Edited version of your private ruling

Authorisation Number: 1012577834441

Ruling

Subject: Travel expenses

Question 1

Are you entitled to a deduction for the cost of your airfares to and from work?

Answer

No.

Question 2

Are you entitled to a deduction for the cost of your meals while living away for work?

Answer

No.

This ruling applies for the following periods:

Year ended 30 June 2013

The scheme commences on:

1 July 2012

Relevant facts and circumstances

You are an employee.

You and your family set up home in City A.

You were contracted to your employer and worked in City B.

You fly between City A and City B.

Your employer does not pay for your flights and you have paid all these yourself.

You use specialised equipment.

There is no provision on the work site to securely store the equipment. Additionally, the equipment requires regular maintenance that is not available near the workplace. Therefore, you transport the equipment from City B back to City A.

The equipment is heavy which has resulted in an excess luggage fee on some occasions.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Reasons for decision

Section 8-1 of the Income Tax Assessment Act 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.

In considering the deductibility of travel expenses a distinction is made between travel to work and travel on work. It is only if the duties of the job require a taxpayer to travel in the course of undertaking their work duties that the taxpayer's expenses can be deducted (Taylor v Provan 1975 AC 194).

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. The cost of travel 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. (see paragraph 77 of Taxation Ruling TR 95/34)

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

· where the employment can be construed as having commenced at the time of leaving home, for example a doctor on call,

· where you travel between home and shifting places of work, that is, an itinerant occupation, and

· the transportation of bulky equipment in some circumstances.

In your situation, your work has not commenced before leaving home and you are not considered itinerant. You do carry some work equipment while travelling, therefore the issue of bulky equipment will be addressed further. The question of what constitutes bulky equipment is a question of fact and must be considered according to the individual circumstances of each case.

The Administrative Appeals Tribunal in Crestani v. FC of T 98 ATC 2219; 40 ATR 1037 (Crestani's case) found the taxpayer's toolbox measuring 25cm x 28cm x 57cm and weighing 27kg was bulky and cumbersome. In this case, the taxpayer was an aircraft engineer who worked at Sydney Airport. They transported their toolbox home at the end of each shift as there was no secure storage at work. The Tribunal held that the home to work travel was attributed to the transportation of these tools. The expenses incurred in transporting these tools were deductible and the taxpayer was simply one of those fortunate few who is able to hitch a free ride on his tool box.

In the case of bulky equipment, the cost is attributed to the transportation of the bulky equipment rather than private travel between home and work where the transportation of the equipment is essential and is not done as a matter of personal choice or convenience and there is no secure storage provided at the workplace.

In your situation, you take various tools of your trade with you when travelling between home and work as your employer does not provide secure storage for your tools and they require regular maintenance that is not available near the workplace.

However, when travelling by plane, the cost of a plane flight is considered to be the expense enabling you to travel as a passenger. As a passenger, you are also entitled to carry a certain quantity of luggage with you. Your tools are hitching a ride with you and therefore you have not incurred any expenses in transporting the tools apart from the excess luggage fees. The travel is considered private in nature. Consequently no deduction is available for the cost of your plane tickets

Meals

Meal expenses incurred by an individual who lives away from home to carry out the duties of their employment are not deductible.  Expenses of this nature have been found to be private or incurred before or after the activity of earning assessable income. They are a prerequisite to the earning of assessable income and therefore are not expenses incurred in the course of gaining or producing that income.