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Ruling

Subject: Work related expenses - home to work travel

Question and answer

Are you entitled to a deduction for motor vehicle expenses for the transport of a small item to and from work each day?

No.

This ruling applies for the following periods:

Year ending 30 June 2012

The scheme commenced on:

1 July 2011

Relevant facts and circumstances

You are required to take some work related equipment home with you each night as there is no secure facility to store the equipment at work.

This is a direction from your employer.

The equipment is small.

The equipment is the property of your employer.

You wish to claim car expenses using the cents per kilometre method

Relevant legislative provisions:

Income Tax Assessment Act 1997 Section 8-1.

Income Tax Assessment Act 1997 Division 28.

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.

Division 28 of the Income Tax Assessment Act 1997 deals with deductions relating to car expenses. It sets out the rules for working out deductions for car expenses if you own or lease a car.

There are four different methods of calculating car expenses deductions under Division 28. You wish to claim car expenses using the cents per kilometre method.

To be eligible to claim a deduction for car expenses under the cents per kilometre method, section 28-25 of the ITAA 1997 requires that there be business kilometres, that is, kilometres the car travelled in the course of:

· producing your assessable income, or

· Your 'travel between workplaces'.

A deduction is generally not allowable for the cost of transport by an employee between home and his normal workplace as it is considered to be a private expense. The cost of travelling between home and work is incurred to put the employee in a position to perform duties of employment, rather than in performance of those duties.

However, a deduction may be allowable for the cost of travel between home and work for an employee who is required to transport bulky equipment. Paragraphs 63 and 64 of Taxation Ruling TR 95/34 explain that a deduction may be allowed in these circumstances where:

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

· it is essential to transport the equipment to and from work and it is not done as a matter of convenience or personal choice,

There are no secure facilities available for storage of the equipment at the work place.

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

In Cretan v. FC of T 98 ATC 2219; (1998) 40 ATR 1037 (Crestanis case), a toolbox which measured 57 cm x 28 cm x 25 cm and weighing 27 kilograms (kg) was considered as bulky, in the sense of cumbersome, and the transport cost was attributable to the transportation of such bulky equipment rather than private travel between home and work. The employer did not provide a secure storage area for the toolbox and the use of public transport was not a viable option.

As bulky equipment is not limited to toolboxes, we also need to identify what items would be considered under the umbrella of bulky equipment. For this purpose, any equipment that is used in deriving assessable income would be taken into consideration.

In your case you are required to transport some small equipment to and from work each day.

You are required to transport the equipment as there is no secure facility to store the equipment at your work place.

This equipment is the property of your employer.

You are not entitled to a deduction under Division 28 of the ITAA 1997 for motor vehicle expenses for the transport of the equipment as it is not considered bulky equipment and it is the property of your employer not your own equipment.

Home to work travel is not deductable as it is private and domestic in nature and is not in relation to the derivation of your income.