Edited version of private advice

Authorisation Number: 1012678699331

Ruling

Subject: Home to work travel expenses

Question and answer

Are you entitled to a deduction for travel between your home and a shed to collect a motor vehicle?

No.

This ruling applies for the following period:

Year ended 30 June 2014

The scheme commenced on:

1 July 2013

Relevant facts and circumstances

You drive a motor vehicle for a living.

The motor vehicle is housed in a shed.

You do paper work and invoicing from your home before and after your shifts.

You drive your personal motor vehicle to a shed which houses the motor vehicle to commence your shift.

The shed only provides office space and equipment for owners and secretaries.

Any additional paper work is done in the motor vehicle during the day.

You wish to claim your travel to and from the shed each day to collect the motor vehicle.

Relevant legislative provisions:

Income Tax Assessment Act 1997 Section 8-1.

Income Tax Assessment Act 1997 Section 8-5.

Income Tax Assessment Act 1997 Section 12-5.

Income Tax Assessment Act 1997 Section 25-100.

Income Tax Assessment Act 1997 Division 28

Income Tax Assessment Act 1997 section 28-12

Reasons for decision

The deduction provisions are contained in Division 8 of the Income Tax Assessment Act 1997 (ITAA 1997). Section 8-1 of the ITAA 1997 (the general deduction provision) allows a deduction for all losses or outgoings to the extent to which they are incurred in gaining or producing assessable income or necessarily incurred in carrying on a business for the purpose of gaining or producing assessable income, except to the extent that they are outgoings of a capital, private or domestic nature.

Division 28 of the Income Tax Assessment Acct 1997 considers the deductibility of car expenses.

Section 28-12 allows a deduction using one of the four methods.

Section 8-5 of the ITAA 1997 deals with specific deductions, and allows deductions where an amount can be deducted under a specific provision of the ITAA 1997, other than within Division 8.

Section 12-5 of the ITAA 1997 lists those provisions dealing with specific deductions. Included in this list is section 25-100 of the ITAA 1997 which deals with transport expenses incurred in travelling between workplaces.

Travel between places of employment

Prior to the decision known as Paynes case (Commissioner of Taxation v. Payne [2001] HCA 3) the Commissioner allowed deductions incurred in travelling directly between two unrelated places of income-earning activity under the general deduction provision. However, in Payne's case, the High Court held that such expenses were not deductible under the general deduction provision as they were not incurred in gaining or producing assessable income but rather incurred in the interval between the two activities.

Section 25-100 of the ITAA 1997 was introduced to overcome the effect of the decision in Payne's case and provides a specific deduction for transport expenses incurred on travel between two workplaces where certain conditions are met. These conditions include:

• the individual must have incurred transport expenses in travelling between two workplaces,

• the purpose of the travel between workplaces is to earn assessable income at the second workplace,

• the individual does not reside at either place, and

• expenses incurred must not be capital, or of a capital nature.

However, deductions that continue to be available under section 8-1 and s section 28-12 of the ITAA 1997 for transport and travel expenses include where:

1)  the nature of the employment is itinerant;

2)  there is a need to transport bulky equipment;

3)  the need to use a motor vehicle arises out of the type of work performed; or

4)  a taxpayer's income earning activities commence before leaving home;

In your case, you are travelling between two places, one of which is a place that you reside. The nature of your employment is not itinerant and you do not transport bulky equipment when you travel.

In Taxation Ruling 95/34 , regarding income earning activities commencing before leaving home, consideration was given to the decision of the Supreme Court, Federal Commissioner of Taxation v Collings (6 ATR 476; 76 ATC 4254). The taxpayer was a computer technician required to provide on-call technical advice on a 24 hour basis. If trouble arose at the headquarters with the operation of the computer and the duty staff were unable to rectify it they phoned her. If she was unable to have the problem solved over the phone she would have to travel by her car to headquarters to deal with it. In addition, the taxpayer had the use of a portable terminal which she took to her home or other places where she might be outside normal office hours. By dialling the headquarters computer on an ordinary phone line and placing the telephone receiver in the portable terminal, she was able to work from the telephone to the computer.

On these facts, his Honour concluded the taxpayer was continuously on duty wherever she was. She was not choosing to do part of the work of her job in two separate places. Hers was not the freedom of choice of a barrister who does some of his work at home. Her double work location was not only merely colourable but the two places of work were a necessary application arising from the special nature of her duties". From these conclusions his Honour was able to say that the motor vehicle expenses claimed by the taxpayer were deductible in the relevant sense required by the law.

In your case you perform some work leading up to your departure to the shed to collect the motor vehicle such as paper work and invoicing.

Your situation is unlike the computer technician above, where income earning activities commenced before leaving home. Your situation is like that of a barrister, who does some of his work at home.

Therefore a deduction is not allowable for your travel costs from your home to the shed.