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Ruling

Subject: Transport expenses - bulky equipment

Question

Are you entitled to a deduction for the cost of transporting bulky equipment to and from work?

Answer

Yes.

This ruling applies for the following period:

Year ending 30 June 2012

The scheme commences on:

1 July 2011

Relevant facts and circumstances

You reside in Australia.

You are employed as a position which requires you to regularly travel on trips covering several days as a part of your work.

You live a long distance from where you commence your employment, and travel it many times per year in your private motor vehicle.

As there is no secure storage where you commence your employment, you carry the following items in your vehicle from your home:

§ bag 1 which contains work related items and weighs in excess of 10 kilograms

§ bag 2 which contains sleeping items which weighs in excess of 10 kilograms

§ a food box which contains food and cooking utensils which weighs in excess of 10 kilograms, and

§ a cooler bag which weighs in excess of 10 kilograms.

As you are away for a number of days each work trip you must carry your food and bedding with you.

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) 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 transport by an employee between home and his normal workplace as it is generally considered to be a private expense. The cost of travelling between home and work is generally incurred to put the employee in a position to perform duties of employment, rather than in performance of those duties.

However, a deduction may be allowable for the cost of travel between home and work for an employee who is required to transport bulky equipment. Paragraphs 63 and 64 of Taxation Ruling TR 95/34 explain that a deduction may be allowed in these 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,

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

The question of what constitutes bulky equipment was considered in Crestani v. Federal Commissioner of Taxation 98 ATC 2219; (1998) 40 ATR 1037 (Crestani's case). In that case, the toolbox in question measured (approximately) 562mm by 250mm by 262mm and weighed approximately 27kg. The Administrative Appeals Tribunal in that case decided that the toolbox was sufficiently cumbersome to be considered bulky.

In your case, your bag 1 would not be considered bulky equipment by itself. However, the combination of the bag1, the bag containing your sleeping items, the food box and cool bag could be considered bulky.

As you are required to carry the above items which are all used for sleeping away from your home for the periods you are away, the question focuses on the deductibility of expenses relating to that purpose.

Expenses incurred in sleeping away from home

Taxation Ruling TR 95/18 is an occupational ruling for truck drivers. Although the occupation discussed in the ruling is a truck driver, the principles established in the ruling can be applied to your circumstances.

The ruling states that a deduction is allowable for work-related travel expenses incurred by an employee truck driver who is required to sleep away from home. These expenses could include the costs of accommodation, fares, meals or incidentals. Such expenses are seen as having a sufficient connection with the truck driver's income-earning activities.

There have been a number of cases considered by the Courts and Tribunals where deductions for travel expenses were allowed where the taxpayer was required to sleep away from home. In Case E34 5 TBRD (NS) 205; 4 CTBR (NS) Case 99, J L Burke (Chairman) stated (TBRD at 205; CTBR at 587:

'...where the taxpayer maintained a domestic establishment and where her employment caused her to move away from that establishment for periods of indefinite duration, I am prepared to find that expenses incurred on hotel accommodation and meals whilst the taxpayer was absent from her headquarters, if I may use the term, were not of a private or domestic nature.'

The conclusion reached in that case was, because the income-earning activities of the position required the taxpayer to sleep away from home, the expenses incurred on accommodation and meals were an allowable deduction.

In your case, your income-earning activities require you to sleep away from home for several nights at a time. As such, the expenditure incurred for the purpose of sleeping away from home in the course of your work would be an allowable deduction.

The items you are required to transport are collectively considered bulky in nature. Further you do not transport your items to and from work as a matter of convenience or personal choice, but because your employer does not provide secure storage for your items where you commence your employment. Therefore, you are entitled to a deduction for the cost of transporting your bulky equipment to and from work under section 8-1 of the ITAA 1997.