one employer or several employers, is not sufficient to alter the character of the travel expenses.

In your case, your travel is not a fundamental part of your work; you do not work at one site before travelling to a second worksite and you do not have a 'web' of work places as you have two regular fixed places of employment.

TR 95/34 provides an example which is relevant to your situation:

Leo works for an accountancy firm and attends head office three days a week. He works the remaining two days at a suburban office. Leo's work does not display a 'web' of work places because:

(a) upon commencement he is not required to travel in the course of his duties; and

(b) Leo has two regular places of work.

Therefore, your travel to your secondary work place is considered to be home to work travel, and as such, a deduction is not allowable.

Accommodation

In FC of T v. Toms 89 ATC 4373; (1989) 20 ATR 466 (Toms Case) the Federal Court disallowed a forest worker's deduction for the cost of maintaining a caravan and other living expenses. The taxpayer incurred the expenses in providing temporary accommodation at the base camp because the taxpayer had chosen to reside at a place far from the worksite. These expenses were dictated not by work but by private considerations.

As you are not travelling in the course of carrying out employment duties, no deduction is available for your accommodation expenses you incur when working away from your usual place of residence. Further to this the essential character of your expenditure is of a private or domestic nature. The expenses incurred by you to stay in close proximity to your work-place are a prerequisite to the earning of assessable income and are not expenses incurred in the course of gaining or producing that income.

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