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Ruling

Subject: Work related expenses - meals and accommodation

Question 1

Are you entitled to a deduction for travel between your home and your second workplace?

Answer

No.

Question 2

Are you entitled to a deduction for accommodation and meals while at the work location?

Answer

No.

This ruling applies for the following periods

Year ended 30 June 2012

Year ended 30 June 2013

Year ended 30 June 2014

Year ended 30 June 2015

The scheme commences on

1 July 2011

Relevant facts and circumstances

You are an employee.

Your permanent place of residence is in one town and you work in a different town.

You work a roster. On your days off you return to your home town.

Your employer pays you an allowance for the work days.

Your employer does not allow you to reside in your home town and travel each day due to fatigue.

You have rented accommodation in the town close to where you work.

When travelling from your home to your accommodation, you carry the following items:

· two bags of work clothing

· a portable freezer

· food

· a tool box

You are not required to provide your own tools as your employer provides them.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Reasons for decision

Travel costs

According to section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997), you can deduct a loss or outgoing if it is incurred in producing your assessable income except where the outgoing is of a capital, private or domestic nature.

A deduction is generally not allowable for the cost of travel between home and work because the expenses are not considered to be incurred in producing assessable income. These expenses are incurred as a consequence of living in one place and working in another and any expenses incurred to enable a taxpayer to commence their income earning activities are therefore considered private in nature.

The case of Lunney v. Commissioner of Taxation [1958] ALR 225;1958 - 0311H - HCA;100 CLR 478;(1958) 11 ATD 404;(1958) 32 ALJR 139 (Lunney's Case) settled the principle that travel to and from work is ordinarily not deductible under section 8-1 of the ITAA 1997. This travel is considered to be of an essentially private or domestic nature.

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

· the taxpayer's home constitutes a place of employment and travel is between two places of employment or business

· the employee has to transport by vehicle bulky equipment necessary for employment

· the employees employment is inherently of an itinerant nature, or

· travel is between two places of employment.

Home constitutes a place of employment

In your case, your home does not constitute a place of employment. You have stated that you performed work in another town.

Travel between two places of employment

As already stated, your home does not constitute a place of employment and your only place of employment was your employer's premises. Therefore, you were not travelling between two places of employment when travelling between your home and where you work.

Employment is inherently of an itinerant nature

In your case, your travel is not a fundamental part of your work; you do not have a 'web' of work places and you do not travel to different work locations on a daily or weekly basis and you do not travel from one worksite to another. 

Transporting bulky equipment necessary for employment

A deduction is not allowable if the equipment is transported to and from work as a matter of convenience or personal choice.  

A deduction is not allowable if a secure area for the storage of equipment is provided at the workplace. 

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

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, in that the toolbox was not easily portable. The transport cost was attributable to the transportation of such bulky equipment rather than private travel between home and work. Also, the employer did not provide a secure storage area for the toolbox. 

In Case 43/94 94 ATC 387 a flight sergeant with the Royal Australian Air Force was denied a deduction for the cost of transporting his flying suit and other items used for work purposes. These items were carried in:

· a duffle bag measuring 75cm x 55cm x 50cm weighing 20 kilograms

· a suit bag which weighed 10 kilograms

· a brief case- sized navigational bag containing charts, work manuals and study materials.

It was held that the mode of transporting the items was simply a consequence of the means adopted to convey him to work. It was considered that the duffle bag was not sufficiently bulky or weighty to impede facile transport.

In your case, you carry a toolbox containing tools, two bags of protective clothing and jumpers, food and a portable freezer.

The transporting of your toolbox is for personal reasons as your employer provides work tools. Thus, the transporting of your own tools is private in nature.

While the two clothing bags may appear bulky because of the size and weight similar to that in Crestani's Case, the transport of your protective clothing and jumpers is incidental to the primary purpose of transporting yourself to work. Similar to Case 43/94, we consider the protective equipment when separated from personal effects is not considered to be of a size or weight that would make their transportation difficult. Thus, the clothing bags carried are not considered to be bulky equipment.

Taxation Ruling TR 95/18 states that a deduction is allowable for the decline in value of a portable fridge purchased for the storage of food and drink while travelling for income producing purposes. Whilst TR 95/18 deals with deductions for employee truck drivers, this principle may be applied to other employees as well. As already stated the travel you undertake is not a fundamental part of your work as the travel is to commence your income earning activities and not incurred in producing assessable income. Therefore the transporting of the portable freezer is private in nature.

Similarly, the transporting of your food is of a private nature.

As your home is not considered to be a place of employment, your employment is not inherently of an itinerant nature, you are not travelling between two places of employment and the costs are not incurred to transport bulky work equipment the costs you have incurred are as a consequence of living in one place and working in another and were incurred to enable you to commence, or return home after completing, your income earning activities and are considered private in nature and are not deductible.

Accommodation and meals

Some expenses are incurred in order to put you in a position to be able to earn your assessable income. For example, unless you get yourself to work it is not possible to earn your income. Such expenses are incurred before you have commenced your duties and thus before your income is being earned (Lunney's Case).

Similarly, accommodation expenses incurred by an individual who lives away from home to carry out the duties of their employment will not be deductible. Expenses of this nature have been found to be private or incurred before or after the activity of earning assessable income.

The issue of expenses incurred in relation to accommodation near the workplace and meal expenses away from home while maintaining a family residence in another location has been considered by the courts.

In the case Federal Commissioner of Taxation v. Charlton 84 ATC 4415; (1984) 15 ATR 711, the taxpayer worked in Bendigo as both a pathologist and as an assistant to the local coroner. As his permanent family home was in Melbourne, he rented a flat in Bendigo. As he worked Monday to Friday in Bendigo, the taxpayer was reluctant to make the round trip to Melbourne without rest. The taxpayer claimed that the rental was incurred in the production of assessable income, but the Court ruled that the expense of accommodation was considered private and domestic in nature and would not be deductible under section 8-1 of ITAA 1997.

This is supported by the decision in FC of T v. Toms 89 ATC 4373; (1989) 20 ATR 466 (Toms' Case). The taxpayer was a forest worker who during the working week lived in a caravan in a bush camp 108 kilometres from his family home in Grafton. He claimed it was too far to travel each day to his work in the forest, so that it was necessary to establish a caravan at the camp. He would return home on weekends. He claimed the costs of maintaining his caravan and other living expenses such as the cost of heating and lighting. The Federal Court considered that the caravan was rendered necessary as much by the taxpayer's choice of the place of his residence in Grafton as by his choice of employment in the forest, and its purpose was to enable him to retain his residence at Grafton although employed in the forest. It was held that the expenses incurred in relation to the temporary accommodation near the workplace while maintaining a family residence in another location were dictated not by his work but by private considerations, and therefore were not deductible.

You incur expenses for renting accommodation to enable you to work in a different town to where your principal residence is. However, as in Toms' Case, the expenses are a prerequisite to the earning of assessable income. They are incurred in order to enable you to earn income but are not incurred in the course of gaining or producing that income. A deduction is therefore not allowable for your rental accommodation and meal expenses.