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Ruling

Subject: travel expenses

Question 1

Is your home office considered a base of operations?

Answer

Yes

Question 2

Are you entitled to a deduction for travel expenses from your home office to your employer's head office?

Answer

Yes

Question 3

Are you entitled to a deduction for travel expenses from your home office to another workplace?

Answer

Yes

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 not provided with any office facilities by your employer and it is expected that you carry out your employment duties from home.

You have a room in your home that you use to carry out your employment duties.

The room you use for work purposes is used exclusively for work related purposes.

Your employment duties that are carried out from the room in your home include:

§ accessing the company's server remotely

§ communicating with clients and other employees via email or phone

§ designing campaigns for your employer

You are required to travel to your employer's head office twice a week during your working day to attend meetings. The meetings only last a few hours after which you return home to complete your employment duties. There is no provision for you to complete any work at your employer's head office other than to attend the meetings.

You are also required to travel to another work location. You have a number of duties to carry out that this location,

You do not work a regular Monday to Friday week you are sometimes required to work on weekends. You do not however, work a seven day week.

Your regular work routine is as follows;

§ you commence your work day at 8.30am at your home

§ as required you travel to your employer's head office and the other workplace

§ you return home after completion of the head office meetings or events at the other workplace to complete your employment duties for the day

§ your workday concludes between 5.00pm and 7.00pm at your home

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Reasons for decision

Section 8-1 of the Income Tax Assessment Act 1997 (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.

Generally, expenditure in travelling between a taxpayer's home and place of work is of a private nature and is accordingly excluded as a deduction under section 8-1 of the ITAA 1997.

It is only in certain circumstances, such as your work is of an itinerant nature, you are carrying bulky equipment or, where your home is considered to be a base of operations are you entitled to a deduction for travel to or from your home.

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 (Taxation Ruling TR 95/34).

In FC of T v. Collings 76 ATC 4254; (1976) 6 ATR 476 (Collings' case) the taxpayer was a highly trained computer consultant whose employment required her to be on call 24 hours a day. She was involved in supervising a major conversion of the computer facilities that her employer provided to its clients.

The taxpayer was provided with a portable terminal that was connected to the computer through the telephone line. It was common for her to receive telephone calls at home and give advice to workers at the office any time a problem arose. If she was unable to resolve the problem over the telephone or through the portable computer she would return to the office in order to get the computer working.

The Court accepted that there were two separate and distinguishable facets of her employment. While she commuted regularly to her work, she was also required to be ready on call at all other times. The Court held that, on the occasions the taxpayer returned to work after hours:

§ she had commenced performance of her duties before leaving home and travelled to work to complete those duties. Her obligation was more than just being on stand-by duty at home; and

§ she did not choose to do part of the work in two separate places. The two places of work were a necessary obligation arising from the nature of the special duties of her employment.

In your case, you carry out a substantial portion of your duties from your home office. Although you are required to travel regularly to other workplaces, you commence your duties before you leave home. You have access to the company's server from your home computer and you regularly communicate with clients and colleagues from home. Similarly to Collings' case your obligation is more than being on stand-by duty at home. Additionally it is not by choice that you have multiple work locations, your employer expects that you carry out some of your employment duties at home. It is due to the nature of your position and the duties you are required to carry out that you are required to travel to the two other work locations.

Due to the nature of the duties that you carry out at home, we consider that your home office constitutes a base of operations.

Accordingly, you are entitled to a deduction under section 8-1 of the ITAA 1997 for the costs incurred to travel between your home office and your other workplaces.