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Edited version of private advice

Authorisation Number: 1012618625895

Ruling

Subject: travel

Questions and Answers

1. Are you entitled to a deduction for expenses in travelling between your home and work?

2. Are you entitled to a deduction for expenses incurred for meals from Monday to Friday when you are required to be away from home overnight?

3. Are you entitled to a deduction for the repair and registration costs for your trailer and depreciation of your recovery equipment?

This ruling applies for the following periods

Year ended 30 June 2013

Year ended 30 June 2014

Year ended 30 June 2015

Year ended 30 June 2016

The scheme commenced on

1 July 2012

Relevant facts and circumstances

You are contracted to work for several companies at a time. You invoice each company on a regular basis.

You work night shift during the week.

You travel to the remote work site in the afternoon, then after each night shift you return home. Sometimes you are away from home for more than one night.

On weekends you travel to the remote site and stay on site for more than 24 hours.

You are paid on an hourly basis for the services you provide to the companies. You commence being paid from when you 'clock on' from your residence to when you return to your residence. You are paid for the time it takes you to travel to each of the drilling sites and back home.

You are required to log in by telephone before leaving your house and log off by telephone when you return home. You use your own phone.

You conduct a personal services business. You hold ultimate discretion on how the work is achieved. You employ a few employees to assist you.

The site locations may change from week to week. You do not have knowledge of your work sites in advance.

You handle the administrative aspects of your business affairs (including attending to payroll matter, etc) from your home.

The work sites are in remote areas.

You carry recovery equipment so you can get yourself out of trouble if you get stuck in travelling to and from work. Each item of equipment cost in excess of $300. You do not use any of your equipment for private purposes.

You also have to carry all your food, water and equipment you require whilst working.

You carry everything you need in your car and trailer.

You incur costs for repairs and registration of your trailer.

Sometimes you work on two sites and travel between these sites throughout the day and night.

Some of the work sites have no facilities or accommodation provided. You use your own car and a tarpaulin as shelter from the heat, rain, wind and cold. You usually sleep in your car as there is not generally enough room to pitch a tent on site. You also take your own bedding.

As you are unable to leave the site you are unable to go to the shops or town. Therefore you need to be self-sufficient.

You are not paid a travel, meal or phone allowance.

You keep records and receipts of your expenses.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Income Tax Assessment Act 1997 Part 2-10

Reasons for decision

Business expenses generally fall for consideration under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997). Section 8-1 of the ITAA 1997 allows a deduction for losses and outgoings which are incurred in the course of gaining or producing assessable income, unless the losses or outgoings are capital, or are of a capital, private or domestic nature.

In your case, you are conducting a personal services business. Thus the personal services income rules do not apply to you. You are contracted by several companies to work on sites. You employ a few employees to assist you.

You are paid on an hourly basis for the services you provide to the companies. You commence being paid from when you 'clock on' from your residence to when you return to your residence. You are paid for the time it takes you to travel to each of the drilling sites and back home.

As your travel expenses are related to your business, you are entitled to a deduction for expenses in travelling between your home and work.

Generally, meal expenses are not allowable as a deduction under section 8-1 of the ITAA 1997 on the basis there is not a sufficient connection between the expenditure and the income earning activities of a taxpayer. However, there are exceptions to this rule.

The deductibility of expenditure on meals will depend on the essential character of the expenditure on the basis of the facts of each case. Where the relevant expenses are considered to be incurred in carrying on a business, and the business requires overnight travel, the meal expenses are not considered to be private in nature.

You work night shift during the week. You travel to the work site in the afternoon, then after each night shift you return home. Sometimes you are away from home for more than one night.

On weekends you travel to the site and stay on site for more than 24 hours.

The site locations may change from week to week. You do not have knowledge of your work sites in advance.

Some of the work sites have no facilities or accommodation provided. You use your own car and a tarpaulin as shelter from the heat, rain, wind and cold. You usually sleep in your car as there is not generally enough room to pitch a tent on site. You also take your own bedding.

In view of your working conditions and working hours, your meal expenses are incurred while travelling overnight and also in the course of your business. Thus they are deductible under section 8-1 of the ITAA 1997, provided the relevant substantiation provisions are satisfied.

The work sites are in remote areas. You have to carry all your food, water and equipment you require whilst working. You carry everything you need in your car and trailer. You incur costs for repairs and registration of your trailer. As you use your trailer for your business, you are entitled to a deduction for repairing and registration of your trailer.

You carry recovery equipment so you can get yourself out of trouble if you get stuck in travelling to and from work. As you use your recovery equipment as part of your business, you are entitled to a deduction for capital expenditure over time (depreciation) on these items as each item cost more than $300.

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