Edited version of private ruling

Authorisation Number: 1011672128754

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Ruling

Subject: Car expenses

Question

Are you entitled to a deduction for car expenses between your home and your place of employment?

Answer

No.

This ruling applies for the following period:

Year ended 30 June 2009

The scheme commences on:

1 July 2008

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

You are required to travel by car to your workplace.

You work 14 days on and 14 days off.

You are provided with accommodation while at work but you are required to vacate at the end of your shift.

You carry your protective equipment along with your personal items in the car when travelling home as there is no secure storage facility available to employees in your workplace.

You carry your protective equipment and personal items in two storage bags which are approximately 600mmx400mmx300mm, weighing 25kgs each.

You are required to report to your employer when you leave home to travel to the site office and report again at the site office.

Your employer provides transport to and from the work site and the accommodation facilities.

You are not required to work from home.

You are not on call.

You did not receive any travel allowance or reimbursements for your car expenses.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1.

Reasons for decision

While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.

Summary

You are not entitled to a deduction for car expenses when travelling to and from your workplace as the expenses are considered private and domestic in nature.

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, or relate to the earning of exempt income.

Home to work travel

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

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

· the transportation of bulky equipment in some circumstances.

Home is a place of employment

An employee's home may constitute a base of operations if the work is commenced at or before the time of leaving home to travel to work and the responsibility for completing it is not discharged until the taxpayer attends at the work site. Whether an employee's home constitutes a base of operations depends on the nature and the extent of the activities undertaken by the employee at home.

In FC of T v. Genys (1987) 17 FCR 495; 87 ATC 4875; 19 ATR 356 (Genys Case), the taxpayer was contacted by telephone by a nursing agency when work was available. The taxpayer in this case believed her home constituted a base of employment because she received instructions about her next work location over the telephone which was the only method of contacting her. The Court held that the mere receipt of telephone calls from an employer or employment agency was not sufficient to allow the home to be classed as a base of operations.

In your case, you are required to travel from your home to your workplace to perform your work. You do not carry out any work activity before you leave your home.

Therefore, your home is not considered to be a place of employment.

Itinerant work

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.

The main features of itinerant work include:

· 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 their usual place of residence; and

· the employee has a degree of uncertainty of location in their employment (that is, no long term plan and no regular pattern exists).

Travel is a fundamental part of an employees work

For the travel to be a fundamental part of an employees work, travel must be an essential feature of an employee's duties (see paragraph 22 TR 95/34). Your duties will only commence when you reach your workplace where you carry out your work. You are not considered to be travelling in the performance of your duties from the moment you leave home or from the time you leave your accommodation in the work site. Therefore, travel is not a fundamental part of your employment. 

Web of work places

A web of work places exists when an employee earns the income by performing his or her duties at several work sites before returning home. In FC of T v. Wiener 78 ATC 4006; (1978) 8 ATR 335 (Wiener Case), the taxpayer was required to teach at four to five schools each day. Her duties for the day involved travelling between the schools to instruct pupils at different schools. This constituted a web of work places because the travel was a fundamental part of her work. Travelling between schools was part of her duties for the day.

This situation is contrasted with Case U97 87 ATC 584; AAT Case 68 (1987) 18 ATR 3491 (Case U97), where the taxpayer was not considered to be an itinerant worker. His work required him to travel to one outer station for a number of days then another outer station for another period. It was decided that there is not the web of work places for the work to be regarded as itinerant.  

In your case, your employer provides you with transport and takes you from your accommodation to the work site. You do not work in a number of jobs in different locations and even if you do this is not sufficient to constitute a web of work places for itinerancy. You do not work at more than one location on any given day. You work every day for one employer at one location for a period of 14 days. In addition, travel is not a fundamental part of your duties. Your duties commence when you start work at the work site and end when you leave the work site at the end of the day. Hence, your case is more similar to Case U97 as your duties do not require you to go from one job to another in a work day.

Uncertainly of location 

The degree and uncertainty of the employment did not have a large impact in the Courts' considerations in both Genys Case and Wiener Case.

Although, uncertainty in the nature of a taxpayer's employment is insufficient to treat their work as itinerant, in your situation, your work pattern is 14 days on duty and 14 days off duty. You have regular work pattern and one work location. You work is therefore not considered itinerant.

Transport of bulky equipment

The question of what constitutes bulky equipment must be considered according to the individual circumstances in each case.

The Administrative Appeals Tribunal in Crestani v. FC of T 98 ATC 2219; 40 ATR 1037 (Crestani Case) found the taxpayer's toolbox measuring 25cm x 28cm x 57cm and weighing 27kg was bulky and cumbersome. In this case, the taxpayer was an aircraft engineer who worked at Sydney Airport. They transported their toolbox home at the end of each shift as there was no secure storage at work. The Tribunal held that the home to work travel was attributed to the transportation of these tools. The expenses incurred in transporting these tools were deductible and the taxpayer was simply one of those fortunate few who is able to hitch a free ride on his tool box.

In the case of bulky equipment, the cost is attributed to the transportation of the bulky equipment rather than private travel between home and work where the transportation of the equipment is essential and is not done as a matter of personal choice or convenience and there is no secure storage provided at the workplace.

In Case 43/94 94 ATC 387 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.  These 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 mode of transporting the items was simply a consequence of the means adopted by the taxpayer to convey him to work. It was considered that the duffle bag was not of sufficient size or weight to impede facile transport.

In your case, you carry both protective equipment and personal items between your home and your workplace. While your storage bags may appear bulky because of their size and weight similar to that in the Crestani Case, the transport of your personal items and protective equipment is incidental to the primary purpose of transporting yourself to work. Similar to Case 43/94, we consider the protective 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.

We acknowledge that your employer does not provide you with a secure storage area to store your protective equipment; however, this fact is not sufficient, as a deduction is only allowable when it is established the tools or equipment are bulky.

Therefore, the car expenses you incur in travelling between home and work are private in nature. Accordingly, the expenses are not deductible under section 8-1 of the ITAA 1997.