Edited version of your written advice

Authorisation Number: 1012783271641

Ruling

Subject: Travel expenses

Question

Are you entitled to a deduction for your travel between home and work?

Answer

No.

This ruling applies for the following periods:

Year ended 30 June 2014

The scheme commences on:

1 July 2013

Relevant facts and circumstances

You are an employee.

During the 2014 financial year, you supervised two separate projects.

Project 1:

• The project consisted of several separate sites collectively constituting a single project.

• The distance between the two furthest sites was in excess of 30km.

Project 2:

• The project covered 13km.

• You were required to live away from home for which you were paid a Living Away From Home Allowance.

• You lived away from home several nights per week.

For both projects you were required to provide an appropriate site vehicle in order to undertake daily inspections of construction works.

For both projects your employer paid a motor vehicle allowance in accordance with the site specific motor vehicle policy. This policy refers to a site vehicle as a "tool of trade".

You often receive phone calls relating to construction activities either at home prior to driving to the site and/or en-route to the site.

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.

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.

Home as a base of operations

Travel expenses are deductible where an employee travels between home based employment and another place of employment. However, the fact that the employee chooses to perform work at home associated with employment conducted elsewhere is not sufficient for the home to constitute as a base of operations.

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. 

However paragraph 61 of TR 95/34 states that the mere receipt of telephone calls from an employer is not sufficient to allow the home to be classed as a base of operations.

In FC of T v. Collings 76 ATC 4254; (1976) 6 ATR 476 for example, a computer consultant's employment required her to be on call 24 hours a day. She was provided with a portable terminal that was connected to her employer's computer through the telephone line. It was common for her to receive telephone calls at home and give advice to workers at the office any time a problem arose. If she was unable to resolve the problem over the telephone or through the portable computer she would return to the office in order to get the computer working.

The Court accepted that there were two separate and distinguishable facets of her employment. While she commuted regularly to her work, she was also required to be ready on call at all other times. The Court held that, on the occasions the taxpayer returned to work after hours:

(a) she had commenced performance of her duties before leaving home and travelled to work to complete those duties. Her obligation was more than just being on stand-by duty at home; and

(b) she did not choose to do part of the work in two separate places. The two places of work were a necessary obligation arising from the nature of the special duties of her employment.

This case can be contrasted with Case L49 (79 ATC 339). In this case a pilot claimed that his home constituted a place of work because it was necessary for him to keep up with the latest orders and technical materials and his employer made no provision for him to carry out these duties at work. The claim was disallowed on the grounds that the Board of Review determined that the taxpayer's duties commenced when he 'signed on' at the airport for a flight or, on other occasions, when he arrived at the airport.

Your situation can be compared to Case L49. Although you may receive phone calls prior to arriving at the site, it is considered that your work does not commence before or at the time of leaving home, but when you arrive at your workplace. Consequently, you are not considered to be travelling between two places of employment and it is not considered that your work has commenced before you leave home.

Itinerant work

The question of whether an employee 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. The main features of itinerant work specified in TR 95/34 include:

• Travel is a fundamental part of the employee's work.

• The existence of a web of work places in the employee's regular employment, that is, the employee has no fixed place of work.

• The employee continually travels from one work site to another.  An employee must regularly work at more than one work site before returning to his or her usual place of residence.

• 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).

Web of work places

An employee may earn income by performing his or her duties at several work sites. The location of those sites may make it necessary to travel to the various sites. If an employee performs work at a single site and then moves to other sites on a regular basis, it would be considered that a 'web' of work places exists. In FC of T v. Wiener 78 ATC 4006; (1978) 8 ATR 335 (Wiener's case), the taxpayer was required to attend four to five schools each day. This constituted a 'web' of work places.

Although an employee may perform duties at more than one work location, this fact in itself may be insufficient to constitute a 'web' of work places for the purpose of itinerancy. Each work place may be regarded as a regular or fixed place of employment.

In your case, although your project area may comprise a number of separate sites you are not considered to have a web of work places. Your project area is considered to be a regular place of work. There is also no uncertainty of your location as your assignments are long term. Therefore you cannot be considered as an itinerant worker.

Transport of bulky equipment

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 (Taxation, Federal Commissioner of v. Vogt [1975] 1 NSWLR 194;5 ATR 274;75 ATC 4073). If the equipment is transported to and from work by the employee as a matter of convenience or personal choice, it is considered that the transport costs are private and no deduction is allowable.

Taxation Ruling IT 112 states that in cases comparable with Vogt's Case - travel expenditure will be deductible where the essential character of the expenditure is part of the operations by which the taxpayer earns his income; there is no other practicable way of getting his equipment to the places where he is to perform; and, the expenditure may be attributed to the carriage of the equipment rather than to his travel to the place of performance.

In your case, are required to use your car to drive around your worksite. In order to be eligible for a deduction for the transportation of bulky equipment it is a requirement that you had to use your own vehicle because you are required to transport tools or equipment using that vehicle. Although your employer classifies your vehicle as a tool of trade, it is not considered a tool or equipment for the purpose of the bulky equipment deduction. Your motor vehicle expenses are attributed to your travel to and from work rather than the carriage of work related equipment and materials. Therefore your travel is not considered to be for the purpose of transporting bulking equipment.

Travel to an alternative work place

A deduction is generally allowable for the cost of travelling to and from an alternative workplace. MT 2027 provides three principles for determining whether expenses incurred in travel from home to an alternative workplace are deductible. These three principles are:

• the employee has a regular place of employment to which he or she travels habitually;

• in the performance of his or her duties as an employee, travel is undertaken to an alternative destination which itself is not a regular place of employment; and

• the journey is undertaken to a location at which the employee performs substantial employment duties.

In your case, your project sites are considered to be your regular places of employment. Therefore you have not travelled to an alternative workplace.

In view of the above, you do not satisfy the requirements specified in TR 95/34 for travel expenses between home and work to be deductible. Your home does not constitute a base of employment, you are not engaged in itinerant work, your transport costs are not attributed to the transportation of bulky equipment and you have not travelled to an alternative workplace. Therefore you are not entitled to claim a deduction for the travel expenses between your home and work.