Edited version of your written advice

Authorisation Number: 1051436531282

Date of advice: 2 October 2018

Ruling

Subject: Travel deduction - home to work

Question

Can you claim your motor vehicle and associated travel expenses for your trips between home and work?

Answer

No

This ruling applies for the following periods:

Year ended 30 June 2018

Year ended 30 June 2019

The scheme commences on:

1 July 2017

Relevant facts and circumstances

You have worked for your employer for a number of years

A clause in your employment contract (the contract) advises of your normal working hours

Other clauses in the contract state you are to carry out your duties at the premises or such other locations as stated by the employer from time to time and that the employer can change the location of work and that the employer may only require you to change location of work if you consent to that in writing.

You are paid an annual salary.

The lease on the property you were living at was running out and you wanted to keep your employment with the same employer. You moved house, away from the office you work at. You stayed in your role for a few months until a new employee started and you could then change to your new role and work from home.

You and your employer came to an agreement that you would drive to the office a number of days per week and the other days you would work from your home residence.

An addendum was made to your employment contract which changed your role.

The addendum said that a permanent workstation no longer exists at the office location and you were required to share workstations. You and your employer agreed to amend the work location arrangements to allow you to work from your home premises.

Your employer owns all the electronic equipment that you are required to have to perform your daily work duties. Your employer will incur all costs in regard to providing the necessary work equipment at the home premises work station.

It is your responsibility to pay for the associated costs to travel between premises to perform work duties on a daily basis.

You have been keeping records of the kilometres that you have travelled between work and home.

The vehicle you use to travel between home and work is owned by you.

Prior to the new role and the working from home arrangement and after you moved house you travelled for a few months, from your new home, to get the office in order and to train the new employee in your previous role.

You do not receive any payment in relation to the travel expenses you incur, either by way of allowance or reimbursement.

You do not transport bulky equipment in relation to the travel between home and work.

You have a separate space at your home you use when you are working from home. You use the space about 98% for work and nobody else uses the room.

You are not on call.

You do not start work before you leave home on the days you travel to the office location.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

Income Tax Assessment Act 1997 section 25-100

Reasons for decision

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.

Draft taxation ruling TR 2017/D6 Income tax and fringe benefits tax: when are deductions allowed for employees’ travel expenses? (TR 2017/D6) sets out the general principles for determining whether an employee can deduct travel expenses under section 8-1 of the ITAA 1997. A transport expense is not deductible unless the work requires the employee to undertake the travel. Travel to start work is not incurred in performing the work activity but is preliminary to the work. Ordinary home to work travel is not incurred in gaining or producing the employee’s assessable income, it reflects the employee’s private choice about where to live (see paragraphs 15, 23, and 36 of TR 2017/D6).

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 Income tax: employees carrying out itinerant work - deductions, allowances and reimbursements for transport expenses (TR 95/34)).

Paragraph 22 of TR 2017/D6 lists the following factors to be considered in determining whether travel is undertaken in performing an employee’s work activities:

(a) whether the work activities require the employee to undertake the travel

(b) whether the employee is paid, directly or indirectly, to undertake the travel

(c) whether the employee is subject to the direction and control of their employer for the period of the travel, and

(d) whether the above factors have been contrived to give a private journey the appearance of work travel.

Paragraph 37 of TR 2017/D6 states:

Ordinary home to work travel is usually evident without referring to specific terms of employment. The nature of this travel is not altered by an arrangement contrived to give a private journey the appearance of work travel.

Situations where it has been accepted that travel by employees from home to work is deductible include:

● where the taxpayer has to transport, by vehicle, bulky equipment necessary for employment

● where the taxpayer's employment is inherently of an itinerant nature

● where the home can be regarded as a base of operations

● where the taxpayer incurs expenses for travel between two places of business or work.

Whether an employee’s home constitutes a base of business operations depends on the nature and the extent of the activities undertaken by the employee at home. An employee’s home may constitute a base of business operations if the work is commenced at or before the time of leaving home to travel to work and the responsibility for completing the work is not discharged until the taxpayer attends the worksite (FC of T v. Collings 76 ATC 4254; (1976) 6 ATR 476).

Example 2 of TR 2017/D6 demonstrates how travel between home and an alternative but regular work location are treated for taxation purposes.

Ordinary home to work travel (non-deductible)

104. Raj is an accountant who lives on the Gold Coast and is employed by an accounting practice located in Southport (15 minutes' travel from his home).

105. Raj's employer requires him to temporarily work at their Brisbane city office (1 hour's travel from home) each Wednesday to Friday while another employee is on three months' long service leave.

106. Under the temporary working arrangement, the employer requires Raj to make his own way to the city office and start and end work at the times he usually starts and ends work at Southport. Raj is paid a travel allowance of $300 per week for the three months to help cover the extra cost of his travel and for inconvenience.

107. Raj is not on paid duty, and is not subject to the employer's direction and control, for the period he travels between the Gold Coast and Brisbane. The travel between the Gold Coast and Brisbane does not require Raj to stay away from home overnight.

108. Raj's transport expenses travelling between home and the employer's Brisbane city office are home to work journeys to a regular but temporary work location. The travel is not an activity he is paid to do and it is preliminary to his work. The fact that Raj receives an allowance to cover the extra costs and compensate him for the extra travel does not make the travel deductible.

109. Raj must declare the allowance as income and cannot claim a deduction for his transport expenses between his Gold Coast home and Brisbane.

Application to your situation

In your case you are not required to transport bulky equipment and your employment is not inherently of an itinerant nature.

On particular days you travel to the employer’s office to start work. Your employment contract details your normal hours of work. Duties of a salary and wage earner generally will not commence until the arrival at a place of work and will cease upon departure from work. The addendum to your employment contract says it is your responsibility to pay for the associated costs to travel between premises to perform work duties on a daily basis. You are not being paid to undertake the travel. Whilst you are travelling to and from your employer’s office you are not under the direction and control of your employer. The travel to start work is not required by the work activity but is preliminary to the work. Your work does not commence before or at the time of leaving home on the days where you are required to travel to your employer’s office. Your work commences once you arrive at the office location.

In your case your employment contract specifies you have two regular work locations, one being your employer’s office and the other your home. This arrangement appears to have arisen due to two factors, one being that you moved away from your employer’s office and the other being your employer no longer has a permanent workstation available for you at the office location. It is not reasonable to conclude that the travel is undertaken in performing your work activities because of the requirement for you to work in more than one location.

In conclusion the motor vehicle and associated travel expenses for your trips between work and home are not deductible under section 8-1 of the ITAA 1997.

Transport between workplaces - section 25-100 of the ITAA 1997 Under subsection 25-100(1) of the ITAA 1997, if you are an individual, you can deduct a transport expense to the extent that it is incurred in your travel between workplaces. However, under subsection 25-100(3) of the ITAA 1997, 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.

Therefore you cannot deduct the transport expenses under section 25-100 of the ITAA 1997.