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Ruling

Subject: Home to work travel

Question

Are you entitled to a deduction for home to work travel?

Answer

No.

This ruling applies for the following period

Year ended 30 June 2012

Year ended 30 June 2013

Year ended 30 June 2014

Year ended 30 June 2015

Year ended 30 June 2016

Year ended 30 June 2017

The scheme commenced on

1 July 2011

Relevant facts

You are an employee and you carry protective clothing with you when travelling between home and work.

You carry your protective clothing in a bag.

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.

In Case L49 79 ATC 339; 23 CTBR (NS) Case 56 (Case L49), an airline pilot was not allowed a deduction for expenses incurred in transporting luggage to and from the airport. The taxpayer's duties commenced when he 'signed on' at the airport for a flight or, on other occasions of mandatory attendance, on arrival at the airport. In this case, Board Member Mr M B Hogan stated (ATC at 342; CTBR at 469):

The taxpayer had the normal accoutrements of a travelling businessman, a bulky suitcase and a hand satchel. But this bulk is hardly such as to suggest that the accoutrements were being transported primarily, and that the taxpayer obtained an incidental (and "tax free") ride. Nor, of course, are the businessman's personal accoutrements the equivalent of ``plant'' employed by [the taxpayer] in the production of his assessable income.

The Administrative Appeals Tribunal in Case 43/94 94 ATC 387; AAT Case 9654 (1994) 29 ATR 1031 examined where a flight sergeant with the Royal Australian Air Force claimed a deduction for carrying bulky equipment between home and work. The flight sergeants bag was a standard air force issue duffle bag and when packed, weighed 20kg.

The contents can be summarised as being mainly uniforms, personal survival gear and flying clothing and included some equipment such as a knife and torch. The tribunal held that the means of transporting the bag was simply as a consequence of the method the flight sergeant used to travel from home to work and placing the bag in the car did not alter the nature of the trip or the character of the expenditure. The duffle bag was not of a size or weight to impede facile transport. The expense should be attributed to the flight sergeants travel to and from work, and not the carriage of the bag. The tribunal then stated this conclusion eliminated the need to examine any issues of storage at the workplace.

The attributes of the clothing may imply an income producing purpose. However this does not alter their nature from being essentially an item of personal luggage, which is considered private in nature. Additionally, the carriage of luggage is not generally considered to be performed by a means which would impede facile transportation. Accordingly you are not entitled to a deduction for the expenses incurred in relation to travel between home and work.