Edited version of your written advice

Authorisation Number: 1013025377125

Date of advice: 30 May 2016

Ruling

Subject: Work related car expenses travelling to and home from work while carry a bulky tool.

Question 1

Are you entitled to claim a deduction for the cost of travelling directly between your home and your work as you carry tools necessary to perform your duties?

Answer

No.

Question 2

Is your emergency medical bag considered a bulky tool?

Answer

No.

This ruling applies for the following periods:

1 July 2010 - 30 June 2011

1 July 2011 - 30 June 2012

1 July 2012 - 30 June 2013

1 July 2013 - 30 June 2014

1 July 2014 - 30 June 2015

The scheme commences on:

1 July 2010

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

You are a sole trader in a medical practice.

You also make house calls to patients in their homes and in nursing homes.

You transport an emergency medical bag containing medical equipment and emergency medication in your vehicle.

The emergency medical bag is not bulky or heavy equipment.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Reasons for decision

Issue 1

Question 1

Are you entitled to claim a deduction for the cost of travelling directly between your home and your work as you carry tools necessary to perform your duties?

Summary

You are not entitled to a deduction for expenses incurred to travel (in either direction) directly between your home and your regular place of work.

Detailed reasoning

You can deduct from your assessable income any loss or outgoing to the extent that it is incurred in gaining or producing your assessable income except where the loss or outgoing is capital or private in nature (section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)).

The expenses of travelling between home and a place of work are generally not deductible as these expenses are of a private nature (Lunney v. FC of T (1958) 100 CLR 478 (Lunney's Case)).

In Lunney v. FC of T (1958) 100 CLR 478 (Lunney's Case) the Full High Court laid down the principle that for a deduction to be allowable it is not enough for the expenditure to be an essential prerequisite to the derivation of assessable income. In that case it was held that the costs incurred by a taxpayer in travelling to the place where they work are expenses incurred in order to enable them to earn income but are not expenses incurred in the course of earning that income.

The principle in Lunney's Case (that the cost of travel between home and work is generally incurred to put you in a position to perform your duties, rather than in the performance of those duties) has been considered in numerous more recent decisions. These decisions confirm that the general principle is not altered by the availability of transport, the lack of suitable public transport, the erratic hours and times of the travel, or the 'on-call' nature of the work.

Question 2

Is your emergency medical bag considered a bulky tool?

Summary

In your case, you carry an emergency medical bag in your vehicle. While this may be necessary for your work, it is not bulky, and as such the fact that it is transported in your vehicle does not change the nature of your travel. Therefore, despite the fact that the items are necessary for your duties, you are not entitled to a deduction for home to work travel expenses simply on the basis that you always carry these items in your motor vehicle whether you visit a patient's home or not.

Detailed reasoning

In Crestani v. FC of T 98 ATC 2219; (1998) 40 ATR 1037 (Crestani's Case), a toolbox which measured 57 x 28 x 25 centimetres and weighed 27 kilograms was considered to be bulky, in the sense of cumbersome, and was not easily portable. The travel cost incurred was attributable to the transportation of the bulky equipment rather than the private travel of the taxpayer between his home and workplace because the employer did not provide a secure storage area for the toolbox.

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, as you are a sole trader in a medical practice, as your own employer you have made the choice to not provide a secure storage area for the emergency medical bag. We consider the bag you carry is not sufficiently cumbersome or heavy to be considered bulky. Based on the decisions in Crestani's case and Case 43/94, your emergency doctor's bag used to carry medical equipment and emergency medication is not considered to be of a size or weight that would make the transportation difficult.

You have also stated that while traveling to and home from work you will be carrying your emergency medical bag home with you in the rare chance an emergency may occur where you will require the emergency medical bag. This would be constituted as matter of convenience, not a requirement of your income earning activities.