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Ruling

Subject: Deductibility of travel, food and accommodation expenses

Question

Can you claim your travel, food and accommodation expenses in relation to getting to your workplace on a land oil rig?

Answer

No.

This ruling applies for the following period

For years ended 30 June 2008 to 2013

The scheme commenced on

1 July 2007

Relevant facts

You live in another state to where you work.

You usually work on a roster basis of a number of weeks on and then a number of weeks off, but are on call to fill in anytime at all.

You work on a land oil rig that changes locations periodically. Your usual mode of transport is flying from home on a chartered aircraft to the worksite. On many occasions you are required to make your own way to a capital city airport, to link up with your employer's aircraft in order to get to work. On these occasions you are required to pay your own travel, food and accommodation costs.

There is always a different location when you return to work.

You are paid for some hours per trip, included in your gross income.

Upon commencement of your duties you regularly change work sites on the same day.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Reasons for decision

Summary

You are not entitled to a deduction for your travel, food and accommodation expenses in relation to getting to your workplace on a land oil rig. The travel is considered to be travelling between home and work, and as such, it is considered a private expense.

Detailed reasoning

Section 8-1 of the Income Tax Assessment Act 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.

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. (see paragraph 77 of Taxation Ruling TR 95/34)

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

· where the employment can be construed as having commenced at the time of leaving home, for example a doctor on call

· where you travel between home and shifting places of work, that is, an itinerant occupation,

· the transportation of bulky equipment in some circumstances.

It is not considered you have commenced work prior to leaving your home and you are not carrying bulky tools.

In the case of itinerancy, work is considered to be of an itinerant nature where:

· travel is a fundamental part of your work

· there is a 'web' of work places in your regular employment

· you continually travel from one work site to another.

In FC of T v. Wiener 78 ATC 4006, 8 ATR 335 a teacher was engaged in a pilot scheme. They were required to teach at five different schools spending about one hour a day at each school. The court found that travel was a fundamental part of their work. In their judgment Smith J said:

The nature of the job itself made travel in the performance of its duties essential, and it was a necessary element of the employment that on those working days transport be available at whichever school the taxpayer commenced her teaching duties and that transport remained at her disposal throughout each of those days.

In the above case and other cases where the taxpayer has been considered to be itinerant, the taxpayer has been responsible for travel expenses incurred in order to undertake work duties during the course of a work day.

Your case is different in that you are only responsible for the expenses of travelling from home to a capital city airport on the occasions you are required to do so in order to link up with your employer's aircraft to get to work. Although during your rostered on period, you may regularly change work locations during a day, you are not responsible for this travel expense.

It is considered that the expenses you are responsible for are expenses incurred in order to put you in a position to commence your work, rather than in the course of performing your work. You are not entitled to a deduction for the cost of travel, accommodation and food when travelling between home and work as it not incurred in the course of performing your work and it is private in nature.