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Ruling

Subject: Travel expenses - home to work travel

Question 1

Are you entitled to a deduction for travel expenses (including car expenses and airfares) for travel between your home and X or Y airport?

Answer

No.

Question 2

Are you entitled to a deduction for parking fees incurred at the X airport?

Answer

No.

Question 3

Are you entitled to a deduction for accommodation, taxis, meals and incidentals while in Y?

Answer

No.

This ruling applies for the following periods:

Year ended 30 June 2011

Year ending 30 June 2012

The scheme commenced on:

1 July 2010

Relevant facts and circumstances

You are employed in the airline industry.

You also have an additional role which requires you to train others.

Your preferred port is X airport and your home base is Y airport. This means your roster may start or finish in either X or Y.

Your residence is located in X and when your roster starts or finishes in X you drive to the airport and do not require any accommodation.

When your roster starts or finishes in Y you may require accommodation, meals, transport to the airport, and in some cases flights to and from X and Y.

Your employer does not provide any allowances or reimbursement for the costs of travel, taxis, accommodation, meals or incidentals while you are in X or Y. No allowance is paid by your employer for any home to work travel, whether working in X or Y.

If you are required to be in any location worldwide, other than X or Y, your employer pays you a daily travel allowance.

Your role requires you to undertake various non-flying related mandatory activities. You undertake these activities at your residence.

These activities are carried out in the study of your residence. Your employer does not provide any office or storage facilities and expects you to make your own arrangements for these facilities.

There are study rooms in your residence. The study you use for work purposes is situated in an area that requires other members of the household to pass through it to access the garage.

The study is equipped with a computer, printer, internet and phone facilities. There are bookcases and a lockable drawer in which you store files, manuals and a briefcase. Some personal items such as photo albums and literature are also stored in the study. There are chairs and a second workstation in the study which is used by other members of the household.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1.

Reasons for decision

Summary

The travel expenses you incur in relation to your travel between home and work are private in nature and are therefore not deductible under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997). Although you undertake various employment related tasks in your home, your home is not considered a place of employment.

Detailed reasoning

Section 8-1 of the ITAA 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 (paragraph 77 of Taxation Ruling TR 95/34).

Taxation Ruling TR 95/19 provides that an airline employee may be regularly employed at one work place some days and at another place on other days. In both cases, the normal work place is where the airline employee performs normal duties. Therefore, the travel to either the X or Y airports is considered to be travel to your normal workplace.

There are situations where it has been accepted that travel by employees from home to work is deductible. This is where:

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

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

· the employee commences work before leaving home and travel is to a workplace to continue work, or

· travel is between two places of employment

TR 95/19 states that where an airline employee lives at one of the places of employment or business, a deduction may not be allowable as the travel is between home and work. It is necessary to establish whether the income-producing activity carried on at the person's home qualifies the home as a place of employment or business.

The fact that a room in the airline employee's home is used in association with employment or business conducted elsewhere will not be sufficient to establish entitlement to a deduction for travel between two places of work (Taxation Ruling IT 2199).

Paragraph 56 of TR 95/34 states that 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 Collings v. Federal Commissioner of Taxation 76 ATC 4254 a highly trained computer consultant was required by her employer to be on call 24 hours a day. The taxpayer was allowed a deduction for car expenses incurred by her in travelling between home and work solely outside the normal daily journeys to and from work. In order to assist in diagnosing and correcting computer faults while at home, she was provided by her employer with a portable terminal.

In accordance with the terms of her employment, she used the terminal at home in the performance of her duties. If she could not resolve the problem over the telephone, she would return to the office in order to get the computer working.

In these particular circumstances, the expenses were found to be incurred in gaining or producing her assessable income and were not of a private or domestic nature. The abnormal journeys to and from home were made necessary by the very nature of the employment and of her duties.

This case can be contrasted with Case L49 (79 ATC 339). In this case a pilot claimed that his home constituted a place of work because it was necessary for him to keep up with the latest orders and technical materials and his employer made no provision for him to carry out these duties at work. The claim was disallowed on the grounds that the Board of Review determined that the taxpayer's duties commenced when he 'signed on' at the airport for a flight or, on other occasions, when he arrived at the airport.

Your situation can be compared to Case L49. You undertake various tasks associated with your employment in a room in your home. Your employer does not provide you with any facilities to carry out these tasks. The activities undertaken in your home are only a part of your overall income producing activities. The travel expenses you incur are not directly related to the employment related activities you undertake in your home; rather they are necessary to enable you to commence your duties as an employee of the airline industry. Consequently, you are not considered to be travelling between two places of employment and it is not considered that your work has commenced before you leave home.

Accordingly, the travel expenses (including airfares) you incur in travelling from your home to either the X or Y airports are private in nature and are not deductible under section 8-1 of the ITAA 1997.

Parking fees

TR 95/19 provides that a deduction is allowed for parking fees (but not fines) and tolls if the expenses are incurred while travelling:

o between two separate places of work;

o to a place of education for self education purposes (if the self education expenses are deductible); or

o in the normal course of duty and the travelling expenses are allowable deductions.

A deduction is not allowable for parking fees and tolls incurred when airline employees are travelling between their home and their normal place of employment. The cost of that travel is a private expense and the parking fees and tolls therefore have the same private character (paragraph 103 TR 95/19).

Accordingly, you are not entitled to a deduction for parking fees incurred when travelling between your home and the X airport as they are a private travel expense.

Accommodation, meals, taxis and incidentals in Y

Accommodation expenses incurred in maintaining a residence in the city of the airline employee's base while also maintaining a family residence in another city, i.e., a domicile port, are not an allowable deduction. We consider that the airline employee's duties commence when he or she 'signs on' at their base, not when he or she departs from his or her domicile port (paragraph 106 TR 95/19).

When working from Y we consider your duties do not commence until you 'sign on' at the Y airport. Therefore, accommodation, meals, taxis and other incidental expenses you incur in Y are private in nature. Accordingly, these expenses are not deductible under section 8-1 of the ITAA 1997.