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Ruling

Subject: Work related expense - travel - home to work

Question

Are you entitled to claim a deduction for the car expenses that you incur to travel between your home and workplace?

Answer

No

This ruling applies for the following periods:

Year ended 30 June 2012

Year ending 30 June 2013

Year ending 30 June 2014

Year ending 30 June 2015

The scheme commences on:

01 July 2011

Relevant facts and circumstances

You are an employee of a company.

The director the company is your spouse.

You and your spouse live in the same home residence.

You carry out certain employment duties during the day at your workplace.

You also carry out some of your employment duties at home in the evening.

You store work documents at your home residence.

On an average day you transport numerous arch files, a laptop and various other documents between your home and workplace.

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, or relate to the earning of exempt income.

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. 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 (see paragraph 77 of Taxation Ruling TR 95/34).

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

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

· where the employment can be construed as having commenced at the time of leaving home (for example a doctor on call), and

· the transportation of bulky equipment in some circumstances.

Home as a place of employment or business

Taxation Ruling IT 2199 considers the deductibility of travelling expenses between places of employment and/or places of business. It states that, whether a taxpayer's home constitutes a place of business depends on the nature and the extent of the activities undertaken by the taxpayer at home. The fact that a room in the person's home is used in association with employment or business conducted elsewhere will not be sufficient to establish entitlement to a deduction for travel between home and the place of work.

The circumstances where part of a home is considered to have the character of a place of business can be contrasted with the more common case where a taxpayer maintains an office or study at home as a matter of convenience (for example, so that he or she can carry out work at home which would otherwise be done at his or her regular place of business or employment). Examples of this include:  

· a barrister who reads client briefs at home,  

· a teacher who prepares lessons or marks assignments at home, and  

· an insurance agent who maintains client files and occasionally interviews a client in his or her home office.  

In these circumstances the area of the home where the work is undertaken retains it's private or domestic character and is not considered to be a place of employment or business. 

Similarly, in your case although you carry out some activities related to your employment at home, the work that you carry out at home is done as a matter of convenience. Therefore, your home is not considered to be a place of employment.

Employment commencing before or at the time of leaving home  

Taxation Ruling IT 112 states that a deduction may be allowed for travel expenses where the employee is considered to be on-call and on-duty from the moment of receiving the call in terms of their duties.

In Federal Commissioner of Taxation v. Collings 76 ATC 4254; 6 ATR 476, the taxpayer was on-call 24 hours a day and at times was required to attend her workplace after hours. It was held that any travel that was solely outside the normal daily journeys to and from work was deductible.

In your case, you are not on-call and you are not required to carry out any travel outside of your normal daily journey to work. The travel undertaken is simply part of your regular daily journey to work.

Therefore your employment is not considered to have commenced at the time of leaving home.

Transporting bulky equipment

Taxation Ruling TR 95/34 states that a deduction for travel expenses may be allowed in certain circumstances where: 

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

· it is essential to transport the equipment to and from work and it is not done as a matter of convenience or personal choice, and

· there are no secure facilities available for storage of the equipment at the work place.  

The question of what constitutes 'bulky equipment' must be considered according to the individual circumstances in each case.  Equipment that is of a private nature cannot be taken into account when considering whether a taxpayer is transporting 'bulky equipment'.

In Crestani v. FC of T 98 ATC 2219; (1998) 40 ATR 1037, a toolbox 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. In addition the employer did not provide a secure storage area for the toolbox.

What constitutes bulky equipment was also considered in Case 43/94 ATC 387; AAT Case 9654 (1994) 29 ATR 1031, which  involved a flight sergeant with the Royal Australian Air Force who was denied a deduction for the cost of transporting his flying suit and other items used for work purposes. In this case the Administrative Appeals Tribunal found that his equipment was not of sufficient size or weight to impede facile transport.

In your case, you carry out some of your employment duties at your home residence in the evening.

Although your employer has indicated that you may need to perform some of your duties outside of hours, it is your personal choice to work from home and it is done so as a matter of convenience.

In addition, the equipment that you transport on a daily basis is not considered to be of a size and shape that could be considered to impede the facile transportation of it to your workplace.

Therefore, your travel from home to work is not considered to be undertaken to transport 'bulky equipment'.

As such you are not entitled to claim a deduction for the car expenses that you incur to travel between your home and workplace under section 8-1 of the ITAA 1997.

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