Edited version of private advice

Authorisation Number: 1052030920417

Date of advice: 8 September 2022

Ruling

Subject: Deduction - travel between home and work

Question

Are you entitled to claim a deduction for the cost of travel between home and work when you carry your knives that you use for work?

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

Your work requires you to use knives.

You carry the knives to and from work with you each day in a large toolbox.

Your employer provides you with a locker on the work site to store your knives.

You do not use this storage locker as you are of the opinion that it is not secure because you believe that it could be bent open.

The locker requires a padlock to be locked.

Your contentions

You consider that no suitable sharpening equipment is provided at work and therefore need to transport your knives home to sharpen them.

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, or relate to the earning of exempt income.

Generally, travel between a taxpayer's home and place of work is considered to be private and domestic in nature and the cost of such travel is not deductible under section 8-1 of the ITAA 1997. This is an established principle of law (Lunney v. Commissioner of Taxation [1958] ALR 225;1958 - 0311H - HCA;100 CLR 478;(1958) 11 ATD 404;(1958) 32 ALJR 139).

One of the exceptions to this general principle is when an employee is required to transport bulky equipment necessary for their employment. In such cases, a deduction for the cost of transporting that bulky equipment may be available provided some other requirements are met. However, this exception is construed by the Commissioner as a narrow exception (paragraph 79 of Taxation Ruling TR 2021/1 Income tax: when are deductions allowed for employee's transport expenses?).

The basic requirements for a deduction to be allowed for the cost of transporting bulky equipment between a taxpayer's home and their place of work are detailed in paragraphs 63 and 64 of Taxation Ruling TR 95/34 Income tax: employees carrying out itinerant work - deductions, allowances and reimbursements for transport expenses. Essentially the basic requirements detailed in the paragraphs referred to are:

•         the equipment is not being transported as a matter of convenience or personal choice,

•         there is no secure storage for the equipment at the workplace, and

•         the equipment being transported is bulky,

Whether storage is secure

Whether secure storage is provided to an employee is a question of fact and must be determined by reference to all of the objective evidence and not just the taxpayer's opinion about the storage available.

In Reany v FC of T [2016] AATA 672, Senior Member Walsh stated the following at paragraph 56:

Even if this were not the case, and Mr Reany was required by TCC to carry bulky tools and equipment from home to work, Mr Reany would nevertheless not be entitled to a deduction for any amount of his work related travel expenses in the 2012 year because the evidence establishes at all times during the 2012 year TCC provided him with secure storage lockers at the worksite at the Wagerup Refinery. Mr Reany's view that the storage lockers were not secure is simply that, his view. It is not supported by objective evidence. As stated, the one break in that did occur at the worksite occurred after the end of the 2012 year and, further, it is unclear from the evidence whether the break-in was to the workshop/shed or to the lockers within the workshop/shed.

Generally, an employee will be found to have secure storage where they are provided with a locker at the workplace which can be locked with a key or padlock to store their work equipment, and which is not accessible to members of the general public.

In circumstances where a taxpayer carries equipment between their home and their workplace despite being supplied with secure storage because they are of the view that the storage provided is not secure, a deduction for travel between their home and work will be denied. This is because the equipment is carried as a matter of personal choice rather than necessity.

Whether equipment is bulky

Even if no secure storage is available at the workplace, the equipment must also be shown to be bulky. There is no definition in the tax law as to what constitutes bulky equipment so case law must be taken into account when considering this issue.

The question of what constitutes bulky equipment was considered in Crestani v. Federal Commissioner of Taxation 98 ATC 2219; (1998) 40 ATR 1037. In that case, the toolbox in question measured 56cm x 25cm x 28cm and weighed approximately 27 kilograms. The Administrative Appeals Tribunal (AAT) in that case decided that the toolbox was sufficiently cumbersome to be considered bulky. The opinion of the AAT was the toolbox was not easy to lift and could not be carried for any distance.

In Case 43/94 94 ATC 387; AAT Case 9654 (1994) 29 ATR 1031, the taxpayer, a flight sergeant with the Royal Australian Air force, was denied a deduction for the cost of transporting items required to and from work in a duffle bag, a briefcase sized navigational bag and on occasions a suit bag. The duffle bag when packed weighed 20 kilograms and measured 75cm long, 55 cm wide and 50 cm deep. The suit bag weighed 10 kilograms. It was considered that the duffle bag was not of sufficient size or weight to impede facile transport.

Transportation of knives

Whether a deduction is allowable for transport costs in relation to transporting knives is considered in Taxation Ruling TR 95/11 Income tax: hospitality industry employees - allowances, reimbursements and work-related deduction. At paragraph 167 it provides the example of a chef who takes their knives home at the end of each day. The ruling states that the chef is not considered to be transporting bulky equipment and is therefore not entitled to a deduction.

The question of whether illegality of using public transport is a relevant consideration in determining the deductibility of transport expenses was considered in Case L49 79 ATC 339; (1979) 23 CTBR (NS) 467. In that case the taxpayer had argued that given what he was transporting, it would have been illegal for him to use public transport. In disallowing his deduction claim for travel expenses, Board of Review Member Dr P Gerber stated: 'it is quite irrelevant that the use of public transport is illegal'. Therefore, the illegality of carrying knives on public transport, consequently requiring transportation in a private motor vehicle, is not a relevant consideration in determining the deductibility of the expenses.

Application to your situation

Your employer provides you with a locker to house your items. It is your opinion that the lockers are not secure. It is a personal choice of yours not to use the lockers and it is not a reason for the transport of the knives to be an allowable deduction.

It is your view that your employer provides no suitable sharpening equipment at work. It is our understanding that workplaces in your industry provide sharpening equipment. You have provided no evidence that this equipment is not suitable. It is a personal choice for you to sharpen your knives at home.

Even if your locker was not secure and no suitable sharpening equipment was provided so you had no option other than to sharpen your knives at home, a deduction for your transport costs would still only be deductible if your knives were considered to be bulky.

The knives that you use to carry out your job are not considered to be bulky equipment. The knives could be stored in a knife roll or a sheath and then placed in a bag, tacklebox or relatively small toolbox for carriage to and from work. The fact that you carry them in a large toolbox is your personal choice. The knives themselves are not considered to be of a size or weight that would be cumbersome.

Also, as explained further above, the illegality of carrying knives on public transport, is not relevant in determining the deductibility of the expenses.

Conclusion

We consider that it is your personal choice to transport your knives between home and work. However, even if this was not the case and you had no choice but to transport your knives to and from work, a deduction for your transport expenses is still not allowable as the knives are not bulky.