Edited version of private ruling

Authorisation Number: 1011658018215

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Ruling

Subject: Deduction-travel expenses

1. Is the travel allowance assessable income?

Yes.

2. Are you considered to be carrying out itinerant work and entitled to a deduction for the cost of using your car to travel to and from work?

Yes.

3. Are you entitled to a deduction for work-related car expenses when you use your spouse's motor vehicle?

Yes.

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 employed full time as a carer.  

You own a motor vehicle.

You used the motor vehicle to undertake travel from your home to the client's premises to provide personal and domestic care.

Once you arrive at a client's residence, you also use your motor vehicle to travel to a number of other destinations.

You visit a large number of clients per day.

The clients you visit change from day to day.

Your employer advises you of your work schedule a number of days before you undertake the required work.

You do not travel to your employer's business premises before you commence work nor do you stop along the way before you commence work at a client's premises.

You do not undertake or commence work from home for your employer.

You may carry items owned by a client.

Your employer pays you a travel allowance for your travel expenses.

You have kept a log book in relation to your travel for the income year.

Your spouse owns a motor vehicle which is registered in your spouse's name.

You contributed to the purchase of your spouse's motor vehicle.

You may use your spouse's motor vehicle during another income year to carry out your employment duties with your employer.

You are intending to pay for the motor vehicle expenses when you use your spouse's motor vehicle for work purposes.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1.

Income Tax Assessment Act 1997 section 28-12.

Reasons for decision

Allowance

Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of an Australian resident includes ordinary and statutory income derived from all sources during the income year. However, if an amount is exempt income, it is not assessable income (section 6-15 of the ITAA 1997).

Under section 15-2 of the ITAA 1997 your assessable income includes the value to you of all allowances, gratuities, compensations, benefits, bonuses and premiums received in respect of your employment, either directly or indirectly.

In your case, your employer pays you a travel allowance while undertaking your work duties. Therefore, the allowance is required to be included as part of your assessable income under section 15-2 of the ITAA 1997. 

Travel expenses

Section 8-1 of the ITAA 1997 allows you to deduct from your assessable income any loss or outgoing to the extent that it is incurred in gaining or producing your assessable income except where the loss or outgoing is capital, private or domestic in nature, or relates to the earning of exempt income

Itinerant

A deduction is generally not allowable for the cost of transport between home and the normal workplace. However, a deduction is allowable for the cost of travelling between home and work if an employee's work is itinerant (Taxation Ruling TR 95/34). 

The question of whether an employee's work is itinerant is one of fact, to be determined according to individual circumstances. It is the nature of each individual's duties and not their occupation or industry that determines if they are engaged in itinerant work. Further, itinerant work may be a permanent or temporary feature of an employee's duties. 

There have been a number of cases where deductions for transport expenses were allowed on the basis of the taxpayer's shifting places of work. Shifting places of work is another term for itinerancy. The following characteristics have emerged from these cases as being indicators of itinerancy: 

· travel is a fundamental part of the employee's work

· the existence of a web of work places in the employee's regular employment, that is, the employee has no fixed place of work

· the employee continually travels from one work site to another (an employee must regularly work at more than one work site before returning to his or her usual place of residence)

· other factors that may indicate itinerancy (to a lesser degree) include:

o the employee has a degree of uncertainty of location in his or her employment (that is no long term plan or regular pattern exists)

o the employee's home constitutes a base of operations

o the employee has to carry bulky equipment from home to different work sites, and

o the employer provides an allowance in recognition of the employee's need to travel continually between different work sites.

It should be noted that the above characteristics are not exhaustive and no single factor on its own is necessarily decisive.  

In your case, travel is a fundamental part of your employment because the nature of the job itself necessitates travelling between clients homes to perform your employment duties. You regularly perform your employment duties at a number of locations, continually travelling from one client's home to another before returning home. In addition, there is no long term plan or regular pattern as to where you are required to perform your duties. Further, your employer has paid you an allowance in recognition of the continual requirement to travel and this also adds weight to support the view that your work is of an itinerant nature.

Therefore, you are entitled to a deduction under section 8-1 of the ITAA 1997 for the cost of travel between your home and the various locations where you perform your employment duties. You are entitled to claim a deduction for your work related car expenses under any of the four methods under Division 28 of the ITAA 1997 as noted below.

Work related care expenses

Pursuant to Division 28 of the ITAA 1997, there are four methods available to claim car expenses when a car is used for work-related purposes:

· the 'cents per kilometre' method

· the '12% of original value' method

· the 'one-third of actual expenses' method

· the 'log book' method.

Although each method has different substantiation requirements, all methods require you to own or lease the car used. You are able to choose the method that best suits your situation and needs.

Use of your spouse's car

Normally a car will be registered in the name of its owner. However, a taxpayer may be considered to be the owner or lessee of a car where a family or private arrangement makes them the owner or lessee even though they are not the registered owner.

A taxpayer can prove ownership of the car by demonstrating their financial contributions to any of the following:

· the initial purchase of the car

· lease payments

· hire purchase agreements, or

· loan payments.

A taxpayer may not be considered to own or lease the car if they do not contribute to the payment of one of the above, even though the taxpayer may pay for other expenses such as registration, insurance, maintenance or other running costs.

In your case, you contributed to the initial purchase of your spouse's motor vehicle which is registered in their name. As you did contribute financially to the initial purchase of the car, you are considered to own the motor vehicle and accordingly, you can claim your motor vehicle expenses using one of the four methods under section 28-12 of the ITAA 1997. You need to be aware that if you use your spouse's motor vehicle and you intend to use the log book method you should use a separate log book for this vehicle. Any deduction claimed in respect of this motor vehicle should be apportioned over the period you use the car in the income year.