Edited version of private ruling

Authorisation Number: 1011619719237

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Ruling

Subject: work related travel expenses

Questions

1. Are you entitled to a deduction for the transport cost of carrying your tools from home to the airport before the commencement of a new job?

Answer: No.

2. Are you entitled to a deduction for the cost of returning your vehicle back home after being dropped off at the airport?

Answer: No.

3. Are you entitled to a deduction for the cost of returning your vehicle to the airport, to pick up you and your tools after the completion of your employment?

Answer: No.

4. Are you entitled to a deduction for the transport cost of carrying your tools from the airport to your home after the completion of your employment?

Answer: No.

5. Are you entitled to a deduction for the cost of meals and accommodation if you are required at the airport early, or to attend a mandatory course prior to being allowed on site?

Answer: No.

This ruling applies for the following period

Year ended 30 June 2010

Year ending 30 June 2011

The scheme commenced on

1 July 2009

Relevant facts

You are a tradesman.

You are contracted mainly, on a fly in, fly out basis.

You drive to and from your home to the airport.

You leave home early before your flight's departure, so as to be at the airport an hour before takeoff.

Your spouse drives back home after dropping you off, and drives back from your home to collect you and your tools.

You and your tools are transported to and from the site at the company expense. You pay for any excess weight.

You usually take only 15kgs of tools from your larger toolkit with you, as you are limited by the airline limitations on baggage weight.

The store on site can usually supply very large tools or equipment specific tooling.

You are accommodated in a camp at the work site and your tools are usually secured each night.

After your contract is completed you and your tools are flown back to the airport.

There is public transport available from your home to the airport, but you would have to stay overnight if your flight departed early, as the train and shuttle to the airport would arrive too late for your flight.

You have included copy of a letter of offer and suggested tool list in your application.

Reasons for decision

Summary

The costs you have incurred are as a consequence of living in one place and working in another and were incurred to enable you to commence, or return home after completing your income earning activities and are considered private in nature and are not deductible.

Detailed reasoning

Section 8-1 of the Income Tax Assessment Act 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.

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

· where you travel between home and shifting places of work, that is, an itinerant occupation, and

· the transportation of bulky equipment in some circumstances.

In your situation, your work has not commenced before leaving home and you are not considered itinerant. You do carry some work equipment while travelling, therefore the issue of bulky equipment will be addressed further. The question of what constitutes bulky equipment is a question of fact and must be considered according to the individual circumstances of each case.

The question of what constitutes bulky equipment was considered in Crestani v. Federal Commissioner of Taxation 98 ATC 2219; (1998) 40 ATR 1037. In that case, the toolbox in question measured 56cm x 25cm x 28cm and weighed approximately 27kg. The Administrative Appeals Tribunal (AAT) in that case decided that the toolbox was sufficiently cumbersome to be considered bulky. The opinion of the AAT was the toolbox was not easy to lift and could not be carried for any distance and that public transport was not a viable option.

In Case 43/94 94 ATC 387; AAT Case 9654 (1994) 29 ATR 1031 a flight sergeant with the Royal Australian Air Force was denied a deduction for the cost of transporting his flying suit and other items used for work purposes. The items were carried in:

· a duffle bag measuring 75cm long x 55cm wide x 50cm deep and weighing 20 kilograms when packed

· a suit bag which weighed 10 kilograms when packed, and

· a briefcase sized navigational bag which contained charts, work manuals and study materials.

It was held that the travel was private in nature and the items were not sufficiently bulky to impede easy transport. It was held that the mode of transporting the duffle bag, the navigational bag and the suit bag was simply a consequence of the means adopted in conveying himself to and from his place of employment.

In your situation, you take various tools of your trade with you when travelling between home and work. We consider the tools you carry are not sufficiently cumbersome or heavy to be considered bulky. Based on the decisions in Crestani's case and Case 43/94 your tools are not considered to be of a size or weight that would make their transportation difficult.

Therefore, your tools are not considered to be of such bulk that it would change the primary purpose of your journey from one of transporting yourself to and from work to one of transporting the tools. Consequently you are not entitled to a deduction.

Accommodation and meal expenses incurred by an individual who lives away from home to carry out the duties of their employment are not deductible. Expenses of this nature have been found to be private or incurred before or after the activity of earning assessable income. They are a prerequisite to the earning of assessable income and therefore are not expenses incurred in the course of gaining or producing that income.