Edited version of your private ruling

Authorisation Number: 1012477207697

Ruling

Subject: Travel expenses

Question

Are you entitled to a deduction for motor vehicle expenses for travel between home and work?

Answer

No.

This ruling applies for the following periods:

Year ended 30 June 2012

The scheme commences on:

1 July 2011

Relevant facts and circumstances

You are an employee who travels overnight.

You transport both work and personal items from your home to start work.

There are no suitable storage facilities provided by your employer.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Reasons for decision

Summary

The work equipment that you carry is not considered to be of sufficient bulk to alter the private nature of travel between home and work. Therefore you are not entitled to a deduction for the expenses incurred transporting yourself between home and work.

Detailed reasoning

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.

Generally, travel between a taxpayer's home and place of work is considered to be private and domestic in nature and the cost of such travel is not deductible under the provisions of section 8-1 of the ITAA 1997. This is an established principle of law (Lunney v. Commissioner of Taxation [1958] ALR 225;1958 - 0311H - HCA;100 CLR 478;(1958) 11 ATD 404;(1958) 32 ALJR 139).

One of the exceptions to this general principle is when an employee is required to transport bulky equipment necessary for their employment. In such cases, a deduction for the cost of transporting that bulky equipment may be available provided some other requirements are met.

The basic requirements for a deduction to be allowed for the cost of transporting bulky equipment between a taxpayer's home and their place of work are detailed in paragraphs 63 and 64 of Taxation Ruling TR 95/34 Income tax: employees carrying out itinerant work - deductions, allowances and reimbursements for transport expenses. Essentially the basic requirements detailed in the paragraphs referred to are:

· the equipment being transported is bulky,

· the equipment is not being transported as a matter of convenience or personal choice, and

· there is no secure storage for the equipment at the workplace.

For a deduction to be allowed the equipment must first be shown to be bulky. There is no definition in the tax law as to what constitutes bulky equipment so case law must be taken into account when considering this issue. There are several cases with relevance to your situation.

Crestani v. FC of T 98 ATC 2219; 40 ATR 1037 (Crestani's case) found a tool box that contained an aircraft engineer's specialist tools was bulky and a deduction for the cost associated with transporting that tool box between the taxpayer's home and place of work was allowed. Nothing else was being transported (at least in terms of the claim for a deduction on the basis of transporting bulky equipment).

Although not particularly large, the tool box in Crestani's case was found to be 'bulky' because it was heavy (it weighed approximately 27 kilograms) and therefore was cumbersome and not easily portable. The Tribunal found that rather than bulkiness being determined by the size of an object, the term was more aptly applied to something that was 'cumbersome in the sense that it was not easily portable'. The tool box qualified because although it was small, it was heavy and difficult to carry.

An important factor in the decision in Crestani's case was that the tools being transported were essential to the taxpayer's work. As discussed below, this has been a critical factor in several decisions on this issue, including those made by the Tribunal in Case 43/94 94 ATC 387 and more recently in Sciberras and Commissioner of Taxation [2011] AATA 509 (25 July 2011).

In Case 43/94 94 ATC 387, a member of the Royal Australian Air Force was denied a deduction for the cost of transporting bulky equipment to and from his place of work in his private vehicle. This case involved the transporting of up to three bags of varying weights and sizes to transport work related 'flying gear', as well as items of a personal nature, including civilian clothing. The flying gear was always packed in one particular bag (a duffle bag) and in making its decision about the deductibility of the expense claimed, the Tribunal focussed only on the duffle bag containing the work related equipment. The Tribunal considered that the duffle bag containing the 'flying gear' was not of sufficient size or weight to impede facile transport and the bags containing personal items and clothing were considered to be of no consequence to the issue of whether or not bulky equipment was being transported.

In Sciberras and Commissioner of Taxation [2011] AATA 509 (25 July 2011) the taxpayer was denied a deduction claimed for the cost of transporting bulky equipment to his place of work.

Mr Sciberras was a truck driver who drove from his home to the place where he would commence his truck driving duties. He claimed a deduction for transporting bulky equipment from his home to his place of employment on the grounds that he needed that equipment to perform his duty and would take it with him in his truck. The extra equipment consisted of tools, clothing and manuals and was in addition to the Personal Protective Equipment prescribed by his employer.

In the decision handed down in Sciberras' case, Senior Member D Letcher, QC noted (Sciberras and Commissioner of Taxation [2011] AATA 509 (25 July 2011) at paragraphs 25 and 26):

A common thread in the cases where an exception to the general rule is found to exist is that the equipment is an essential part of the work being specialist tools suited to the task or items intrinsically involved in the work. In the case of Mr Sciberras the tools, clothing and manuals were not essentials used in the driving work, nor were they items without which the work could not be done, nor were they required by the contract of employment or provision of law.

The relevant exception to the general principle may be stated as follows (in the case of transport equipment) and satisfied if:

(a) It is an integral part of the income-earning activity;

(b) It is essential to the performance of the work;

(c) The expense is incurred as the only practical means of transporting it; and

(d) There is no secure alternative to transporting it.

The Tribunal found that for an item to be considered bulky in terms of it leading to a deduction for the cost of transporting it to and from a taxpayer's home and place of work, all of the above criteria must be satisfied.

Application to your circumstances

It is considered that the carriage of personal items which are essentially used by you to provide for your comfort and sustenance, do not have the same character as the transportation of essential tools of trade. Those items are not 'specialist tools suited to the task or items intrinsically involved in the works' and therefore are not included in the exception to the general rule that travel between home and work is private in nature.

You carry both work equipment and personal items between your home and your workplace; similar to Case 43/94, we consider the work equipment when separated from your personal effects is not considered to be of a size or weight that would make their transportation difficult.

Thus, the equipment carried is not considered to be of such bulk that it would change the primary purpose of your travel from one of transporting yourself to and from work to one of transporting the equipment. Also, the lack of secure storage at your work is not sufficient consideration, as a deduction is only allowable when it is established the tools or equipment are bulky.

Therefore, after giving consideration to the principles noted above, you are not allowed a deduction for your car expenses under 8-1 of the ITAA 1997 for carrying your work equipment and personal belongings between home and work.

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