Private ruling: Deductions for travel
Date of advice: 30 April 2025
Published: 7 July 2025
Ruling period: Year ended 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Is travel deductible between the 2 workplaces under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. | Q2: Is travel deductible between your home and workplace under section 8-1 of the ITAA 1997? | A2: No. | Q3: Is travel deductible between the Location A and accommodation at Location B under section 8-1 of the ITAA 1997? | A3: No. | Q4: Is travel deductible between your home and accommodation at Location B under section 8-1 of the ITAA 1997? | A4: No. | Q5: Is travel deductible between the Location B and client meetings under section 8-1 of the ITAA 1997? | A5: Yes. | Q6: Is travel deductible between your home and client meetings under section 8-1 of the ITAA 1997? | A6: No. | Q7: Is a deduction available for your short-term accommodation in Location B under section 8-1 of the ITAA 1997? | A7: No.

Relevant facts and circumstances: You are a professional and operate under a sole trader structure. You reside in Location A. You were licensed to operate in Location A. The business was later expanded into Location B and you were licensed to operate there. You were transitioning the business to Location B over a period of time. You transferred to working at Location B. You indicated that considerable time can be spent in administration and presentation tasks. Technology allows for you to conduct tasks via electronic mediums, depending on the required involvement of the matter. A laptop is required to conduct your duties and provide access to online subscriptions. Where required, due to living in Location A and having work obligations in Location B, you commute to the second location. The duration of stay in Location B varies from XX to XX. You generally travel to Location B on XX and return home on a XX or XX evening, subject to work commitments in Location B or Location A. Travel time is restricted to work requirements. There is no vacation or short-stay holiday. Short-term accommodation had previously been utilised whilst in Location B, prior to securing long-term accommodation at Location B. The business is now based in Location B. You will not be moving your home to Location B. When not required in Location B you work from your home office in Location A. Your business is not advertised outside your home, and you do not have clients come to your home office. From the home office you undertake the following tasks: • business finance and administration functions • research • preparation for meetings • advice and • document preparation. You provided a screenshot of your travel pattern for a short period of time. You advised that you read work while waiting for and on your public transport.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 8-1 | Income Tax Assessment Act 1997 section 900-85 | Income Tax Assessment Act 1997 subsection 900-150(1) Summary | A deduction is allowed for expenditure incurred between 2 places of work whilst traveling 'on work'. Travel and accommodation expenditure are not allowed where the travel is private in nature.

Reasons for decision: Detailed Reasoning - Travel from home to work: Section 8-1 of the ITAA 1997 provides that you can deduct from your assessable income any loss or outgoing to the extent that it is incurred in gaining or producing your assessable income or it is necessarily incurred in carrying on a business for the purpose of gaining or producing your assessable income. The latter applies to you as your income is solely generated from the carrying on of a business. It also advised that you cannot deduct a loss or outgoing to the extent that it is a loss or outgoing of capital, or of a capital nature; or it is a loss or outgoing of a private or domestic nature. Taxation Ruling TR 2021/1 Income tax: when are deductions allowed for employees' transport expenses? deals with the deductibility of transport expenses under section 8-1 of the ITAA 1997. It includes the cost of travel by airline, train, taxi, car, bus, boat, or other vehicle. Though TR 2020/1 mentions employees, the principles relate to those conducting a business. Paragraph 2 of TR 2021/1 advises that transport expenses incurred for 'ordinary travel between home and a regular place of work are not deductible' as it is considered private in nature. Paragraphs 24 to 28 of TR 2021/1 discuss regular place of work and it is defined in paragraph 25 as being a usual or normal place where the employee starts and finishes their work duties with a particular employer. Where you are in business, this would be the usual location where you carry out your assessable income earning activities. Where travel is between two related places of work or 'in the course of gaining or producing' assessable income, the travel is 'on work' and is deductible under section 8-1 of the ITAA 1997 (paragraph 12 of TR 2021/1). Paragraph 12 of TR 2021/1 states: It has long been established that the term 'incurred in gaining or producing assessable income' is understood as meaning incurred 'in the course of gaining or producing' assessable income. Other ways that this has been expressed in the context of transport expenses is that the employee is travelling 'on work', the travel is part of the employment or the travel is an incident of the employment. Paragraph 28 of TR 2021/1 mentions how the general position of cost of travel between home and the regular place of work is not deductible, even when certain scenarios exist. This includes not being allowable when your home is very distant from work, where public transport is not available, and not allowed when you stop en route 'to fulfil an incidental work task'. Where home is very distant from work the travel is not explained by the duties of employment, rather by personal choice. Consideration is also to be given to where one's regular place of work is. In your instance it would be appear that it was the Location A office and that it is currently the Location B office, with the possibility of there being overlap when utilising 2 offices concurrently. The scenarios in paragraph 28 of TR 2021/1 that may draw similarities to your case include: • the employee's home is very distant (for example, requiring a flight) from their regular place of work. For example, an employee takes a job based wholly in Sydney but chooses to continue to live in Brisbane with their family and flies to their work in Sydney each week (refer to Example 5 of this Ruling) • a second or subsequent regular place of work is distant to the employee's home (refer to paragraphs 52 to 55 of this Ruling for further discussion) • the employee needs to travel to and from their regular place of work more than once a day. For example, a teacher who drives to school after hours to attend parent-teacher interviews. Example 2 at paragraph 31 to 32 of TR 2021/1 provides that travel between home and regular work locations are not eligible for a deduction for transport expenses, with the example discussing the details of an employee who under their work contract has duties at one store on certain days and another store on other days. A deduction is not allowed for the cost of travel between their home and the stores at either location as both store locations are considered to be regular places of work due to them being routine places where she commences work. The journey forms part of the ordinary travel required to get to work and is a prerequisite to earning her assessable income. The expenses are not incurred in the course of gaining or producing her assessable income. Example 3 at paragraphs 33 to 38 of TR 2021/1 provides that travel between home and a subsequent place of work that has become a regular work location does not allow for transport expenses to be deductible. It covers an accountant living on the Gold Coast and the employer being in Southport, which is a 15 minutes drive from his home. The employer requires him to work at their Brisbane city office, which is a one-hour journey from his home, while another employee is on leave for 5 months. Under the agreement he is to make his own way to the Brisbane city office. He starts and ends his work in Brisbane at the hours he usually does in Southport. This shift to the Brisbane office is temporary and is for a sustained period. The travel to work from his home to the Brisbane office is not considered to be whilst he is 'on work'. He is also not under the employer's direction and control for the time he spends travelling between his home on the Gold Coast and the Brisbane office. He does not have an overnight stay away from his home. It is considered that the transport expenses incurred in travelling between his home and the employer's Brisbane city office are 'home to a regular place of work'. The travel expenses are not incurred in gaining or producing his income and are private in nature. A deduction is not allowed. Paragraphs 21 and 22 of TR 2021/1 mention that, with limited exceptions, the costs of travelling between home and a regular place of work are not deductible. They then go on to advise that this position does not change for the mere fact that the taxpayer performs some 'work-related tasks at home as a matter of choice or for their convenience'. In addition to this conducting some work activities whilst travelling does not 'convert the travel to being part of the employment if it is otherwise private'. The travel is still a means of the taxpayer transporting to their workplace. Example 1 at paragraphs 29 to 30 of TR 2021/1 state that travel between home and a regular work location does not hold entitlement to a deduction for transport expenses. The example relates to a public servant working in Geelong, who travels a distance to the office by train. The duties undertaken at home are the frequent checking of work emails on her work phone and occasionally choosing to do some work tasks either before leaving for work or after arriving home from work. In addition to this on the train when travelling to work, they sometimes use the work phone to respond to work emails and texts and make work-related phone calls. This individual's travel puts them in a position to undertake their duties and the travel costs incurred between their home and office are not incurred in gaining or producing their assessable income. The travel between their home and regular place of work is characterised as a prerequisite to earning their assessable income and is private in nature. The work-related activity conducted at home and during the journey does not change the characterisation of the expenditure incurred and a deduction is not allowed. Taxation Ruling TR 95/9 Income tax: employee lawyers - allowances, reimbursements and work-related deductions at paragraphs 193 and 195 discuss travel between home and the normal workplace transporting bulky equipment. It says that a deduction is not allowable 'where, as a matter of convenience, the employee lawyer performs some work at home and transports papers, materials, etc. (whether bulky or not) between home and work for that purpose'. They also provide an example about a lawyer who chooses to work at home and carries 50 kilograms of working papers and a notebook computer in his car when traveling to and from work. This was also private in nature as the travel between home and work 'is not attributable to necessarily carrying bulky' equipment. 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. When you travel from your workplace to client meetings, the travel is allowable as you are travelling 'on work'. | Detailed Reasoning - Home as a base of operations: A taxpayer's home may constitute a base of operations where an area of their home is set aside as their 'sole base of operations' due them not having any other location from which to work. That area of their home would become their regular place of work (paragraph 78 of TR 2021/1). Taxation Ruling TR 93/30 Income tax: deductions for home office expenses discusses whether part of a business owner's home has the character of a place of business. Paragraph 5 of TR 93/30 provides the following factors which indicate whether an area set aside has the character of a 'place of business': • the area is clearly identifiable as a place of business; • the area is not readily suitable or adaptable for use for private or domestic purposes in association with the home generally; • the area is used exclusively or almost exclusively for carrying on a business; or • the area is used regularly for visits of clients or customers. Paragraph 14 of TR 93/30 says that: the circumstances where part of a home is considered to have the character of a place of business can be contrasted with the more common case where a taxpayer maintains an office or study at home as a matter of convenience (i.e., so that he or she can carry out work at home which would otherwise be done at his or her regular place of business or employment). Examples of this include: • a barrister who reads client briefs at home; • a teacher who prepares lessons or marks assignments at home; and • an insurance agent who maintains client files and occasionally interviews a client in his or her home office. In these circumstances the area of the home and the expenses incurred retain their private or domestic character ( Handley v FC of T (1981) 11 ATR 644; 81 ATC 4165 ( Handley's Case ) and Forsyth v FC of T (1981) 11 ATR 657; 81 ATC 4157). Handley's Case was one about a barrister with city chambers who claimed home study expenses used for professional purposes for 20 hours per week, 45 weeks of the year. His claim was not allowed. | Detailed Reasoning - Application to your circumstances: You advised that you carry out work duties at your Location A home office which include: • business finance and administration functions • research • preparation for customer and professional meetings • attending online customer and professional meetings • advice and • document preparation. As earlier discussed, an important principle when considering the deduction of a travel expense is whether the travel is 'on work' or 'to work'. It would appear that your substantive work and means of deriving your income commences when you have reached your workplace as you are required to attend the workplace (previously in Location A and currently in Location B), client meetings, and appearances. Your travel from your Location A home to the Location B accommodation puts you in a position to work from the Location B office, and attend appearances and meetings in Location B. You can't claim travel expenses when you are living away from home. The expenses to travel to the Location B accommodation are not incurred while 'on work' and have not been incurred in gaining or producing your assessable. In contrast to transport expenses between home and a regular place of work, expenses of travelling between related places of work, neither of which is the taxpayer's home, are ordinarily deductible provided that it is the work that is the occasion for the expenses. This includes different workplaces of the same business and other locations where the business is carried on, such as travelling directly between the Location A office and the Location B Office. Note that, with reference to section 900-85 and subsection 900-150(1) of the ITAA 1997, for any trip where you are away from home for 6 nights or more in a row on work, a travel record should be kept detailing the nature of the activity, the day and approximate time when it began, how long it lasted, and where you engaged in it. | Detailed Reasoning - Accommodation expense: Taxation Ruling TR 2021/4 Income tax and fringe benefits tax: employees: accommodation and food and drink expenses, travel allowances, and living-away-from-home allowances sets out general principles for determining whether an employee can deduct 'living expenses' under section 8-1 of the ITAA 1997. It includes accommodation, and food and drink expenses which are ordinarily private or domestic in nature (paragraph 9 of TR 2021/4). As a general rule, living expenses are of a private or domestic nature and not deductible. This includes the ordinary costs of maintaining a home and consuming food and drink to go about your daily activities, such as to attend work. These costs are preliminary to the work and are not incurred in the course of performing those activities (paragraph 14 to 15 of TR 2021/4). However, if a taxpayer is found to be travelling 'on work' in the course of performing their income earning activities, these expenses will generally be deductible under section 8-1 of the ITAA 1997 as they would have a business-related character (paragraphs 10 and 12 of TR 2021/4; see also The Roads and Traffic Authority of New South Wales v Commissioner of Taxation [1993] FCA 445). Hence, an important distinction is whether you are 'travelling on work' or are incurring 'living expenses' whilst staying at your short-term accommodation in Location B. In determining whether a taxpayer is travelling 'on work', consideration must be had to the personal circumstances, whether the taxpayer is living at a location or whether the expense is incurred as a result of relocating from their usual residence (paragraph 24 of TR 2021/4). Where an employee incurs accommodation expenditure while they are living away from their usual residence, the accommodation expenses will be classified as 'living expenses' and is private or domestic in nature (paragraph 40 of TR 2021/4). The private or domestic nature of these expenses often reflects a choice the employee has made which results in their usual residence not being located near their new workplace (paragraph 41 of TR 2021/4). The issue of expenses incurred for accommodation near the workplace while maintaining a family residence in another location was considered in FC of T v Toms 89 ATC 4373; (1989) 20 ATR 466 ( Toms' Case). In that case, a forest worker lived in a caravan in a bush camp near his workplace during the week and returned home on weekends. He claimed it was too far to travel each day to his work in the forest, so that it was necessary to establish a caravan at the camp. The Federal Court held that the expenses incurred in relation to the temporary accommodation near the workplace while maintaining a family residence in another location were dictated not by his work but by private considerations and were therefore not deductible. Paragraph 48 of TR 2021/1 denies a deduction for transport expenses when travelling away from home for work where an employee lives at a significant distance from their regular place of work. The example provided being that their transport expenses are not deductible if they are required to fly to attend work. The premise behind the deduction not being allowed is that the transport expenses are incurred because the distance the employee is located from their regular place of work, as opposed to the employment itself being the occasion for the expenses. The expenses are not incurred in gaining or producing the employee's assessable income and are private in nature. Example 5 at paragraph 49 also denies a deduction for travel between home and a distant regular work location for a specialist technician living in Brisbane, that is an employee of a company in Sydney on a part-time basis (Wednesday and Thursday). She drives from her home in Brisbane to the airport, catches a flight to Sydney and then takes a taxi to her company's office. She stays overnight in Sydney on Wednesday night and returns to Brisbane on Thursday evening. A deduction is not allowed for the transport expenses, between her home in Brisbane and the Brisbane airport, return flights from Brisbane to Sydney, accommodation, and taxis taken between Sydney airport and her office. The travel taken puts hers in a position to commence her duties and have not been incurred in gaining or producing her assessable income. Her requirement to travel has been necessitated by the location in which she lives from her place of employment. The travel is merely a prerequisite to gaining or producing her assessable income. | Detailed Reasoning - Application to your circumstances: You advised that you travel to Location B from Location A and had been utilising short-term accommodation in order to: • make professional appearances • attend meetings and • for networking. Although carrying on a business as a sole trader your circumstances are similar to Toms' Case . You have made the choice to take up the income earning activities in Location B and remain living in Location A. Your accommodation expenses in relation to your short-term accommodation arise from this choice. It is considered that the costs of acquisition or leasing an apartment are incurred to enable you to stay in the proximity of where you choose to conduct your business and are incurred in order to put you in a position to be able to derive assessable income and that they are not expenses incurred in the course of gaining or producing your assessable income. | Detailed Reasoning - Conclusion: Where travel is between two related places of work, the travel is 'on work' and is deductible under section 8-1 of the ITAA 1997. With application to your circumstances, where you travel when 'on work' such as when you travelled directly from the Location A office to the Location B office to continue work, a deduction is allowed. In addition to this where you travelled from the Location A or Location B office to client meetings. Where travel is from home to office, this is considered home to work travel. It is not usually an allowable deduction as it is a private expense. You are found to be living away from your usual residence, not simply travelling for work. You can't claim travel expenses when you are living away from home. Your travel expenses between the Location A office and Location B accommodation, and Location A home and Location B accommodation are not incurred while "on work" and are of a private or domestic nature. Your accommodation expenses are private in nature. Therefore a deduction would not be available.