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Ruling

Subject: Work related travel expenses

Question 1

Is the cost of travel deductible when you travel directly between your home and the office?

Answer

No

Question 2

Is the cost of travel deductible when you travel directly between your home and a client's premises?

Answer

No

Question 3

Is the cost of travel deductible when you travel from your home to a client's premises and then on to the office?

Answer

Yes

Question 4

Is the cost of travel deductible when you travel from the office to a client's premises and then on to your home?

Answer

Yes

Question 5

Is the cost of travel deductible when you travel directly between the office and a client's premises?

Answer

Yes

This ruling applies for the following period

Year ending 30 June 2012

The scheme commences on

1 July 2011

Relevant facts and circumstances

You are an employee.

You have a home office. The tasks completed in your home office are tasks which would otherwise be performed at your employer's premises and as such, these tasks are completed in your home office as a matter of convenience, not as tasks performed at a place of business.

Most days you travel to and spend time working at the employer's office.

On some occasions you travel directly from home to a client's premises, and then continue on to the office.

On some occasions you travel between the office and a client's premises.

Your employer provided you with a mobile office which is contained in a portable suitcase.

Your mobile office consists of a laptop & riser, keyboard, mobile phone and associated cables and dongles and your note books or paper documents.

The suitcase which carries your mobile office has the following dimensions: 28cm (w) X 45cm (l) X 35cm (h) and is approximately 15 kg when packed.

You do not receive an allowance from your employer for the use of your motor vehicle.

You own the motor vehicle used for travel.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

Income Tax Assessment Act 1997 section 25-100

Reasons for decision

The cost of travel between your home and your place of work is generally not deductible under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)

The decision of the Full Court of the High Court in the appeals of Lunney and Hayley v FC of T (1958) 100 CLR 478 affirmed the decision that travel to and from your regular place of employment is not deductible against assessable income earned by you from your employment.

The essential character of the expenditure of travel to and from work is a personal or living expense rather than an expense incurred in, or in the course of, gaining assessable income. It could be said to be a consequence of living in one place and working in another.

Although we acknowledge that you have a home office, it would not be considered a place of business but rather a private study. Maintaining an office or study at home is a matter of convenience, enabling you to carry out work at home which would otherwise be done at your regular place of employment

In your case, you travel from your home directly to the office or from your home directly to a client's premises. These journeys are made by you on your way to your employment and in returning from it and are not made in the course of your employment or performance of your duties, therefore a deduction for the cost of travel is not available.

The cost of travel when you travel directly between your home and work office would not be an allowable deduction.

The cost of travel when you travel directly between your home and a client's premises would also not be an allowable deduction.

In Taxation Ruling MT 2027, the Commissioner accepts that the travel from an employee's home to a client's premises and on to the office will be accepted as business travel where:

The employee has a regular place of employment to which he or she travel habitually

In the performance of his or her duties as an employee, travel is undertaken to an alternative destination which is not itself a regular place of employment, and

· The journey us undertaken to a location at which the employee performs substantial employment duties.

It would also be accepted as business travel when you travel from the office to a client's premises and then on to your home.

The Commissioner does not accept that travel is business travel where the employee merely performs incidental tasks enroute.

In your case,

· You have a regular place of employment which you travel to on a regular basis

· Your client's premises is not your regular place of employment, and

· You undertake the journey to perform your employment duties. These duties would not be considered incidental tasks.

The cost of travel from your home to a client's premises then on to the office would be an allowable deduction.

The cost of travel from the office to a client's premises and then on to your home would also be an allowable deduction.

The cost of travel between 2 workplaces is an allowable deduction under section 25-100 of the ITAA 1997 to the extent that while at the first location you were engaged in activities to gain or produce your assessable income and the purpose of travel to the second location was to engage in activities to gain or produce your assessable income.

In your case, you travel between the office and a client's premises to engage in activities to gain or produce your assessable income. You perform these activities in both locations and the reason for your travel is to perform your employment duties.

The cost of travel when you travel directly between the office and a client's premises would be an allowable deduction.

Another exception from the general principle that home to work travel is not deductible is where bulky equipment is required to be transported. There is no definition in the taxation legislation of bulky for the purposes of considering the transportation of equipment between home and work. Therefore courts have considered whether a deduction for the cost of travel between home and work may be allowable as a deduction if a taxpayer is required to carry bulky equipment (Federal Commissioner of Taxation v Vogt [1975] 1 NSWLR 194; 5 ATR 274; 75 ATC 4073). 

The following factors should be considered in transportation of equipment cases:

· the security of the storage facilities

· the taxpayer's personal choice to carry the equipment (is there a reasonable alternative), and

· the size and weight of the equipment and alternative forms of transportation.

Where the equipment meets the above factors the transport cost is attributable to the transportation of such bulky equipment rather than private travel between home and work.

In your case the equipment you carry in a portable suitcase, would not be considered to be bulky and therefore the exception for home to work travel would not apply. As such it is considered that the transport costs, aside from the deductible travel identified in this ruling, are private expenses and no deduction is allowable for the transport costs.