Edited version of your written advice

Authorisation Number: 1012674778993

Ruling

Subject: Work related travel expenses

Question

Is the work related travel undertaken by the taxpayer to the office of their employer's client deductible under section 8-1 of the ITAA 1997 where all the travel expenses can be substantiated?

Answer

Yes

This ruling applies for the following periods

Income year ended 30 June 2014

Income year ended 30 June 2015

The scheme commences on

1 July 2013

Relevant facts and circumstances

You are employed by a company.

You were employed by the company for the purpose of provided services to their client.

You reside in City A. You conduct the majority (approximately 70%) of your work at home.

You are required to travel to the client's various offices in City B one day of every week. You have also worked from occasion the client's office in City A.

All travel has been entirely for work purposes and you have not conducted any non-work related activities while traveling to City B. You have paid for the travel yourself and have not been provided a travel allowance by your employer or had any travel expenses reimbursed.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

Reasons for decision

Section 8-1 of the 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.

Home to work travel

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 (Lunney v. FC of T (1957-1958) 100 CLR 478; (1958) 11 ATD 404).

There are situations where it has been accepted that travel by employees from home to work is deductible. This is where:

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

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

• The employee's home constitutes a base of operations.

In your circumstances it is not considered that the nature of your employment is inherently itinerant, nor is there any evidence that you would need to transport bulky equipment necessary to your employment.

Paragraph 56 of TR 95/34 states that an employee's home may constitute a base of operations if the work is commenced at or before the time of leaving home to travel to work and the responsibility for completing it is not discharged until the taxpayer attends at the work site.  Whether an employee's home constitutes a base of operations depends on the nature and the extent of the activities undertaken by the employee at home. 

In Collings v. Federal Commissioner of Taxation 76 ATC 4254 a highly trained computer consultant was required by her employer to be on call 24 hours a day. The taxpayer was allowed a deduction for car expenses incurred by her in travelling between home and work solely outside the normal daily journeys to and from work. In order to assist in diagnosing and correcting computer faults while at home, she was provided by her employer with a portable terminal.

In accordance with the terms of her employment, she used the terminal at home in the performance of her duties. If she could not resolve the problem over the telephone, she would return to the office in order to get the computer working. In these particular circumstances, the expenses were found to be incurred in gaining or producing her assessable income and were not of a private or domestic nature. The abnormal journeys to and from home were made necessary by the very nature of the employment and of her duties.

Your situation is distinguishable in that you do not commence a work activity at your residence and then complete that activity at another work site. Rather you on a regular scheduled basis you attend a different work site in City B. Consequently due the regulars scheduled nature of the travel it would be considered that these trips form part of your regular duties and such the travel expense are incurred in relation to your personal choice to reside in City A. In support of this position is the absence of any travel allowance or partial reimbursement of the travel expenses by your employer. Consequently the travel expenses will not be deductible under 8-1 of the ITAA 1997 as they are private and domestic in nature.

Additionally you have argued that the travel expenses should be deductible on the basis that the City B location is an alternative work place however in the Commissioner's view an alternative destination is not a regular place of employment (paragraph 34 of Miscellaneous Taxation Ruling MT 2027).