Edited version of your written advice

Authorisation Number: 1051310648046

Date of advice: 23 November 2017

Ruling

Subject: Travel home to work

Question 1

Are you entitled to a deduction for motor vehicle expenses for travelling from home to work and back home again?

Answer

No

This ruling applies for the following periods:

Year ended 30 June 2017

Year ended 30 June 2018

The scheme commences on:

1 July 2016

Relevant facts and circumstances

You are a engineer.

Your primary residence is in xxxxx approximately xx km from your work site.

You were offered relocation but you declined as living arrangements were not acceptable so you remained at your primary place of residence.

You purchased a 2WD utility specifically for work purposes.

Your employer pays you an allowance that is not shown on your payment summary but appears on your payment slip.

You are a salaried employee and don’t work on a rotating roster and there is no other employee doing the same job.

You drive the xxx kms from home every Monday morning to work site and you stay at the work camp and drive to work office each day which is approximately xx kms from work camp until Friday afternoon when you travel home.

You carry your office supplies consisting of laptop, iPad, contract documents, work diary, text books, memory sticks, hard drives, stationery items and battery chargers for phone, laptop and iPad from your home each Monday and from camp site to work office each day and back home to on Friday as you don’t have a locked office at the work site or camp site. Estimated weight 10-20kg.

You carry each week from home to work camp and back home personal affects that include office uniforms for the week, toiletries and medications, gym/fitness clothing and shoes, casual clothes and business clothing for work or professional related functions when they arise. Estimated weight 15-20kg.

You don’t work set hours and are required to be available 24 hours a day, 7 days a week to provide technical guidance and direction and respond to incidents. You are required to take calls at all hours including weekends. You take work home with you on weekends to work on after hours.

Relevant legislative provisions

Income Tax Assessment Act 1997, Section 8-1

Income Tax Assessment Act 1997, Section 25-100

Reasons for decision

Summary

Your travel from your home to the work camp site and to the work office and back home are private in nature and are therefore not deductible under section 8-1 of the Income Tax Assessment Act 1997.

Detailed reasoning

Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 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, or relate to the earning of exempt income or a provision of the taxation legislation excludes it.

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 95/34).

There are limited situations where it has been accepted that travel by employees from home to work is deductible. This is where:

● The employee’s employment is inherently of an itinerant nature (FCT v Weiner 78 ATC 4006, 8 ATR 335).

● The employee has to transport by vehicle bulky equipment necessary for employment (FCT v Vogt 75 ATC 4073, 5 ATR 274).

● Where the employee starts a work activity at home and then by necessity has to travel to an alternative workplace to complete that work activity (FCT v Collings 76 ATC 4254, 6 ATR 476).

In your circumstances it is not considered that the nature of your employment is inherently itinerant.

Your employer pays you a travel allowance; the receipt of an allowance does not automatically entitle an employee to a deduction (see paragraph 11 and 72 of Taxation Ruling 95/34).

Transport of bulky equipment necessary for employment

The question of what constitutes bulky equipment must be considered according to the individual circumstances in each case.

The question of what constitutes bulky equipment was considered in Crestani v. FC of T 98 ATC 2219; 40 ATR 1037 (Crestani’s case). In that case, the toolbox in question measuring 25 cm * 28 cm * 57 cm and weighing 27 kg and contained only tools. The Administrative Appeals Tribunal (AAT) in that case decided that the toolbox was sufficiently cumbersome to be bulky. In this case, the taxpayer was an aircraft engineer who worked at Sydney Airport. They transported their toolbox home at the end of each shift as there was no secure storage at work. The Tribunal held that the home to work travel was attributed to the transportation of these tools. The expenses incurred in transporting these tools were deductible.

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 provide at the workplace.

In Case 43/94 94 ATC 387, 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. These items were carried in:

● a duffle bag measuring 75 cm long * 55 cm wide * 50 cm 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 mode of transporting the items was simply a consequence of the means adopted by the taxpayer to convey him to work. It was considered that the duffle bag was not of sufficient size or weight to impede transport.

In your case, you carry bags containing your personal work clothes, toiletries, medication, casual clothes and business clothes for functions, in addition to your laptop, iPad, memory sticks, hard drives and contract documents you need to perform your work at the office. The work clothes, toiletries, medication, casual clothes and business function clothing are considered to be personal in nature. Laptops and iPads, memory sticks, hard drives are designed to be portable and not considered bulky even when transported with the additional work items stated.

While your bags may appear bulky, the transport of your personal items which are also in these bags is incidental to the primary purpose of transporting yourself to work. Similar to Case 43/94 we consider the work items, when separated from your personal effects are not considered to be of a size or weight that would impede easy transport. Therefore, the equipment you carry is not considered to be of such bulk that it would change the primary purpose of your travel from one of transporting yourself to and from work to one of transporting the equipment. Although you may not have a locked office at the work site, this does mean that your travel is deductable.

Home as a base of operations

Paragraph 56 of Taxation Ruling 95/34 states that an employee’s home may constitute a base of operations if the work 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 their regular place of work. Whether a taxpayer’s home constitutes a base of operations depends on the nature and extent of the activities undertaken at home.

In Collings v. FCT 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 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.

Taxation Ruling IT 2543 states that generally, the duties of a salary and wage earner will not commence until the arrival at a place of work and will cease upon departure from work. The mode of transport, the availability of transport, the lack of suitable public transport, the erratic hours and times of employment, the on-call nature of the employment, the time of travel, the distance of travel, the unavailability of residential accommodation near the place of work, the frequency of travel and the necessity of travel are not factors which will alter the essential character of travel between home and work.

Furthermore, section 25-100 of the ITAA 1997 specifically states that travel between two places is not travel between workplaces if one of the places you are travelling between is a place at which you reside. Section 25-100 denies a deduction for your travel expenses between home and your work place.

You travel on a regular scheduled basis between your home and to your work site. Your employer provides you an office to complete work. The office is considered your base of operations. It is acknowledged that your travel is included in your normal weekly hours and that you make phone calls on your trips between home and work. However these aspects do not convert your travel into being an allowable deduction. Even though your home to work travel has a causal connection with the earning of your income, this does not change the nature of your travel. The receipt or making of phone calls, or the undertaking of other tasks at home is not sufficient for your home to be classed as a base of operations.

Consequently, the motor vehicle expenses you incur in travelling between home and your workplace and back home are inherently of a private or domestic in nature and therefore no deduction is allowable under section 8-1 of the Income Tax Assessment Act 1997.

ATO view documents

TR 95/34

IT 2543