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Edited version of your written advice
Authorisation Number: 1012700194103
Ruling
Subject: Travel
Question
Are you entitled to a deduction for expenses in travelling between your home and work when you carry out work at home immediately before or after your travel?
Answer
No.
This ruling applies for the following periods
Year ended 30 June 2015
Year ended 30 June 2016
Year ended 30 June 2017
Year ended 30 June 2018
The scheme commenced on
1 July 2014
Relevant facts
You are a full-time employee.
As part of your current employment conditions you carry out work at home.
Some of this work is carried out at home directly prior to attending work. At other times you do work at home immediately after attending the workplace. You can choose when to do your work at home.
You also have an office at work.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1
Income Tax Assessment Act 1997 Section 25-100
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, or a provision prevents you from deducting it.
A number of significant court decisions have determined that for an expense to be an allowable deduction:
n it must have the essential character of an outgoing incurred in gaining assessable income or, in other words, of an income-producing expense (Lunney v. FC of T; (1958) 100 CLR 478 (Lunneys case)),
n there must be a nexus between the outgoing and the assessable income so that the outgoing is incidental and relevant to the gaining of assessable income (Ronpibon Tin NL v. FC of T, (1949) 78 CLR 47), and
n it is necessary to determine the connection between the particular outgoing and the operations or activities by which the taxpayer most directly gains or produces his or her assessable income (Charles Moore Co (WA) Pty Ltd v. FC of T, (1956) 95 CLR 344; FC of T v. Hatchett, 71 ATC 4184).
Generally a deduction is not allowable for the cost of travel between home and work as it is considered a private expense. Expenditure incurred in travelling to work is a prerequisite to the earning of assessable income rather than being incurred in the course of producing that income. Such expenses are incurred as a consequence of living in one place and working in another. That is, the essential character of the expenditure is of a private or domestic nature, relating to personal and living expenses and therefore not an allowable deduction. (Lunney's case and Federal Commissioner of Taxation v Cooper (1991) 29 FCR 177; 91 ATC 4396; 21 ATR 1616).
Section 25-100 of the ITAA 1997 allows a deduction for the cost of travelling directly between two workplaces. However, subsection 25-100(3) of the ITAA 1997 states that travel between two places is not travel between workplaces if one of the places you are travelling between is a place at which you reside.
Taxation Ruling TR 95/14 Income tax: employee teachers - allowances, reimbursements and work-related deductions discusses the deductibility of expenses incurred by employee teachers. TR 95/14 states that a deduction is not allowable for the cost of travel by an employee teacher between home and their normal place of work.
Although you may work from home before going to work, your employment is not considered to have commenced before or at the time of leaving home. You can choose when to do your work at home. It is not sufficient that your home is used in association with your employment. Your home is not regarded as a place of work or place of business.
The fact that you may do some of your work at home immediately before or after your time at your work place is not enough to change the character of your travel from a private expense to an employment related expense even where it is compulsory to work from home.
The expenses incurred are in a practical sense attributable to your travel to and from your place of work rather than work related travel. Therefore, you are not entitled to a deduction under section 8-1 of the ITAA 1997 for the cost of travelling to and from work. Additionally, subsection 25-100(3) of the ITAA 1997 specifically denies a deduction in your circumstances. Therefore, the associated travel expenses between home and work are not an allowable deduction.
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