Private ruling: Work related expenses - travel to alternate place of work
Date of advice: 6 October 2017
Published: February 2018
Ruling period: Year ended 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Q1: Are the airfare costs you incurred to travel to and from a town away from your usual place of residence, but in which you were working temporarily, deductible under section 8-1 of the Income Tax Assessment Act 1997? | A1: No

Relevant facts and circumstances: You were employed by a company in 2014 in a full time role based in Town A. Your substantive position and principle place of residence were in Town A. You accepted a 3 month secondment contract to work in another division with the company which was based in Town B in 2017. You worked once a week in Town A then flew to Town B to work 3 days of the week there then flew back to Town A at the end of the week. You have incurred expenses for airfare costs to travel between Town A and Town B. You were not paid a travel allowance or reimbursed for your travel costs by your employer.

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

Reasons for decision: Summary: Section 8-1 of the Income Tax Assessment Act 1997 allows a deduction for all outgoings to the extent to which they are incurred in gaining or producing assessable income, or are necessarily incurred in carrying on a business for that purpose. However, a deduction is not allowable for outgoings that are of a capital, private or domestic nature. 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 | Detailed Reasoning - Detailed reasoning: A transport expense is not deductible where the travel is to start work or depart after work is completed. The cost of such travel is not incurred in gaining or producing the employee's assessable income. In contrast, a transport expense is deductible where the travel is undertaken in performing the employee's work activities. To determine whether travel is undertaken in performing an employee's work activities, consider the following factors: (a) whether the work activities require the employee to undertake the travel (b) whether the employee is paid, directly or indirectly, to undertake the travel (c) whether the employee is subject to the direction and control of their employer for the period of the travel, and (d) whether the above factors have been contrived to give a private journey the appearance of work travel. In your case you were not required to travel by your employer as you accepted a temporary contract located in another town and were not directed to undertake the travel as part of your usual position. You were not paid for or under your employer’s direction during the period of travel. You were travelling from your home in Town A to your alternate but regular place of work in Town B and as such it is considered that this travel is home to work travel and undertaken prior to your income producing activity beginning. As such no deduction is allowable for your travel costs between Town A and Town B.