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Subject: Work related expenses-Travel

Question

Are you entitled to a deduction for expenses incurred for travel between your home and your places of employment?

Answer

No

This ruling applies for the following period

Year ending 30 June 2012

The scheme commenced on

1 July 2011

Relevant facts

You work at your first job, then return home to get changed and go to your second job.

You have incurred travel expenses.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1.

Income Tax Assessment Act 1997 Section 25-100.

Reasons for decision

Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that a deduction for all losses and outgoings are allowable to the extent to which they are incurred in gaining or producing assessable income; except where the expenses incurred are capital or private in nature, or relate to the earning of exempt income.

Section 25-100 of the ITAA 1997 discusses travel between workplaces. A deduction is allowed when you are an individual and you have incurred a transport expense in your travel between workplaces.

However, subsection 25-100(3) of the ITAA 1997 specifies that travel between two places is not travel between workplaces if one of the places you are travelling between is a place at which you reside.

A deduction is generally not allowable for the cost of travel between home and work because the expenses are not considered to be incurred in producing assessable income. These expenses are incurred as a consequence of living in one place and working in another and any expenses incurred to enable a taxpayer to commence their income earning activities are therefore considered private in nature.

The case of Lunney v. Commissioner of Taxation [1958] ALR 225;1958 - 0311H - HCA;100 CLR 478;(1958) 11 ATD 404;(1958) 32 ALJR 139 settled the principle that travel to and from work is ordinarily not deductible under section 8-1 of the ITAA 1997. This travel is considered to be of an essentially private or domestic nature.

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

· the taxpayer's home constitutes a place of employment and travel is between two places of employment or business   

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

· the employees employment is inherently of an itinerant nature, or

· travel is between two places of employment.

In your case, you travel from your home to your first work place and then return home to get changed and travel to your second work place. The first three situations do not apply in your circumstances. Additionally, you are not travelling between two work locations. Rather, you are travelling between your home and work on each occasion. As such, the travel to each of your jobs is home to work travel and is considered to be private in nature. Therefore, no deduction is allowable for this home to work travel.