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Ruling

Subject: Home to work travel

Question and Answer:

Are you eligible to claim a deduction for car expenses for home to work travel as you need to carry material with you?

No

This ruling applies for the following period:

Year ending 30 June 2010

The scheme commences on:

1 July 2009

Relevant facts and circumstances

You work full time at location A.

You also have a casual employment at location B.

You work at the location B on weekends and sometimes in the evening on week days.

You use two types of kits for work purposes at location B.

One kit weighs around five kilograms and has the following dimensions:

Length 50cm

Width 30cm

Height 15cm

The other kit weighs approximately three kilograms and has the following dimensions:

Length 40cm

Width 38cm

Height 9cm

These items are essential to carry out your work effectively.

You also carry a laptop, bound text books and other resource materials.

You keep these items in a suitcase while transporting them in your car.

As you are not a full time employee at location B you have not been provided with a secure storage place at your place of work.

Due to the weight and size of the materials it is not possible to use public transport.

You carry both the kits at the same time, for work purposes.

Reasons for decision

Home to work travel

Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) generally allows a deduction for any loss or outgoing to the extent that it is incurred in gaining or producing assessable income.

In relation to car expenses, there are specific rules that must be followed in order to claim a deduction, which can be found in Division 28 of the ITAA 1997. Section 28-12 of the ITAA 1997 provides that you must use one of four methods to calculate the amount of deduction: that is, the cents per kilometre, 12% of original value, one-third of actual expenses and the log book methods. Each method requires you to travel business kilometres, that is, kilometres the car travelled in the course of producing your assessable income or between workplaces.

It is settled law that expenditure incurred in travelling to and from the normal workplace is not deductible as it is not incurred in, or in the course of, gaining or producing the assessable income (Lunney & Hayley v. Federal Commissioner of Taxation (1958) 100 CLR 478). The general rule, as discussed in Taxation Ruling IT 112 Deductibility of travelling expenses between residence and place of employment or business, is that travel between home and a person's regular place of employment or business is ordinarily private travel. While travel to work is a necessary pre-requisite to earning income, it is not undertaken in the course of earning that income.  Any expenses related to such travel are incurred at a point too soon to have the necessary connection with gaining or producing assessable income.

However there are situations where it has been accepted that travel by employees from home to work is deductible. These include:

· the employee's home constitutes a place of employment and they travel to a workplace to continue work

· the employee's employment is inherently of an itinerant nature, and

· the employee has to transport by vehicle bulky equipment necessary for employment.

The first two circumstances are not relevant in your case; however, the third circumstance is relevant and is discussed below.

Bulky equipment

The courts have considered whether a deduction for the cost of travel between home and work may be allowable as a deduction if a taxpayer is required to carry bulky equipment. A deduction is only allowable if:

· the cost is attributed to the transportation of the bulky equipment rather than private travel between home and work

· 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.

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

In Crestani v. FC of T 98 ATC 2219; (1998) 40 ATR 1037 (Crestani's Case), a toolbox which measured 57 x 28 x 25 centimetres and weighed 27 kilograms was considered as 'bulky', in the sense of 'cumbersome', in that the toolbox was not easily portable. The transport cost was 'attributable' to the transportation of such bulky equipment rather than private travel between home and work. Also, the employer did not provide a secure storage area for the toolbox.

However, in AAT Case 43/94 94 ATC 387; Case 9654 (1994) 29 ATR 1031 (Case 43/94), 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 75 cm long x 55 cm wide x 50 cm deep and weighing 20 kilograms when packed

· a suit bag which weighed 10 kg 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.

You carry two kits for work purposes that together weigh less than ten kilograms. Your luggage also includes a laptop, bound textbooks and other resource materials. The equipment you carry in your car for work purposes is lighter than the tool box considered in Crestani's Case. Your situation is comparable to the facts in Case 43/94 and your suitcase is not considered to be bulky.

Therefore you are not eligible to claim a deduction for car expenses from home to work based on the need to carry classroom material with you.