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Ruling

Subject: Motor vehicle expenses

Question and answer:

Are you entitled to a deduction for work related car expenses on the grounds that you transport bulky equipment to and from work?

No.

This ruling applies for the following period:

1 July 2009 to 30 June 2010.

The scheme commenced on:

1 July 2009.

Relevant facts and circumstances:

Your job requires you to wear heavy protective clothing.

You state there is nowhere for you to store the protective clothing at work so you transport it to and from work each day.

The combined weight of the clothing is less than 20 kg and is carried in a standard sized duffle bag.

Relevant legislative provisions:

Income Tax Assessment Act 1997 Section 8-1.

Reasons for decision

Deductions for work related transport expenses - general

The general deduction provisions of the tax law are contained in section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) which 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.

Taxation Ruling TR 95/19 Income tax: airline industry employees - allowances, reimbursements and work related deductions notes that costs associated with travelling between an employees home and normal place of work are usually considered private in nature and therefore not deductible.

Taxation Ruling IT 112 - Deductibility of travelling expenses between residence and place of employment or business explains that for the majority of employees, the longstanding line of decisions by the courts in these matters is that the essential character of expenditure incurred by a taxpayer in travelling to and from a regular place of work is that the expenditure is a personal or living expense, rather than an expense incurred in, or in the course of, gaining assessable income.

As noted in Taxation Ruling IT 2543 - Income tax: transport allowances: deductibility of expenses incurred in travelling between home and work, the courts have held that the essential character of travel between home and work as a private expense is not altered by factors such as the mode of transport, the availability of transport, the lack of suitable public transport, erratic hours and times of employment, any on-call nature of employment, time of travel, distance of travel, unavailability of residential accommodation near the place of work, frequency of travel and necessity of travel.

Notwithstanding the above, Taxation Ruling TR 95/19 also notes that in some cases, a deduction is allowable if the transport expense (the cost of running a motor vehicle for example) can be attributed to a requirement to transport bulky equipment to and from a taxpayer's home and workplace. In such cases, the expense is considered to be incurred in gaining or producing the assessable income of the taxpayer, rather being a private expense incurred in simply travelling to and from work.

What is bulky equipment?

Taxation Ruling TR 95/22 - Income tax: employee building workers - allowances, reimbursements, long service payments, redundancy trust payments and work-related deductions specifies that to establish an entitlement to a deduction for transport costs attributed bulky equipment, it must first be demonstrated that the equipment is bulky. If this cannot be demonstrated, no deduction is allowable.

There is no definition of the terms 'bulky' or 'bulky equipment' in the tax law. However, in the context of whether or not a deduction is allowable for transport costs attributed to bulky equipment, the concept of what constitutes bulky equipment has been the subject of numerous determinations by the courts.

TR 95/19 refers to FC of T v. Vogt 75 ATC 4073; 5 ATR 274 (Vogt's case) as an authority for allowing a deduction for transport costs attributed to bulky equipment.

Vogt's case is explained in more detail in Taxation Ruling TR 95/34 Income tax: employees carrying out itinerant work - deductions, allowances and reimbursements for transport expenses. In Vogt's case, the taxpayer was a musician who kept his instruments and related equipment at home for storage and practice and would generally transport all of his instruments, including an acoustic bass and electric bass (each with their own amplifying equipment), trumpet and flugel horn, to each place of performance. The Court held that (ATC at 4078; ATR at 279):

'...in a practical sense, the expenditure should be attributed to the carriage of the taxpayer's instruments rather than to his travel to the places of performance. The mode of his travel was simply a consequence of the means which he employed to get his instruments to the place of performance, that is by carrying them in the motor vehicle which he drove.'

Taxation Ruling TR 95/34 notes that the extreme bulk of the equipment was a decisive factor in Vogt's case.

In contrast to Vogt's case, TR 95/19 also refers to AAT Case 43/94 94 ATC 387; AAT Case 9654 (1994) 29 ATR 1031 in which a taxpayer employed by the Royal Australia Air Force was denied a deduction for a transport expense associated with travelling to and from his home and place of work. The taxpayer in this case carried clothing and other equipment to and from his home and place of work in a duffle bag which he kept in the boot of his car. The duffle bag measured 75cm long × 55cm wide × 50cm deep weighed 20kg when packed (ATC at 389). As noted in TR 95/34, the Tribunal found in this case that neither the size nor weight of the duffle bag was such that easy transportation was impeded. That is, the bag and its contents was not considered bulky.

Conclusion

For the following reasons, we do not accept that the protective clothing and bag in which you carry it constitutes bulky equipment:

· The combined weight of the protective clothing is less than 20kg and is carried in a duffle bag of similar dimensions to that referred to above in the case involving the Air Force employee.

· Considering both cases referred to above, the weight and dimensions of the protective clothing and bag you transport them in cannot in any way be said to compare to the extreme bulk of the equipment in Vogt's case. Rather, we consider the bulk of the protective clothing and bag to be more closely aligned with the facts in the case involving the Air Force employee where a relatively standard sized bag weighing 20 kg was not considered bulky enough to impede easy transportation and justify a deduction for transport costs attributed to bulky equipment.

In view of the above, you are not entitled to a deduction for work related car expenses.