Edited version of your written advice

Authorisation Number: 1012676295660

Ruling

Subject: Travel

Question 1

Are you entitled to a deduction for the cost of travelling on the occasions when you actually use the equipment that you carry?

Answer

Yes.

Question 2

Are you entitled to a deduction for the cost of travelling when you carry your equipment in the event that you may need to use them but do not?

Answer

No.

This ruling applies for the following period

Year ended 30 June 2014

The scheme commenced on

1 July 2013

Relevant facts

You are an employee.

You work in the office five days per week.

On approximately one occasion per week, you may receive a call or email instructing you to attend a site prior to going on to work.

You are on a roster for after-hours support.

You need to be onsite within four hours of an issue being identified or reported.

You estimate that you would get an after-hours callout approximately 6 to 8 times per month.

It may take 1 to 2 hours to remotely diagnose the issue and confirm that an onsite person is required.

When you attend a callout on the way to work, you are required to carry the following equipment:

• Toolbox, measuring 56cm (length), 30cm (width), 28cm (depth) weighing between 12-18.

• Laptop (in a carry case) with small tools, cables, connectors weighing approximately 5 Kg.

• Two milk crate size containers with various equipment

• Hardhat and safety vest

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Reasons for decision

Summary

You are entitled to claim a deduction for travel on occasions when you use your equipment for work related purposes. However, when you travel between home and work and do not use the equipment, it is considered to be private travel and no deduction is allowed for those trips.

Detailed reasoning

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.

A deduction is generally not allowable for the cost of travel between home and work as it is considered to be a private expense. Expenditure incurred in travelling to work is a prerequisite to the earning of assessable income rather than being incurred in the course of producing that income. That is, the duties of an employee do not commence until the arrival at a place of work and will cease upon departure from work. The essential character of the expenditure is of a private or domestic nature, relating to personal and living expenses and therefore not an allowable deduction. (Lunney v FCT (1958) 100 CLR 478).

The fact that the travel may be outside normal working hours, or involves a second or subsequent trip, does not change the above principle.

However, a deduction may be allowed for home to work travel expenses in certain exceptional circumstances, for example:

• the employees home constitutes a place of employment and travel is between two places of employment,

• the employees employment is inherently of an itinerant nature, and

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

The first two circumstances are not relevant in your case, however, the third circumstance is relevant and is discussed below.

Taxation Ruling TR 95/19 Income tax: employee building workers - allowances, reimbursements, long service payments, redundancy trust payments and work-related deductions states that a deduction may be allowable if the transport costs can be attributed to the transportation of bulky equipment rather than to private travel between home and work. While the Ruling relates to building workers, it has equal application in your circumstances.

If the equipment is transported to and from work as a matter of convenience or personal choice, it is considered that the transport costs are private and no deduction is allowable.

Furthermore, the equipment must be bulky and used in the earning of assessable income.

Whether equipment is regarded as bulky is a question of fact after considering the size and weight of the equipment. In FC of T v Vogt (1975) 5 ATR 274; 75 ATC 4073, (Vogt's case), a professional musician transported several instruments (trumpet, flugelhorn, acoustic bass, electric bass) and amplifiers from his residence, to various clubs where he worked. The instruments and equipment were very bulky and it was found that Vogt's income was earned not only by performing as a musician but also by providing valuable musical instruments. Vogt kept the instruments at home in order to practice and have them available to take to his next place of work. He used his motor vehicle to transport himself and his instruments between his place of residence and the various places where he worked. The expenditure was said to be attributed to the carriage of equipment, rather than to his personal travel and a deduction was allowable.

In your case, we accept that because of the weight and number of pieces of equipment, your equipment is bulky or cumbersome. Therefore, you are entitled to a deduction for travel on the occasions when you actually use the equipment for your income producing activity.

However, on occasions when you carry your equipment between home and work in case you may need it but do not actually use it, your travel is to enable you to arrive at your work place to earn your assessable income and is not incurred in the actual gaining or producing of your assessable income. Therefore your home to work travel when you are not required to use your equipment is considered to be private in nature and not an allowable deduction.