Private ruling: Travel expenses
Date of advice: 2 January 2018
Published: May 2018
Ruling period: Year ending 30 June 2018 | Year ending 30 June 2019 | Year ending 30 June 2020 | Year ending 30 June 2021
Date scheme commenced: 31 January 2018

Ruling: Q1: Are you entitled to a deduction for travel between home and your usual work places when carrying work equipment? | A1: No.

Relevant facts and circumstances: You are an Australian resident for taxation purposes. You earn income as a professional in a remote region. You have a home office and work in two different work places in two remote towns. Work site one has no equipment. You are the only professional in the area. You will participate in the on call roster to provide after hour services for the region. You will be on call from home. You transport your work equipment with you each day in your vehicle as you may also be called to clients or emergencies. You carry three items including a storage box. The weight of the work equipment is approximately 5kg. You also take your laptop to each work place. You carry work equipment due to the remoteness, your participation in being on call and the limited emergency services in the region.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1. | Income Tax Assessment Act 1997 Section 25-100.

Reasons for decision: Summary: 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. A deduction is generally not allowable for the cost of travel between home and the normal workplace as it is considered to be a private expense and not incurred in producing assessable income ( Lunney v. Federal Commissioner of Taxation [1958] ALR 225; 100 CLR 478). The cost of travel between home and work is generally incurred to put a person in a position to perform duties of employment, rather than in the performance of those duties. The Commissioner accepts that expenses incurred in travelling between home and work may be deductible in limited circumstances, for example: ● the taxpayer's employment is inherently of an itinerant nature and they regularly work at more than one site each day before returning home, or ● the taxpayer has to transport by vehicle bulky equipment necessary for employment. In your case your employment is not regarded as itinerant, however whether your travel is allowable due to transporting bulky equipment needs to be considered. A deduction may be allowable if the transport costs can be attributed to the transportation of bulky equipment ( Federal Commissioner of Taxation v. Vogt [1975] 1 NSWLR 194; 5 ATR 274; 75 ATC 4073). In this case, the taxpayer worked at various places and his employment created the necessity to transport his musical instruments. There was no other practical way of getting his instruments to the places where he was to perform and the associated travel deductions were allowable. The extreme bulk of the equipment was a decisive factor and the taxpayer was not merely keeping his violin, trumpet, bass, amplifiers and other musical equipment at home for safe-keeping and practice. The question of what constitutes bulky equipment must be considered according to the individual circumstances in each case. In Crestani v. Federal Commissioner of Taxation 98 ATC 2219; (1998) 40 ATR 1037, a toolbox which measured 57 centimetres by 28 centimetres by 25 centimetres and weighed 27 kilograms was considered as 'bulky', in the sense of 'cumbersome', and the toolbox was not easily portable. The transport cost was 'attributable' to the transportation of such bulky equipment rather than private travel between home and work. In your case you have your work equipment in your vehicle. Your empty box is not considered to be work equipment and therefore is not relevant in determining if your work equipment is bulky. It is considered that your work equipment is easily transportable in your vehicle and is not considered to be bulky or cumbersome. Your case differs from Vogt’s case as ● your home to work travel expenses are not incurred as part of the operations in which your earn your income, ● you do not have shifting places of work, and ● your home to work travel expenses are not attributed to the carriage of your work equipment. Your equipment is smaller in size and lighter than the work equipment considered in Crestani’s case and is not considered bulky. After considering your specific facts, it is considered that your home to work travel is not an allowable deduction. This is based on the following factors: ● your equipment is not sufficiently weighty or cumbersome to be classed as bulky, ● the equipment does not impede facile transportation, ● your home to work travel expenses are not considered to be sufficiently relevant and incidental to the derivation of your assessable income, and ● it is considered that the transportation of your equipment to and from work is unlike other cases where the home to work travel has been allowed. Your home to work travel expenses enable you to arrive at your work place to earn your assessable income and are not incurred in the actual gaining or producing of your assessable income. Your travel is not considered to be undertaken to transport bulky equipment. Although your equipment is necessary for your employment, the items are not considered to be bulky or heavy. The transportation of your equipment to and from work does not change the character of your travel. Your home to work travel costs are considered to be private in nature and not an allowable deduction under section 8-1 of the ITAA 1997. It is acknowledged that you have a home office. However section 25-100 of the ITAA 1997 specifically states 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. Section 25-100 denies a deduction for your travel expenses between home and your work place.