Edited version of private advice

Authorisation Number: 1051608420849

Date of advice: 26 November 2019

Ruling

Subject: Work related travel expenses

Question 1

Are you entitled to a deduction for the cost of travel from your home to locum placements in other cities?

Answer

No.

Question 2

Are you entitled to a deduction for accommodation and food expenses during your locum placements?

Answer

No.

Question 3

Are you entitled to a deduction for return travel from the site of a locum placement to your home during the middle of the placement?

Answer

No.

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You are a professional.

You live in City Z.

You are employed by a company in City Z.

You also do locum work with various employers.

You are registered with a locum agency who provide access to short term contracts with various employers.

You can choose which placements you will accept.

The locum placements generally range from one day to one month in duration and are less than four months a year in total.

The placements are arranged prior to travelling to the location.

Some employers provide accommodation while others do not or they reimburse you for your costs.

You attend one location to carry out the locum work, when that contract ends you then move on to the next contract at another employer.

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 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.

Itinerant employment

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

·         The employees home constitutes a place of employment and travel is between two places of employment,

·         The employees employment is inherently of an itinerant nature, and

·         The employee has to transport by vehicle bulky equipment necessary for employment.

The second scenario above may apply to you in that your work may be determined to be of an itinerant nature.

Taxation Ruling 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 employees 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 employee has to carry bulky equipment from home to different work sites.

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 not a fundamental part of your locum work.

·         You need to travel to do the locum work but you do not travel on work.

·         You do not have a degree of uncertainty in relation to your locum work as you choose

which jobs you take from the agency.

·         You do not regularly work at more than one place of employment before returning to your usual place of residence.

·         You can select work that fits in with your company employment.

Your locum work is not of an itinerate nature and would not become itinerant if you did it in a greater capacity.

Travel, accommodation and meals

Travel expenses from home to work are generally not an allowable deduction. The leading case that decided this was the decision of the Full High Court in Lunney v FCT (1958) 7 AITR 166. The reasons are twofold.

Firstly, merely because certain expenditure must be incurred in order to be able to derive assessable income, in that unless one arrives at work it is not possible to derive income, does not necessarily mean that the expenditure is incidental and relevant to the derivation of assessable income or that it was necessarily incurred in the course of gaining or producing assessable income. It is a prerequisite to the earning of assessable income rather than being incurred in the course of gaining that income. Hence, it does not fulfil the positive limbs of section 8-1 of the ITAA 1997.

The second reason is that the essential character of the expenditure is of a private or domestic nature, relating to the personal and living expenses as part of the taxpayer's choice of where to live, in choosing to live away from and at what distance from work. The negative limbs of section 8-1 of the ITAA 1997 are therefore also breached.

The policy of the Commissioner of Taxation is to allow a deduction where all the particular facts which give rise to a deduction in Vogt 75 ATC 4073; Collings 76 ATC 4254; Ballesty 77 ATC 4181 or Wiener 78 ATC 4006 are present. The general policy is that the expenses of travel between home and work are not deductible are contained in Taxation Ruling 2017/D6.

The facts of this case are comparable with Lunney and Hayley in that for people pursuing a profession, expenses of travelling in habitually going from home to a regular place of employment are not deductible.

In your case, you are not able to claim as a deduction the expenses related to your travel and accommodation to and from your locum work as they are incurred in order to put you in a position to carry out the work. The cost of meals are not an allowable deduction as the expense is private and domestic as you would be consuming food if you were at home in City Z.