Private ruling: Work related travel expenses
Date of advice: 22 August 2018
Published: October 2018
Ruling period: Year ended 30 June 2018 | Year ended 30 June 2019 | Year ended 30 June 2020 | Year ended 30 June 2021
Date scheme commenced: 1 July 2017

Ruling: Q1: Are you entitled a deduction for flights and overnight accommodation to and from your home to work at a remote locality? | A1: No.

Relevant facts and circumstances: You live in a suburb of a capital city. You have two unrelated places of work where you are employed on a casual basis. ● One is in the capital city. ● The other is in a remote locality. The worksite at the remote locality does not have permanent accommodation. You work 14 to 15 days at the remote locality, and then have a 7 day break. For these 7 days you return to the capital city to continue your work there. You fly from the remote locality to the capital city in order to maintain both jobs. When you fly from the capital city to the nearest airport to the remote locality, you stay overnight at your own expense before driving to the remote locality the next day in a vehicle that the employer provides for you. You do not work from home, and when working at the capital city job, you return each night to your home in the suburbs when you are on your 7 days off from the remote locality job. You transport your protective equipment and clothing with you when you travel. Your protective equipment and clothing consists of: ● Hard hat ● Protective goggles and mask ● Safety glasses ● Steel cap boots ● Hi Vis shirts ● Drill trousers ● Hi vis coat ● Ear protection The boots, trousers and eye protection have been purchased by you, the rest of the protective equipment and clothing was provided by your employer. All of the items are standard sizes. At present, you are not able to store your equipment securely at work as you share temporary accommodation with other workers when you are off site. This will change later in 2018, with more storage and accommodation arriving on site. Your remote locality employer doesn’t pay for your flight, or your overnight accommodation on the way to the remote locality and you are not reimbursed in any way by your employer. When you finish a shift at remote locality, you fly back to the capital city, return to your suburban home, and commence work the next day at your capital city job.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1

Reasons for decision: Summary: You are not entitled to a deduction for expenses for flights and overnight accommodation to and from your home in the capital city to work at the remote locality as the expenses are considered private and domestic in nature. | Detailed Reasoning - Detailed reasoning: 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 or a provision of the taxation legislation excludes it. ● Generally the expenses of travel to and from work are not deductible. This is either because such expenditure is private in nature, or it is not an expense incurred in gaining or producing assessable income. ● However, there are situations where it has been accepted that travel by employees from home to work is deductible as the employee is transporting bulky equipment. ● The question of what constitutes bulky equipment must be considered according to the individual circumstances in each case. ● The Administrative Appeals Tribunal in Crestani v. FC of T 98 ATC 2219; 40 ATR 1037 ( Crestani’s case ) found the taxpayer’s toolbox measuring 25 cm * 28 cm * 57 cm and weighing 27 kilograms was bulky and cumbersome. In this case, the taxpayer was an aircraft engineer who worked at Sydney Airport. They transported their toolbox home at the end of each shift as there was no secure storage at work. The Tribunal held that the home to work travel was attributed to the transportation of these tools. The expenses incurred in transporting these tools were deductible and the taxpayer was able to claim these expenses as a tax deduction due to the transporting of the tools. ● 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 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 facile transport. In your case, you carry your hard hat, protective goggles and mask, two pairs of safety glasses, steel cap boots, Hi Vis shirts, Drill trousers, Hi vis coat and ear protection ● The work clothes are considered to be personal in nature even though they are heavy duty to provide additional protection compared to standard work clothing. The transport of your personal items and protective equipment is incidental to the primary purpose of transporting yourself to work. Similar to Case 43/94 we consider the protective equipment of boots, hard hat, protective goggles and mask, safety glasses and ear protection, when separated from your personal effects is not considered to be of a size or weight that would make their transportation difficult. Thus, the equipment carried 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. ● Therefore, the expenses you incur in travelling between home and the workplace at Jervois Station are private in nature. Accordingly, the expenses are not deductible under section 8-1 of the ITAA 1997. You provided the following tax rulings in support of your application: TR 95/19, Paras 148 to 153, This ruling provides information on tax deductions specifically for flight attendants and others who are all employees in the airline industry. This guide explains the claims that can and cannot be made by looking at the common expenses that might be incurred by an airline employee; however we have addressed the relevant paragraphs which may apply to your situation. Paras 148 to 153 148: Travel between two places of employment or between a place of employment and a place of business: A deduction is allowable for the cost of travel directly between two places of employment or a place of employment and a place of business, provided that the travel is undertaken for the purpose of carrying out income-earning activities. You do not travel directly between two places of employment or between a place of employment and a place of business. 149: Refer to IT 2199 150: Part time income producing activity at your home does not apply to you. 151: Refer paragraphs 134 to 137, travel between home and work . 152: Refers to circumstances from para 151. 153: TR IT 2199 and MT 2027 are dealt with further in this ruling. (paragraphs 148 to 153). You can claim a deduction for the cost of using your car for work-related travel if: ● you travel directly between two separate workplaces because you have two different employers (for example, ● you have a second job). You can claim the cost of travelling between two places if you finish at the first place and then travel directly to begin work at the second place, and you do not live at either place ● you travel for work-related purposes from your normal workplace to an alternative workplace and back to your normal workplace or directly home (for example, if you need to go to a meeting at your employer’s head office) ● you travel between two workplaces or between a workplace and a place of business (for example, between your employer’s aircraft maintenance areas and administrative offices). TD 96/42, This ruling deals with the cost of travel between a taxpayer’s residence when it is a property on which you carry out a business of primary production. You do not carry out any business from your residence. You are not engaged in the business of primary production. Furthermore, paragraph 1 of this ruling refers to Taxation Ruling IT 2199, which states that the expenses incurred in traveling between home to work are not deductible as they are outgoings of a private nature. IT 2199, Paras 4 to 11, Paragraph 4 relates to expenses incurred in travelling directly between two places of employment where the taxpayer does not live at one of the places. In your case, you travel from your home to your workplace in X, and then home again. When working at the remote locality, you travel between your home and the remote locality, via the closest airport and then home again after your 14 days shift. The remaining paragraphs refer to those cases where an income producing activity is carried on at the taxpayer’s home, which is not the case here. MT 2027 Paras 23 to 36, Paragraph 10 refers to the distinction between business and private use. Travel between your home and your place of work in the capital city, and travel between the remote airport and the remote locality worksite is travel to get you to work, not travel on work. Paragraph 23 also refers to TR IT 2199, Paragraph 26 refers to a case in which a teacher, who under a trial scheme, was allocated as part of her normal teaching duties the task of instructing pupils at five different schools. On the facts of the particular case, it was concluded that the duties were inherently itinerant. More common examples of the application of this principle would include commercial travellers and government inspectors whose homes can be seen to be a base of operations from which they travel to one of a number of locations throughout the day, over a continuing period. You do not travel to a number of locations while using your home as a base of operations. IT 112 Paras 13 to 17. Taxation Ruling IT 112 has been withdrawn, and the relevant views are now included in either Taxation Ruling TR 95/34 - Income tax: employees carrying out itinerant work - deductions, allowance and reimbursements for transport expenses. or | Detailed Reasoning - ·: Draft Taxation Ruling TR 2017/D6 Income tax and fringe benefits tax: when are deductions allowed for employees' travel expenses? TR 95/34: The issues for itinerant work have previously been addressed in IT 2199. Furthermore, example 42 in TR 95/32 quotes the instance of a shearer who at short notice is advised which property he is required to attend. He travels from his place of residence to a single farm each day and returns to his normal place of residence each night. He 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. TR 2017/D6 Paragraph 12: An employee can deduct a travel expense under section 8-1 to the extent that: They incur the expense in gaining or producing their assessable income, and The expense is not of a capital, private or domestic nature. 13. The employee’s purpose or reason for incurring travel expenses is not of itself enough to establish deductibility under section 8-1. 15. An employee’s ordinary costs of travelling between home and work and maintaining a home and consuming food and drink to go about their daily activities, are of a private or domestic nature and are not deductible. Such costs are ‘preliminary to the work’ and are not incurred in performing the work activities.