Edited version of private advice

Authorisation Number: 1051623173316

Date of advice: 6 March 2020

Ruling

Subject: Work related expenses - travel deductions

Question

Are you entitled to claim a deduction for travel, accommodation and meal expenses?

Answer

No

This ruling applies for the following period:

1 July 20XX to 31 June 20XX

Relevant facts and circumstances

You are an Xxxxxx that works in Xxxx (both as an employee and as a sole trader in your own name. In Xxxx you pay fees to a service entity (Xxxx Xxxxx) to conduct business and see clients at the service entity's location.

Recently you took an opportunity to work in Xxxx and work in private clinic rooms that you hire on a sessional basis. You are invoiced after each visit according to a commercial agreement with the service entity, Xxxx Xxxxx Xxxxx. Under this arrangement you are not employed by any agency and receive payment only from privately billing the patients who consult you for medical services. You are merely paying a fee to use the rooms.

All costs of travel, accommodation and subsistence are borne by you.

You drive, in your car, to Xxxx from Xxxx, where you reside, each visit and are required to carry equipment.

You take a clothes bag, a food bag, a fridge plus a few sundry other items.

Although Xxxx Xxxxx Xxxxx currently hold some of your equipment required to be fixed due to the size and weight, you still need to transport a box and three other bags each trip. The equipment carried is required for both your work in Xxxx and Xxxx and it is impractical for you to have two sets of the equipment. You are currently able to leave some of your heavier equipment at Xxxx Xxxxx Xxxxx as the rooms are available.

You usually travel one week out of the month to Xxxx for business leaving one night and arriving back towards the end of the working week.

You stay at an AirBnB while in Xxxx.

The main purpose of your trips was business related.

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 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.

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.

A deduction is generally not allowable for the cost of travel between home and the normal workplace as it is considered to be a private expense and not incurred in producing assessable income (Lunney v Federal Commissioner of Taxation[1958] ALR 225). The cost of travel between home and work is generally incurred to put a person in a position to perform duties of employment, rather than in the performance of those duties.

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

·                     your home constitutes a place of employment and travel is between two places of employment or business (Garrett v FCT82 ATC 4060)

·                     the employment can be construed as having commenced at the time of leaving home (FCT v Collings76 ATC 4254)

·                     you travel between home and shifting places of work, that is, an itinerant occupation (FCT v Wiener 78 ATC 4006) and

·                     the transportation of bulky equipment in some circumstances (FCT v Vogt75 ATC 4073).

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

Transportation of bulky equipment

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

In Crestani v Federal Commissioner of Taxation (1998) 40 ATR 1037 (Crestani's Case), a toolbox which measured 57 centimetres by 28 centimetres by 25 centimetres and weighed 27 kilograms was considered as 'bulky', in the sense of 'cumbersome', and the toolbox was not easily portable. The transport cost was 'attributable' to the transportation of such bulky equipment rather than private travel between home and work.

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 FCT v Vogt [1975]1 NSWLR 194, the taxpayer worked at various places and his employment created the necessity to transport his musical instruments. There was no other practical way of getting his instruments to the places where he was to perform and the associated travel deductions were allowable. The extreme bulk of the equipment was a decisive factor and the taxpayer was not merely keeping his violin, trumpet, bass, amplifiers and other musical equipment at home for safe-keeping and practice.

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 x 55 cm wide x 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 facile transport.

In Sciberras v Commissioner of Taxation[2011] AATA 509, the taxpayer was a truck driver who carried a variety of things to work. In determining how bulky the equipment carried was, it was accepted that some of the books and tools were not required, seldom used or a matter of personal choice. Subsequently they were not considered part of what was required to be transported to work.

According to Crestani's Case, bulky refers to 'not easily portable or cumbersome'. In your case we have determined that the equipment is easily portable and is not cumbersome. Furthermore, if the equipment is transported to and from work by the person as a matter of convenience or personal choice, the transport costs are private and no deduction is allowable (paragraphs 139 to 140 of Taxation Ruling TR 95/18).

After considering your specific facts, it is considered that your home to work travel is not an allowable deduction. Your home to work travel expenses enable you to arrive at your work place to earn your assessable income and are not incurred in the actual gaining or producing of your assessable income. Your travel is not considered to be undertaken to transport bulky equipment. Although you consider your equipment is necessary for your employment, the items are not considered to be bulky or heavy. 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 either workplace, this does not mean that your travel is deductible. Your clothes bag, food bag, and fridge are not considered to be work equipment.

As a general rule, expenditure on accommodation, meals and incidentals while working away from home are not allowed as a deduction (paragraph 52 of draft Taxation Ruling TR 2017/D6). These costs are essentially 'living expenses' of a private or domestic nature. The fact that income cannot be earned unless certain expenses are necessarily incurred is not determinative of deductibility.

Consequently, the expenses you incur in travelling between home and your workplaces and back home are inherently of a private or domestic in nature and no deduction is allowable under section 8-1 of the ITAA 1997.