Edited version of private advice

Authorisation Number: 1052320033381

Date of advice: 22 October 2024

Ruling

Subject: Deductions - travel expenses

Question

Are you entitled to claim a deduction under section 8-1 of the Income Tax Assessment Act 1997 for the travel expenses you incurred between home and the Relief Locations?

Answer

No.

This ruling applies for the following period:

Year ended 30 June 2024

Year ending 30 June 2025

The scheme commenced on:

XX January 20XX

Relevant facts and circumstances

Since January 20XX you have been employed as a Relief Manager for an organisation (Your Employer).

Your Employer has different locations state-wide.

Your Employer's support office is located in City A, State A. This is your base for work and is stated on your employment contract.

This financial year, you have worked from head office on five occasions and from home four times.

Being a relief manager, you are required to travel to different centres in different locations. You could work at that location each day for oner week and then be at different locations each day the following week.

You have worked at various locations; Location A, Location B, Location C, Location D, Location E, Location F and Location G (Relief Locations).

There is no regular pattern to the location of your work.

There is an element of uncertainty, at times, to where you will be required to work, as it is dependent on when a relief manager is required at the various Relief Locations.

You could know where you will be working 12 months in advance, or a week in advance. Relief work can be booked in at any stage but can also change to suit company and community needs.

You are usually based at one location for days or weeks at a time.

You have provided a sample of your monthly work schedule.

Table 1: A sample of your monthly work schedule

Travel to and from the Relief Locations is directly from your home, except on the odd occasion you are required at multiple Relief Locations on the same day.

You are required to be on site at your designated Relief Location for your contracted hours of work. You do not travel to and from home during paid work hours. Your work begins when you get to the support office or Relief Locations.

You are not required to carry bulky equipment.

On occasion you are required to stop at another Relief Location or to pick up supplies/items from the shops on your way to work.

On occasion you have been on call which has required you to answer phone calls and assist homeowners over the phone outside of normal working hours. You have not yet been required to attend a Relief Location for an emergency outside of normal working hours.

You are paid a car allowance of $X per annum in recognition of the need to regularly travel to different Relief Locations.

You use your own car for the travel.

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.

The expenses of travelling between home and a place of work are generally not deductible as these expenses are of a private nature (Lunney v. FC of T (1958) 100 CLR 478 (Lunney's Case)). Lunney's Case considered the issue of whether fares paid by taxpayers to enable them to go day by day to their regular place of employment and back to their home are deductible. The Full High Court held that the costs incurred by a taxpayer in travelling to the place where they regularly work are expenses incurred in order to enable them to earn income but are not expenses incurred in the course of earning that income.

The principle in Lunney's Case (that the cost of travel between home and work is generally incurred to put you in a position to perform your duties, rather than in the performance of those duties) has been considered in numerous more recent decisions. These decisions confirm that the general principle is not altered by the availability of transport, the lack of suitable public transport, the erratic hours and times of the travel, or the 'on-call' nature of the work. This principle is not altered by the performance of incidental tasks on route.

The receipt of an allowance does not automatically entitle an employee to a deduction and must be considered together with the other characteristics of the employee's work.

However, there are certain circumstances where it has been accepted that the cost of travelling between home and a regular place of work is deductible, such as:

•         where the taxpayer is required to carry bulky equipment

•         where the home can be regarded as a base of operations, or

•         where the taxpayer's work is itinerant.

Transport of bulky equipment

A deduction is allowable if transport costs can be attributed to the transportation of bulky equipment rather than to private travel between home and work (see FC of T v. Vogt 75 ATC 4073;5 ATR 274). However, if the equipment is transported to and from work as a matter of convenience, it is considered that the transport costs are private and no deduction is allowable. A deduction is also not allowable if a secure area for the storage of equipment is provided at the work place.

In your case, you have not indicated that you are required to carry bulky equipment for your work. Therefore the transport of bulky equipment is not relevant.

Home as a base of operations

A taxpayer's home may constitute a base of operations if their work commences at or before the time of leaving home to travel to work and the responsibility for completing it is not discharged until the taxpayer attends at their regular place of work. Whether a taxpayer's home constitutes a base of operations depends on the nature and extent of the activities undertaken at home.

In your case, when you are travelling from your home to the Relief Location, you do not commence your work before leaving home - you are simply travelling from home to work. The mere receipt of telephone calls from your Employer or relief Locations is not sufficient to allow the home to be classed as a base of operations.

Itineracy

A deduction is allowable for the cost of traveling between home and work if an employee's work is itinerant.

The question of whether an employee's work is itinerant is one of fact, to be determined according to individual circumstances. It is the nature of each individual's duties and not their occupation or industry that determines if they are engaged in itinerant work. Further, itinerant work may be a permanent or temporary feature of an employee's duties.

Taxation Ruling TR 95/34 Income tax: employees carrying out itinerant work - deductions, allowances and reimbursements for transport expenses provides guidelines for establishing whether an employee is carrying out itinerant work, and states that the following are indicators of itinerancy:

• travel is a fundamental part of the employee's 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, and
• 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.

In FC of T v. Wiener 78 ATC 4006; (1978) 8 ATR 335 (Wiener's case), a teacher was required to teach at a minimum of four different schools ('web' of work places) each day, and comply with a strict timetable that kept her on the move throughout each of these days. The Supreme Court of Western Australia concluded that travel was inherent in her employment. The nature of the job itself made travel in the performance of her duties essential. It was a necessary element of her employment that transport was available at whichever school she commenced her duties and remained at her disposal throughout each work day.

In contrast to Wiener's case, you are not required to travel between a 'web' of work places on a continual daily basis. You are notified of your Relief Locations in advance of your work shifts, albeit sometimes just days in advance. Your home does not constitute a base of operations for your work. Each Relief Location would be regarded as a regular place of employment and travel is not a fundamental part of your work. On occasion you have been required to travel between Relief Locations during the same day; however, this is not a regular pattern of your employment.

TR 95/34 also explains at paragraph 31 that If the teacher in Wiener's case had attended only one school each day, each school would be regarded as a regular place of employment.

In Case U97 87 ATC 584; AAT Case 68 (1987) 18 ATR 3491, the taxpayer was employed as a fireman. He was attached to a fire station located close to his home in a northern suburb of Sydney, but for some years worked as a relief fireman. In that capacity, he was commonly sent to other fire stations in the Sydney fire district. The only distinguishing feature of his claim was that he travelled to one outer station regularly for a number of days then another outer station for another period. Senior Member McMahon contrasted the taxpayer's travel with that of the teacher in Wiener's case and stated (ATC at 587-588; ATR at 3494-3495):

'...this was regarded by the court as an essential feature of her employment. Had she not been required to attend at more than one school on any one day, it would seem that the court may well have taken a different view of the expenses claimed. The position of the taxpayer in that situation where "the office or employment is of itself inherently an itinerant one and that the taxpayer may be said to be travelling in the performance of her duties from the moment of leaving home to the moment of return there" may be contrasted with the position of the applicant in the present case. Once having arrived at his outer station, he remained there until the end of his shift before returning home. ...There was no evidence that his duties required him to use his car from an outer station as a base during the course of his shift. The nature of his employment while there certainly could not be said to be itinerant.'

TR 95/34 includes, at paragraph 42, another similar example (The Ryan Example)

Ryan is a shearer who works at various farms. Ryan is usually contacted at short notice and advised which property he is required to attend. The farms are located at varying distances from his residence. Each day Ryan travels to a single farm and returns to his normal place of residence each night.

Ryan is not engaged in itinerant employment because:

(a) travel is not a fundamental part of his duties; and

(b) there is no continual movement between farms. He merely travels to work and returns home each day.

Your situation is similar to case U97 and the Ryan Example.

Although you work across a number of Relief Locations, your duties do not start until you arrive at the location, where you remain until the end of your shift when you then return home. You are not travelling in performance of your duties. Like Ryan, sometimes you only know where you are required on short notice (a week in advance), travel to a single Relief Location to perform your duties, then return to your normal place of residence each night. You do not continually move between multiple Relief Location each day.

On consideration of the whole of your individual circumstances you are not considered an itinerant worker.

Conclusion

In considering all the factors, it is viewed that in your particular circumstances, while there is a degree of uncertainty of the location of your shifts, your travel is not an essential feature of your duties as a Relief Manager for the retirement villages. You are aware you will be working in one Relief Location on a given day as advised by your Employer. You are not required to travel from one site to another as a consequence of your duties and there is no web of workplaces which you will visit during one day.

Accordingly, your job is not considered to be itinerant, and your travel from home to work is private in nature. Your travel is merely a prerequisite to the earning of assessable income; it is not incurred in the course of gaining of producing your assessable income. Therefore you are not entitled to a deduction for travel from home to the Relief Locations under section 8-1 of the ITAA 1997.

Note: On the days after commencing your duties at your designated Relief Location, where you are required to travel to a different Relief Location, it is considered you are travelling on work rather than to work. This travel is undertaken in the performance of your duties, and you are entitled to claim a deduction for expenses incurred for this travel.