Edited version of private advice

Authorisation Number: 1052321696128

Date of advice: 22 October 2024

Ruling

Subject: Work related travel expenses

Question

Can you claim a deduction for travel expenses?

Answer

No.

This ruling applies for the following period:

Income year ended 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You are a casual teacher.

You fill in for a teacher who is absent or sick.

You work five days a week at X different schools.

You work at a different school each day for the whole day, 9am to 5pm.

You do not work at multiple schools in a day.

You do not know which school you will be at each day. You are generally notified at short notice.

As the number of absent teachers is so frequent at these X schools, you work five days a week consistently, no less. It has been like this consistently for the past X years (and ongoing).

Relevant legislative provisions

Income Tax assessment Act 1997 Section 8-1

Reasons for decision

Summary

You are not entitled to claim a deduction for the expenses you incur travelling between your home and the schools you are employed at. They are not expenses incurred while performing your work duties. Rather, they are incurred to put you in a position to earn income. Therefore, they are a private expense and not deductable.

Detailed reasoning

In considering the deductibility of travel expenses, a distinction is made between travel to work and travel on work. It is only if the duties of the job require a taxpayer to travel that the taxpayer's expenses can be deducted.

In general, a deduction is not allowable for the cost of travel by an employee between their home and their normal workplace as it is considered private in nature. Taxation Ruling TR 95/34, paragraph 77 explains that the cost of such travel is incurred to put the employee in a position to perform their duties of employment, rather than in the performance of those duties.

The case, Lunney v. Commissioner of Taxation ALR 225; 1958 0311H HCA; 100 CLR 478; (1958) 11 ATD 404; (1958) 32 ALJR 139 introduced what is now regarded as the essential character test. This test requires that for an expense to be deductible, it must have the essential character of a business or income producing expense. The taxpayer in this case sought to deduct the cost of travelling from his home to his work. The expenses were disallowed as being private and domestic, establishing the broad principle that costs incurred because of living in one place while working in another cannot be regarded as deductible.

The fact that certain expenditure, such as travelling to work, must be incurred in order to be able to derive assessable income, does not necessarily mean that the expenditure is incidental and relevant to the derivation of assessable income. It is a prerequisite to the earning of assessable income rather than being incurred in the course of gaining that income.

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 the taxpayer's choice of where to live, in choosing to live away from and what distance from work.

Taxation Ruling TR 2021/1 Income tax: when are deductions allowed for employees' transport expenses? provides some useful guidance, particularly at paragraph 27 and in Example 2:

27. In some employment arrangements there may be more than one regular workplace established. This may be expressly provided for in the employment agreement or contract between the employer and employee, or it may arise as a matter of practice in the relationship between employer and employee. A second or subsequent place of work would be a regular place of work if it is also a normal or routine place where the employee works, such that travelling between there and the employee's home is better characterised merely as part of the necessity of travelling to and from work.

Example 2 - travel between home and regular work locations - transport expenses not deductible

31. Aisha works for a retail company. Under the terms of her employment contract she works on a Monday, Thursday and Friday at a store located in a suburban shopping centre and on a Tuesday and Wednesday at a store of the same employer in a different suburb of the same city. Aisha is not entitled to a deduction for the cost of her travel between home and the stores at either location. Both of the stores are considered to be regular places of work for Aisha because they are routine places where she commences work. The journey to each is merely part of the ordinary necessity of getting to work and thus a prerequisite to earning her assessable income. The expenses are not incurred in the course of gaining or producing her assessable income.

Taxation Ruling TR 95/14 Income tax: employee teachers - allowances, reimbursements and work-related deductions provides guidance specifically for teachers who travel between home and a place of employment while 'on call':

156. Supply and relief employee teachers are those employee teachers who are required to replace the regular classroom teacher at various schools at short notice. Generally, the employee teacher will be telephoned at home and asked to attend a particular school for the day. The cost of travelling between home and the various schools is not allowable as a deduction.

Application to your situation

In your case, you have incurred expenses for travel between your home and your work sites, X schools. This travel is incurred in order to put you in a position to perform the duties of your employment; it is not incurred in the performance of the duties of your employment. As such, this travel is not a part of your actual work duties.

For the travel to be a fundamental part of an employee's work, travel must be an essential feature of an employee's duties. Your duties will only commence when you reach the work site where you carry out your work. You are not considered to be travelling in the performance of your duties from the moment you leave your home.

The travel expenses you have incurred travelling between your place of residence and work sites are private in nature. Therefore, you are not entitled to a deduction for these expenses under section 8-1 of the ITAA 1997.