Edited version of private advice

Authorisation Number: 1052167354052

Date of advice: 12 September 2023

Ruling

Subject: Deductions - work related expenses

Question 1

Is the Taxpayer entitled to claim travel expenses in carrying the tools and equipment to and from his residence to the employer provided accommodation under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

No.

Question 2

Is the Taxpayer entitled to claim travel expenses between the employer provided accommodation and their place of work under section 8-1 of the ITAA, or as a deduction of travel between workplaces under section 25-100 of the ITAA 1997?

Answer

No.

This ruling applies for the following periods:

Year ended 30 June 20XX

Year ended 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You are a 'Fly in fly out' (FIFO) production operator.

You work at a mine.

You work a 7-days on / 7-days off roster.

Your employer provides accommodation for you.

You incur regular travel expenses when travelling to undertake this work.

You use your own motor vehicle to travel from your place of residence to the employer provided accommodation, and to travel from the employer provided accommodation to the mine site.

You carry personal protective equipment which includes a safety helmet, safety goggles, gloves, and a torch.

Your equipment weighs approximately 2 kgs and fits into a backpack.

Your equipment is required to perform your job.

At the end of the 7-day shift there is no safe area to leave your equipment.

The equipment must be removed from the mine site and the employer provided accommodation.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

Income Tax Assessment Act 1997 section 25-100

Reasons for decision

Question 1

Summary

The equipment you transport for employment are personal protective equipment. The personal protective equipment is not bulky, meaning that they are not awkward to transport and are not heavy. You can carry the equipment in a backpack and the equipment is not of sufficient size or weight to impede transport.

It is considered that these expenses are outgoings of a private nature, so therefore you are not entitled to claim a deduction for the expenses incurred in transporting your equipment under section 8-1 of the ITAA 1997.

Detailed reasoning

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.

Transporting bulky equipment

Taxation Ruling TR 2021/1 Income tax: when are deductions allowed for employees' transport expenses provides an explanation as to whether a particular transport expense is incurred in gaining or producing assessable income and requires consideration of the proper scope of an employee's work activities to determine if the circumstances of the transport expense have a sufficiently close connection to earning the employment income.

Paragraphs 79 and 81 of TR 2021/1 explain that a deduction may be allowed for the transport of bulky equipment where:

•                     the equipment is essential for the performance of the employee's employment duties

•                     the equipment is bulky such that transportation by car or other private vehicle is the only realistic option, and

•                     transporting the items to and from their regular place of work is a practical necessity because there is no secure area for the storage of the equipment provided at the employee's regular place of work or the equipment needs to be transported to a different site each day.

However, when equipment is transported by the employee as a matter of mere convenience or personal choice, the transport costs are private, and no deduction is allowable

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

In FC of T v. Vogt 75 ATC 4073, 5 ATR 274 (Vogt's Case), the taxpayer was a professional musician who used his vehicle to transport bulky musical instruments and associated equipment from his home to his places of employment. It was found in Vogt's Case that the taxpayer was entitled to a deduction for home to work travel expenses as he was using his vehicle for work related purposes to transport bulky equipment.

In Crestani v. FC of T 98 ATC 2219; (1998) 40 ATR 1037 (Crestani's Case), Senior Member J Block was of the opinion that the term 'bulky' should not be construed to refer only to an article of large size, such as the musical instrument subject to the decision in the Vogt's Case, but should be more aptly construed as similar to 'cumbersome' in the sense that it is not easily portable. In Crestani's Case, the tribunal was of the opinion a toolbox was 'bulky'; it was not easy to lift and could not be carried for any distance. The toolbox measured 57 cm x 28 cm x 25 cm (that is, having a volume of about 0.04 cubic metres) and weighed 27 kg. The toolbox was considered as 'bulky', in the sense of 'cumbersome', and the transport cost was 'attributable' to the transportation of such bulky equipment rather than private travel between home and work. The employer did not provide a secure storage area for the toolbox and the use of public transport was not a viable option.

Conversely, 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.

Application to your circumstances

You have incurred expenses for travel between your home and your work. The travel expenses are incurred in order to put you in a position to perform your duties of your employment; they are not incurred in the performance of the duties of your employment.

You carry personal protective equipment, and your equipment can be carried in a backpack. It is easy to lift and not cumbersome. You travel by private car from your place of residence to the employer provided accommodation, and from the accommodation to the work site. There is no secure area for the storage of the equipment provided at your place of work.

The facts here are more closely aligned to Case 43/94, so that the mode of transporting the items is a consequence of the means adopted by you to convey yourself to work. It is considered that these expenses are outgoings of a private nature, you are not entitled to claim a deduction for the expenses incurred in transporting your equipment under section 8-1 of the ITAA 1997.

Question 2

Summary

The expenses you incur in travelling between home, the employer provided accommodation and your workplace are of a private or domestic nature and no deduction is allowable under section 8-1 of the ITAA 1997. In addition, you are not traveling between workplaces and therefore your travel expenses are not deductible under section 25-100 of the ITAA 1997.

Detailed reasoning

Section 8-1 of the ITAA 1997 allows an immediate deduction for expenses incurred in the course of producing assessable income provided that the expenses are not private in nature.

Section 25-100 of the ITAA 1997 explains 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. This provision denies a deduction for your travel expenses between home and your workplace, even if you carry out activities at home related to your work. The travel itself is a prerequisite to commencing work duties at the second location.

Travel expenses that are incurred as a consequence of living in one place and working in another and any expenses incurred to enable a taxpayer to commence their income earning activities are considered private in nature. The expenses place you in a position to start work and earn income but is not part of performing your work duties.

Application to your circumstances

Neither your home; nor the accommodation provided for you by the employer are considered a workplace where you are expected to perform employment duties and then travel to another workplace. The cost of the travel puts you in a position to perform your duties.

The essential character of the travel to and from work is that of a private and domestic nature, related to personal and living expenses as part of your choice of where to live, in choosing to live away from and what distance from work.

Taxation Ruling TR 2020/1 Income tax: employees: deductions for work expenses under section 8-1 of the ITAA 1997 explains that the pivotal element of section 8-1 of the ITAA 1997 for work expenses is the requirement that the expense be incurred 'in the gaining or producing assessable income'.

The expenses you incur in travelling between home, the employer provided accommodation and your workplace are of a private or domestic nature and no deduction is allowable under section 8-1 of the ITAA 1997. In addition, you are not traveling between workplaces and therefore your travel expenses are not deductible under section 25-100 of the ITAA 1997.