Edited version of your written advice

Authorisation Number: 1012853908720

Date of advice: 6 August 2015

Ruling

Subject: Travel expenses

Question

Are you entitled to a deduction for travel expenses?

Answer

No.

This ruling applies for the following periods:

Year ended 30 June 2015

The scheme commences on:

1 July 2014

Relevant facts and circumstances

You are an employee.

Originally you could attend any site as required before you were allocated a permanent site.

You travelled directly from home to these sites and used your motor vehicle to transport all necessary uniforms and equipment to perform your duties.

You are issued with uniforms that you are required to wear in the performance of your duties.

The wearing of the uniform is compulsory and you are provided a laundry allowance for the cleaning of the uniforms.

You are also provided with the equipment for the purposes of carrying out your duties.

You are required to transport your equipment and uniform to and from home to your allocated site.

There are no storage facilities provided. The equipment and uniform are left in your motor vehicle.

The carriage of the equipment or uniform on public transport is not recommended.

You are paid an allowance by your employer for the use of your vehicle.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Reasons for decision

Summary

It's well settled principle that expenses incurred in travel between home and work are generally private in nature and not deductible. However the courts have established a number of narrow exceptions where home to work travel is deductible. We do not consider that your personal circumstances fall within any of the established exceptions, and any travel between your home and workplace will consequently not be deductible.

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.

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).

The mere receipt of an allowance does not entitle an employee to a deduction. Taxation Ruling IT 2543 at paragraph 7 explained that the receipt of an allowance imparts no greater degree of deductibility to an expense which is incurred in relation to that allowance.

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

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 particular activity at another work site. Your home is not a base of operations.

Itinerancy

The question of whether an employee's work 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. 

In FC of T v. Genys (1987) 17 FCR 495; 87 ATC 4875; (1987) 19 ATR 356 (Genys case), the Federal Court held that the taxpayer's employment was not itinerant. The taxpayer was a registered nurse who used an employment agency to seek relief work with various hospitals. She was not continuously employed by any one hospital. When a hospital was in need of additional staff they contacted the agency which would then contact the taxpayer. It was integral to the decision in this case that the taxpayer did not travel after the commencement of her duties. While the taxpayer was unable to predict where she would be required to work from day to day and she was given short notice of her work place for the day she merely travelled to work and home again.

In your case, while you were working as a relief employee you worked at a number of different sites. However, as per the Genys case, you only travelled to one site before returning home. As you do not travel directly between sites during your work day, your work is not considered to be itinerant.

Bulky equipment

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.

The question of what constitutes bulky equipment was considered in Crestani v. Federal Commissioner of Taxation 98 ATC 2219; (1998) 40 ATR 1037. In that case, the toolbox in question measured 56cm x 25cm x 28cm and weighed approximately 27kg. The Administrative Appeals Tribunal (AAT) in that case decided that the toolbox was sufficiently cumbersome to be considered bulky. The opinion of the AAT was the toolbox was not easy to lift and could not be carried for any distance and that public transport was not a viable option.

In Case 43/94 94 ATC 387; AAT Case 9654 (1994) 29 ATR 1031 a flight sergeant with the Royal Australian Air Force was denied a deduction for the cost of transporting his flying suit and other items used for work purposes. The items were carried in:

• a duffle bag measuring 75cm long x 55cm wide x 50cm deep and weighing 20 kilograms when packed

• a suit bag which weighed 10 kilograms when packed, and

• a briefcase sized navigational bag which contained charts, work manuals and study materials.

It was held that the travel was private in nature and the items were not sufficiently bulky to impede easy transport. The mode of transporting the duffle bag, the navigational bag and the suit bag was simply a consequence of the means adopted in conveying himself to and from his place of employment.

In your case, the uniforms and equipment are not considered to be of such bulk that it would change the primary purpose or character of your journey from one of transporting yourself to and from work to one of transporting equipment. While we acknowledge that you do not have a permanent place to store your equipment and the use of public transport is not recommended; this fact alone is not sufficient to support the contention that that the travel has the essential character of performing your duties as opposed to placing you in a position to perform your duties.

Therefore, as your circumstances do not align to any of the situations where home to work travel is deductible, you are not entitled to a deduction for your travel expenses under section 8-1 of the ITAA 1997.