Edited version of your written advice

Authorisation Number: 1012913642747

Date of advice: 20 November 2015

Ruling

Subject: Motor Vehicle Expenses

Question 1

Are you entitled to a deduction for your motor vehicle expenses for travel between your home and workplace?

Answer

No.

Question 2

Are you entitled to a deduction for travel expenses for travel between two different workplaces during the same work day?

Answer

Yes.

This ruling applies for the following period

Financial year ended 30 June 20XX.

The scheme commenced on

1 July 20XX

Relevant facts and circumstances

You provide an on-call relief service to businesses through undertaking positions at short notice and in a temporary capacity from a few hours to a few weeks at a time.

Depending on the businesses location, you may be required to travel long distances to regional or country locations. At some locations, there is no public transport available to or from your destination. You travel by car from your home directly to the business then back home. On occasions, you may undertake split shifts or work at more than one business during a working day.

You carry some small equipment but nothing bulky in size. You carry these items to each location as they are not always available at the businesses and your work is dependent on this equipment being available for use.

You undertake some incidental activities at home prior to undertaking your positions. These activities may involve receiving phone calls advising of the business location and start time, reading documents and preparing stock orders for the businesses.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

Reasons for decision

Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for a loss or outgoing to the extent to which it is incurred in gaining or producing assessable income, except where the loss or outgoing is of a capital, private or domestic nature, or relates to the earning of exempt income.

Travel between home and work

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 (Lunney v. Federal Commissioner of Taxation (1958) 100 CLR 478; 11 ATD 404) (Taxation Ruling IT 112). 

The cost of travelling 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. Put at its simplest, travel to work is private; travel on work is business.

It should be noted that the mode of transport, the availability of transport, the lack of suitable public transport, the erratic times of employment, the time of travel, the distance of travel and the necessity of travel does not alter the essential character of travel between home and work as being private in nature.

However, a deduction for car expenses between home and work may be allowed if a person's job is itinerant.

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. Further, itinerant work may be a permanent or temporary feature of an employee's duties.

Taxation Ruling TR 95/34 provides guidelines for establishing whether an employee is carrying out itinerant work. The ruling states that the following characteristics are indicators of itinerancy:

1. Travel is a fundamental part of the employee's work that is, a taxpayer is required to undertake several journeys between different workplaces per day to be able to perform his/her work (Federal Commissioner of Taxation v. Wiener 78 ATC 4006; (1978) 8 ATR 33) (Wiener's case).

2. There is a 'web' of work places in the taxpayer's regular employment. A web of workplaces will exist where the employee performs work at a single site and then moves to other sites on a regular basis as in Wiener's case. However the existence of a 'web' of work places will not exist if an employee performs work at more than one site and each site is regarded as a regular fixed place of employment.  TR 95/34 states that if the teacher in Wiener's case had attended only one school each day instead of many, each school would be regarded as a regular place of employment.

3. The taxpayer continually travels from one work site to another. Continual travel refers to the frequency with which an employee moves from one work site to another. It envisages that the employee regularly works at more than one work site per day before returning to his or her usual place of residence. The nature of the taxpayer's employment arrangements, that is, whether they have one employer or several employers, is not sufficient to alter the character of the travel expenses.

4. Other factors that may indicate itinerancy (to a lesser degree) include:

• 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 employee's home constitutes a base of operations

• the employee has to carry bulky equipment from home to different work sites

• the employer provides an allowance in recognition of the employee's need to travel continually between different work sites.

Whilst the above characteristics are not exhaustive, they provide guidelines for determining whether an employee's work is itinerant. It is considered that no single factor on its own is necessary decisive.

Application to your circumstances

Your case can be distinguished from Wiener's case as we consider that travel is not a fundamental part of your employment. While you do perform your duties at more than one location, you generally travel to only one location in a work day, so it cannot be considered that you have a web of work places or that continuous travel between work sites is a part of your regular duties. There is no degree of uncertainty, as you are advised in advance as to which business location you need to attend. Your residence does not constitute a base of operations nor a home office as you only undertake incidental or minimal work activities. You carry some small equipment but you do not carry bulky equipment to undertake your roles.

Therefore in view of the above, your employment is not considered itinerant in nature as you travel to only one location to work on any given day. Or if you are working at more than one business you are advised in advance of the locations.

The expenses are incurred to put you in a position to perform the duties of your employment, rather than in the performance of those duties. As such you are not entitled to a deduction for travel expenses between your home and workplace under section 8-1 of the ITAA 1997.

Travel between two different work sites.

On the days after commencing your duties, where you are required to travel directly from one business to another, it is considered you are travelling on work rather than to work. The travel is undertaken in the performance of your duties. Therefore where you finish work at one work site and travel directly to the next work site, you will be entitled to claim a deduction for your travel expenses for this portion of your journey only.