Private ruling: Work related expenses - bulky tools
Date of advice: 27 October 2016
Published: February 2017
Ruling period: Year ending 30 June 20YY
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you entitled to a deduction for transport expenses when transporting your bulky equipment from home to the work depot at the commencement of your contract? | A1: Yes. | Q2: Are you entitled to a deduction for travel expenses incurred for accommodation and meals when you are travelling from your home to the work depot at the commencement of your contract? | A2: No. | Q3: Are you entitled to a deduction for the expenses incurred when you travel between home and an interstate workplace to attend work after commencement? | A3: No. | Q4: Are you entitled to a deduction for expenses incurred in airport parking when you store you tools in your vehicle and leave your vehicle at the airport when you are not working? | A4: No. Issue 2 - Travel between work sites. | Q5: Are you entitled to a deduction for the transport expenses when travelling between the multiple workplaces for your contract? | A5: Yes. | Q6: Are you entitled to a deduction for travel expenses incurred including accommodation and meals when you are travelling for work to multiple workplaces? | A6: Yes

Relevant facts and circumstances: You are contracted as a tradesman. You are completing contract work in metropolitan and regional areas. Your current residence is in another state to where the work will be completed. You will incur expenses for accommodation based on where the work will be completed. On your days off you will fly back to your current residence interstate. You do not receive an allowance or reimbursement for your travel between your home and your workplace. As per your contract, you are required to provide all equipment and materials as may be necessary to properly and efficiently perform the contract services. You will be provided with an elevated work platform that is a truck that will be driven by your co-worker and kept overnight. Your co-worker will pick up the truck from the depot at the start of the rotation, and keep it over night until it is returned to the secure depot at the end of the rotation. The truck has secure storage for your equipment and is large enough to store all your required equipment. You will be driving your vehicle with your tools and equipment from your home to the depot. A co-worker will drive the truck with the elevated platform around the various locations where the work will be completed. You are required to drive your vehicle between the various locations where you complete your work as you require your vehicle to transport other materials. You are unable to transport the other materials in the truck as per advice from the Roads and Traffic Authority. The tools that you require have been extensively outlined in your letter.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1 | Income Tax Assessment Act 1997 Section 25-100 Further issues for you to consider | As with other work related expenses, transport expenses incurred to travel between workplaces are subject to the substantiation rules of Division 900 of the ITAA 1997.

Reasons for decision: Summary: 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. | Detailed Reasoning - Detailed Reasoning: Transport expenses for travel to an interstate workplace at the commencement of the contract whilst carrying tools and equipment. 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. A deduction is generally not allowable for the transport expenses incurred by an employee between their home and their normal workplace as it is considered private in nature. The cost of such travel is generally incurred to put the employee in a position to perform their duties of employment, rather than in the performance of those duties However, a deduction may be allowed for home to work transport expenses in certain exceptional circumstances, established in Taxation Ruling 95/34, where: ● the employees home constitutes a place of employment and travel is between two places of employment, ● the employees employment is inherently of an itinerant nature, and ● the employee has to transport by vehicle bulky equipment necessary for employment. Taxation Ruling 95/34 also provides that for home to work travel 'a deduction is not allowable if a secure area for the storage of equipment is provided at the workplace'. In the case of FC of T v. Vogt 75 ATC 4073; (1975) 5 ATR 274, the taxpayer was a travelling professional violinist. In this decision it was held that 'The expenditure should be attributed to the carriage of the taxpayer's instruments rather than to his travel to the places of performance.' In your case the tools and equipment you require are considered to be bulky. You are required to transport your bulky equipment from your home to the truck when you commence the contract. Similar to the Vogt case , the main purpose of the trip is the transport of the bulky equipment to be used to derive assessable income. Once you have transported your tools to the truck which provides secure storage, you are no longer transporting your bulky equipment. Therefore, you are entitled to a deduction for the transport expenses you incur when transporting your bulky equipment from your home to the depot at the commencement of your contract. Travel expenses for meals and accommodation when travelling to interstate workplace at the commencement As a general rule, expenditure on meals and accommodation while working away from home is not allowed as a deduction. These costs are essentially 'living expenses' of a private or domestic nature. The fact that income cannot be earned unless these expenses are incurred is not determinative of deductibility. The expenses are a prerequisite to the earning of assessable income rather than being incurred in the course of gaining that income. In FC of T v. Cooper 91 ATC 4396; (1991) 21 ATR 1616 the court held that additional expenditure on food and drink was excluded from deductibility as being of a private nature. Hill J stated that (ATC 4415; ATR 1638): Food and drink are ordinarily private matters, and the essential character of expenditure on food and drink will ordinarily be private rather than having the character of a working or business expense. You are not travelling on work when you travel to commence the contract; your travel is to transport your bulky equipment. You are not entitled to deduction for the expenses for accommodation and meals when you travel to the interstate workplace as they are private and domestic in nature. Travel expenses when travelling between home and interstate workplace throughout your contract period. Travel between home and work is generally considered to be a private expense, as discussed above. For an allowable deduction you must be able to demonstrate that you are travelling on work and not to work. The travel expenses incurred when you travel between home and work when you complete your days of rotation is of a private nature. The costs you have incurred are a consequence of living in one place and working in another and were incurred to enable you to commence, or return home after completing, your income producing activities. You are not entitled to a deduction for the travel expenses when travelling between your home to the interstate workplace as these expenses are considered private in nature. Airport parking The parking expenses you incur when you leave your vehicle at the airport to travel home to visit family are of a private nature. Although you leave your tools in the vehicle, your contractor provides storage in the truck, and the truck is left in a secure depot. This is your personal preference, and the expenses are not incurred in gaining or producing assessable income. You are not entitled to a deduction for expenses incurred for airport parking as it is of a private nature. | Detailed Reasoning - Detailed reasoning: Transport expenses when travelling between various workplaces Section 25-100 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for expenditure to the extent that it is incurred when travelling between workplaces. Section 25-100 of the ITAA 1997 states: 'If you are an individual you can deduct a transport expense to the extent that it is incurred in your travel between workplaces.' Section 900-220(3) defines a 'transport expense' as a loss or outgoing to do with transport, including the decline in value of a depreciating assets used in connection with transport, but not including a loss or outgoing for accommodation or for food or drink, or expenditure incidental to transport. You are required to drive your own vehicle whilst your co-worker drives the truck to multiple workplaces to complete your work. You are entitled to a deduction for the transport expenses you incur when you travel between the various workplaces. Travel expenses for meals and accommodation when travelling between various workplaces Generally, accommodation expenses incurred by a person who lives away from home in order to carry out his or her own employment duties will not be an allowable deduction. Expenses of this nature are private, or incurred before or after the activity of earning assessable income. Where a taxpayer is away from home overnight in connection with an income producing activity, accommodation and meals expenses are an allowable deduction under section 8-1 of the ITAA 1997. The expenditure is not considered private because its occasion is the taxpayer's travel away from home on income producing activities. You are entitled to a deduction for the meal and accommodation expenses incurred when travelling between workplaces as the expenses are considered to be incurred on income producing activities.