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Ruling

Subject: Travel Expenses

Question

Are you entitled to a deduction for taxi fares between your home and the airport?

Answer

No

This ruling applies for the following periods

Year ended 30 June 2012

Year ending 30 June 2013

Year ending 30 June 2014

Year ending 30 June 2015

The scheme commenced on

1 July 2011

Relevant facts

You are employed in a particular profession.

You are away from your home for between 4 and 8 weeks at a time.

You usually carry 2 suit cases and a computer bag as you have to carry a large amount of clothing including overalls and boots and some small tools.

As you do not have the same work location, you cannot leave this equipment at your workplace.

As you are away for long periods, you cannot drive to the airport and leave your car, so a taxi is your only viable option.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Reasons for decision

Summary

You are not entitled to a deduction for taxi expenses when travelling to and from the airport as the expense is considered private and domestic in nature.

Detailed reasoning

Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 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 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 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. This is where:

· the employee's home constitutes a place of employment and travel is to a workplace to continue work

· the employee's employment is inherently of an itinerant nature

· travel is between two places of employment, or

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

Home is a place of employment

You are employed in a particular profession. You are required to travel from your home to your workplace to perform your work. You do not carry out any work activity before you leave your home.

Therefore, your home is not considered to be a place of employment.

Itinerant work

In the case of itinerancy, an employee's occupation may be considered itinerant where:

· travel is a fundamental part of the employee's work

· the existence of a 'web' of work places in the employee's regular employment, that is, the employee has no fixed place of work

· the employee continually travels from one work site to another. An employee must regularly work at more than one work site before returning to their usual place of residence.

In your case your duties will only commence when you reach your workplace where you carry out your work. You are not considered to be travelling in the performance of your duties from the moment you leave home. Therefore, travel is not a fundamental part of your employment. 

You do not work at more than one work location on any given day. You work every day for one employer at one location for a period of 4 to 8 weeks at a time. There is not a 'web' of workplaces in your employment and you do not continually travel from one worksite to another. Your work is therefore not considered itinerant.

Transport of bulky equipment

In your case it is necessary for you to carry large amounts of clothing including overalls, boots and some small tools.

The transporting of your personal items and protective clothing is incidental to the primary purpose of transporting yourself to work. We consider the small amount of tools when separated from your personal effects is not considered to be of a size or weight that would make their transportation difficult. Thus, the equipment carried is not considered to be of such bulk that it would change the primary purpose of your travel from one of transporting yourself to and from work to one of transporting the equipment.

Therefore, the taxi expenses you incur in travelling between home and the airport are private in nature. Accordingly, the expenses are not deductible under section 8-1 of the ITAA 1997.