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Ruling

Subject: Home to work travel

Question:

Are you entitled to a deduction for home to work travel when you are carrying two toolboxes?

Answer:

Yes.

This ruling applies for the following period

Year ended 30 June 2012

The scheme commenced on

1 July 2011

Relevant facts

You work at a mine and you are required to use your own equipment.

You have a bag (toolbox 1) which is 500 millimetres (mm) x 300mm x 300 mm in which you carry equipment which weighs 20 to 30 kilograms (kg). You take this toolbox with you to your accommodation each day.

You also have a toolbox that weighs approximately 30 to 40 kg and is approximately 300 mm x 450 mm x 500 mm. You take this toolbox to work on your first day and leave it there on your days on. When you return home at the end of your days on, you take the toolbox with you.

You use two cars for business travel.

Your employer provides you with accommodation in the closest town in single person's quarters. When you go home on days off, you cannot leave all your belongings in the quarters as they are used by others.

You have a locker at work which is 750 mm x 900 mm x 500 mm and you keep your larger tools in it.

Tools left at work are insured but you may have to pay an insurance excess if any are stolen.

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) deals with general deductions and allows a deduction for all losses or outgoings to the extent to which they are incurred in gaining or producing assessable income, except to the extent that they are outgoings of a capital, private or domestic nature.

Generally the expenses of travel to and from work are not deductible. This is either because such expenditure is private in nature, or because it is not an expense incurred in gaining or producing assessable income.

The case of Lunney & Hayley v. Federal Commissioner of Taxation (1958) 100 CLR 478; (1958) 7 AITR 166; (1958) 11 ATD 404 settled the principle that travel to and from work is ordinarily not deductible. The Full High Court held that costs incurred by a taxpayer in travelling to the place where they work are expenses incurred in order to enable them to earn income but are not expenses incurred in the course of earning that income. The travel is considered to be of an essentially private or domestic nature.

However, the Commissioner accepts that expenses incurred by employees in travelling to and from work are deductible in certain circumstances. One of the exceptions to the general view is where the employee is required to transport bulky equipment necessary for employment. Paragraphs 63 and 64 of Taxation Ruling TR 95/34 explain that a deduction may be allowed in 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, and

· there are no secure facilities available for storage of the bulky equipment at the work place.

The question of what constitutes bulky equipment must be considered according to the individual circumstances in each case. To establish if the equipment you carry is bulky, consideration must be given to its size and weight. 

In Crestani v. FC of T 98 ATC 2219; (1998) 40 ATR 1037 (Crestani's Case), a toolbox which measured 57 x 28 x 25 centimetres and weighed 27 kilograms 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.

In your case, we accept that when you are required to carry the two toolboxes, the equipment is bulky and that there is insufficient room in the locker to store the equipment at work. Therefore, you are entitled to a deduction for travel expenses between home and work when you are carrying both toolboxes.