Edited version of your written advice

Authorisation Number: 1012859740904

Date of advice: 17 August 2015

Ruling

Subject: Travel expenses

Question

Are you entitled to a deduction for the cost of travelling between home and work on the basis that your employment is considered itinerant?

Answer

Yes

This ruling applies for the following period

Year ended 30 June 2016

The scheme commenced on

1 July 2015

Relevant facts

You are employed as a technician and your job is to install equipment at clients' premises. Your jobs are usually range from a part of a day to a full day in length and large jobs can be up to several days. You will travel directly from one job to the next.

You are allocated work by mobile phone and e-mail. You are usually allocated this work a day or two in advance, and when doing larger jobs you may know up to a several days in advance.

You travel in your own vehicle and you are paid an allowance by your employer for the travel expenses that you incur. You travel with equipment you need in order to undertake your work.

Two to three times a week you will travel to your employer's office which is situated away from the district that you usually work in. The purpose of your visits is usually for training sessions and meeting with your manager. These visits are not at set times or on regular days and mostly take place between work assignments. Occasionally, about once per month, you will travel directly between your home and your employer's office for these visits.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Reasons for decision

Section 8-1 of the Income Tax Assessment Act 1997 broadly allows a deduction for any losses or outgoings to the extent to which they are incurred in gaining or producing assessable income except to the extent 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).

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

• the employee's home constitutes a place of employment and travel is between two places of employment,

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

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

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.

Taxation Ruling TR 95/34 Income tax: employees carrying out itinerant work - deductions, allowances and reimbursements for transport expenses (TR 95/34) provides guidelines for establishing whether an employee is carrying out itinerant work. These guidelines have been established through the views taken by the Courts, Boards of Review and Administrative Appeals Tribunal in deciding when an employee's work is itinerant.

The following characteristics have emerged from these cases as being indicators of itinerancy

• 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).

• The characteristics above provide guidelines for determining whether an employee's work is itinerant. It is considered that no single factor on its own is necessarily decisive.

In your situation:

• Travel is considered a fundamental part of your work;

• You are continually travelling from one work site to another before returning to your place of residence; and

• There is a degree of uncertainty you experience in relation to your employment (that is, no long-term plan and no regular pattern exists)

The characteristics of your work are such that it is considered to be itinerant in nature.

TR 95/34 also states:

A deduction is also allowable for the cost of transport between an employee's home and the employer's office where the employee is engaged in itinerant work and periodically (e.g., once a week) attends the office to undertake administrative tasks. These would commonly include the completion or filing of reports, collection of supplies or organisation of future trips, etc.,

As your work is itinerant you are entitled to claim your expenses for periodic travel between home and work as a deduction.

Please note that you must declare any car allowance that you receive as assessable income.