Private ruling: Travel expenses – transporting bulky tools and equipment
Date of advice: 28 November 2018
Published: March 2019
Ruling period: Year ending 30 June 20XX.
Date scheme commenced: 1 July 20XX.

Ruling: Q1: Can you claim a deduction for the cost of travel incurred between home and the airport in your home city (City A)? | A1: No. | Q2: Can you claim a deduction for the cost of flights incurred between City A and where your employer transports you to and from (City B)? | A2: No.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You are a mechanical fitter employed on a full time basis. You pay for your travel from home to the airport in City A (return) and are not reimbursed. Your employer provides transport from the airport in City B to various locations for you to conduct your job. Your employer has supplied documentation stating you are expected to arrive at the work site with the required tools directly from the airport and a list of the required tools. All tools are carried in a tool box separate to your personal clothing items. You have provided the dimensions and weight of your toolbox and travel bag when loaded.

Relevant legislative provisions: Income Tax Assessment Act section 8-1

Reasons for decision: Summary: Section 8-1 of the Income Tax Assessment Act 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. 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 in the course of undertaking their work duties that the taxpayer's expenses can be deducted (Taylor v Provan 1975 AC 194). A deduction is generally not allowable for the cost of travel by an employee between home and their normal workplace as it is considered to be a private expense (Lunney v FC of T (1957-1958) 100 CLR 478; (1958) 11 ATD 404). The cost of travel between home and work is generally incurred to put the employee in a position to perform duties of employment, rather than in the performance of those duties (see paragraph 77 of Taxation Ruling TR 95/34). However, there are situations where it has been accepted that travel by employees from home to work is deductible. These situations include: ● where the employment can be construed as having commenced at the time of leaving home, for example a doctor on call, ● where the employee has shifting places of work, that is, the employee is itinerant and has no fixed place of employment, and ● where the travel between home and work can be attributed to the transportation of bulky equipment rather than private travel between home and work. Your work does not commence before you leave home and you are not itinerant. However, you do carry some work equipment while travelling; therefore the issue of bulky equipment will be addressed further. The question of what constitutes bulky equipment is a question of fact and must be considered according to the individual circumstances of each case. If the equipment is transported to and from work as a matter or convenience or personal choice or if a secure area for the storage of the equipment is provided at the place of employment, no deduction for the travel between home and work is allowable. In FC of T v. Vogt 75 ATC 4073: (1973) 5 ATR 274 the taxpayer was a musician who kept his instruments and related equipment at home for storage and practice. He would generally transport all of his instruments, including an acoustic bass and electric bass (each with their own amplifying equipment), trumpet and flugel horn, to each place of performance. Waddell J. considered that the first step in determining whether the expenditure was deductible under section 51 of the Income Tax Assessment Act 1936 (now section 8-1 of the ITAA 1997) was to state the relevant aspects of the operations carried on by the taxpayer for the production of his income. These were that he earned his income by performing at several places, on musical instruments and associated equipment on terms that he brought the instruments and equipment to the place of performance; the instruments and equipment were of substantial value; they were of a bulk which meant they could be transported conveniently only by the use of a motor vehicle; the taxpayer kept the instruments and equipment at his residence for justifiable reasons of convenience and for the purposes of practising on them. The next step his Honour took was to determine what the essential character of the expenditure itself was. Waddell J. thought three matters were relevant to this character:- 1) The expenditure was incurred as part of the operations by which the taxpayer earned his income. 2) It was essential to the carrying on of those operations; there was no other practicable way of getting his instruments to the places where he was to perform. 3) In a practical sense, the expenditure should be attributed to the carriage of the taxpayer's instruments rather than to his travel to the places of performance. The mode of his travel was simply a consequence of the means which he employed to get his instruments to the place of performance, that is by carrying them in the motor vehicle which he drove. In your situation, you take various tools of your trade with you when travelling between your home and your place of employment. You require these tools to perform your duties and you need to carry them to and from your place of employment because your employer does not provide the tools on site and they do not provide a secure area for the storage of your tools at the site. However, the fact that you travel regularly by public transport to the airport rather than driving means that the tools are not so bulky that there is no other practicable way of getting them to where you perform your duties. Unlike the taxpayer in Vogt’s case, the mode of travel is not a consequence of the means which you employ to get your tools to your place of employment. Additionally, the tools themselves along with uniforms for the week would not be considered bulky in terms of their weight. Accordingly, your travel between your home and the airport and between City A airport and City B airport is private home to work travel. Therefore, you are not entitled to a deduction for the expenditure you have incurred on bus fares, petrol and flights under section 8-1 of the ITAA 1997.