Private ruling: Work related travel and accommodation
Published: January 2013
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: Can you claim a deduction for the cost of travel between your home and work in another city? | A1: No | Q2: Can you claim a deduction for accommodation while you are staying in the city close to where you work? | A2: No

Relevant facts and circumstances: You were employed in a city where your employer has their main office. You relocated interstate partly for personal reasons and also to be able to better serve your overseas client base, while adhering to the working hours stipulated by your employer. Seventy five percent of your work is performed at your home office and twenty five percent of your work is at the interstate office. Your working from home written agreement requires you to regularly perform ordinary hours of duty at your home based work site. You are also required to attend your employer's office interstate for a number of days per month, or as required for customer visits. Duties at the interstate office include customer visits in order to maintain work contacts, give and receive information, collect and deliver work, attend meetings and training courses. The agreement states that you are responsible for all travel costs incurred in travelling from your home to the employer's office interstate as well as accommodation and travel costs while there. When you are required to travel to overseas work locations for work purposes, your travel is paid for in accordance with the travel policy of your employer. Your employer does not pay for any costs such as heating, lighting, electricity, gas, water, rent, or wear and tear at the home based work site.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1, | Income Tax Assessment Act 1997 Section 8-5, | Income Tax Assessment Act 1997 Section 12-5 | Income Tax Assessment Act 1997 Section 25-100.

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 or necessarily incurred in carrying on a business for the purpose of gaining or producing assessable income, except where the outgoings are of a capital, private or domestic nature. Some expenses are incurred in order to put you in a position to be able to earn your assessable income. For example, unless you get yourself to work it is not possible to earn your income. Such expenses are incurred before you have commenced your duties and thus before your income is being earned. This decision was established in the court case Lunney & Hayley v. Federal Commissioner of Taxation (1958) 100 CLR 478; (1958) 11 ATD 404; (1958) 7 AITR 166. Section 8-5 of the ITAA 1997 deals with specific deductions, and allows deductions where an amount can be deducted under a specific provision of the ITAA 1997, other than within Division 8. Section 12-5 of the ITAA 1997 lists those provisions dealing with specific deductions. Included in this list is section 25-100 of the ITAA 1997 which deals with transport expenses incurred in travelling between workplaces. Prior to the decision known as Paynes case ( Commissioner of Taxation v. Payne [2001] HCA 3) the Commissioner allowed deductions incurred in travelling directly between two unrelated places of income-earning activity under the general deduction provision. However, in Paynes case , the High Court held that such expenses were not deductible under the general deduction provision as they were not incurred in gaining or producing assessable income but rather incurred in the interval between the two activities. Section 25-100 of the ITAA 1997 was introduced to overcome the effect of the decision in Paynes case and provides a specific deduction for transport expenses incurred on travel between two workplaces where certain conditions are met. These conditions include: · the individual must have incurred transport expenses in travelling between two workplaces · the purpose of the travel between workplaces is to earn assessable income at the second workplace · the individual does not reside at either place, and · expenses incurred must not be capital, or of a capital nature . As noted above, the High Court held in Paynes case that expenses for travel between two unrelated places of income-earning activity were not deductible under the general deduction provision as such expenses were not incurred in gaining or producing assessable income but rather incurred in the interval between the two activities. In your case, you do not meet the conditions of section 25-100 as your office is at your place of residence. Therefore you are not entitled to a deduction for the cost of your travel to and from the city office under section 25-100 of the ITAA 1997. Additionally, it is considered that you have two regular workplaces (one where you live and one interstate) and consequently you are considered to be travelling to work rather than on work when you travel between your home and the interstate office. As such your travel is not deductible under the general section 8-1 of the ITAA 1997 provision as the travel is considered to be private in nature. While it is acknowledged that you are required by your employer to set aside your home office exclusively for conducting your employment duties, and it has unique characteristics to allow your work to be carried out there, the office is part of the home setting and you reside in this home setting. | Detailed Reasoning - Accommodation expenses: Accommodation expenses are normally private or domestic in character. As your travel is to get to work rather than travel on work, section 25-100 does not apply to allow a deduction for travel expenses in your situation and as you have two regular workplaces the accommodation expenses are private in nature and not deductible.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.