Edited version of your private ruling

Authorisation Number: 1012511768655

Ruling

Subject: Travel expenses

Question 1

Are you entitled to a deduction for your motor vehicle expenses to travel between your home and a client's home?

Answer

No

Question 2

Are you entitled to a deduction for travel expenses you incurred when travelling between two different worksites in the one day?

Answer

Yes.

This ruling applies for the following period

Year ended 30 June 2011

Year ended 30 June 2012

Year ended 30 June 2013

The scheme commenced on

1 July 2010

Relevant facts

You work in a particular field for two different employers.

You typically receive a phone call in the evening informing you of where you will be working the next day.

Sometimes you receive this call the next day that you are expected at a work site. You have no prior knowledge of where you are to work until you receive this call.

Your work typically sees you travelling to several different locations.

You usually work at one location per day, but it not uncommon for you to be required to work two work sites in the same day.

It is rare for you to work at the same place two days in a row.

This kind of arrangement is a permanent feature of your work.

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 a loss or outgoing to the extent to which it is incurred in gaining or producing assessable income, except where the loss or outgoing is of a capital, private or domestic nature, or relates to the earning of exempt income.

Travel between home and work

A deduction is generally not allowable for the cost of travel by an employee between home and their normal workplace as it is considered to be a private expense (Lunney v. Federal Commissioner of Taxation (1958) 100 CLR 478; 11 ATD 404) (Taxation Ruling IT 112). 

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 the performance of those duties. Put at its simplest, travel to work is private; travel on work is business.

It should be noted that the mode of transport, the availability of transport, the lack of suitable public transport, the erratic times of employment, the time of travel, the distance of travel and the necessity of travel does not alter the essential character of travel between home and work as being private in nature.

However, a deduction for car expenses between home and work may be allowed if a person's job is itinerant.

Itinerancy

The question of whether an employee's work is itinerant is one of fact, to be determined according to individual circumstances. It is the nature of each individual's duties and not their occupation or industry that determines if they are engaged in itinerant work. Further, itinerant work may be a permanent or temporary feature of an employee's duties.

Taxation Ruling TR 95/34 provides guidelines for establishing whether an employee is carrying out itinerant work. The ruling states that the following characteristics are indicators of itinerancy:

1. travel is a fundamental part of the employee's work that is, a taxpayer is required to undertake several journeys between different workplaces per day to be able to perform his/her work (Federal Commissioner of Taxation v. Wiener 78 ATC 4006; (1978) 8 ATR 33) (Wiener's case).

2. there is a 'web' of work places in the taxpayer's regular employment. A web of workplaces will exist where the employee performs work at a single site and then moves to other sites on a regular basis as in Wiener's case. However the existence of a 'web' of work places will not exist if an employee performs work at more than one site and each site is regarded as a regular fixed place of employment.  TR 95/34 states that if the teacher in Wiener's case had attended only one school each day instead of many, each school would be regarded as a regular place of employment.

3. The taxpayer continually travels from one work site to another. Continual travel refers to the frequency with which an employee moves from one work site to another. It envisages that the employee regularly works at more than one work site per day before returning to his or her usual place of residence. The nature of the taxpayer's employment arrangements, that is, whether they have one employer or several employers is not sufficient to alter the character of the travel expenses.

4. other factors that may indicate itinerancy (to a lesser degree) include:

· the employee has a degree of uncertainty of location in his or her employment (that is, no long term plan and no regular pattern exists)

· the employee's home constitutes a base of operations

· the employee has to carry bulky equipment from home to different work sites

· the employer provides an allowance in recognition of the employee's need to travel continually between different work sites.

Whilst the above characteristics are not exhaustive, they provide guidelines for determining whether an employee's work is itinerant. It is considered that no single factor on its own is necessary decisive.

Your situation

Your case can be distinguished from Wiener's case as we consider that travel is not a fundamental part of your employment. While you do perform your duties at more than one location, you generally travel to only one location in a work day, so it cannot be considered that you have a web of work places or that continuous travel between work sites is a part of your regular duties. There is no degree of uncertainty, as you are advised in advance as to which client you need to attend. None of the other factors that may indicate itinerancy are applicable to your circumstances.

Therefore in view of the above, your employment is not considered itinerant in nature as you travel to only one location to work on any given day. The expenses are incurred to put you in a position to perform the duties of your employment, rather than in the performance of those duties. As such you are not entitled to a deduction for travel expenses between your home and a client's home under section 8-1 of the ITAA 1997.

Travel between two different work sites.

On the days after commencing your duties, where you are required to travel to a different work site it is considered you are travelling on work rather than to work. The travel is undertaken in the performance of your duties. Therefore where you finish work at one work site and travel directly to the next work site in order to continue your work with your employer, you will be entitled to claim a deduction for your travel expenses for this portion of your journey.