Private ruling: Work related expenses
Date of advice: 25 July 2016
Published: September 2016
Ruling period: Year ending 2015 | Year ending 2016
Date scheme commenced: 1 July 2014

Ruling: Q1: Can you claim the depreciation of your caravan? | A1: No. | Q2: Can you claim the costs associated with the caravan as a deduction? | A2: No.

Relevant facts and circumstances: Your employment is as a driver. You work for multiple employers. You can work up to 12 hours a day. By law you are required to rest for a number of hours after completing a shift that is 12 or more hours. Occasionally, by the time you get home, your time for rest is lower than the legislated number of hours of rest before your next shift. You have in the past paid for accommodation due to these time constraints. You purchased a caravan and state that the sole purpose of the caravan is for you to have sufficient sleep in between your shifts.

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

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, except where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income. Accommodation The issue of expenses incurred in relation to accommodation near the work place 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 Toms' Case, the taxpayer was a forest worker who during the working week lived in a caravan in a bush camp 108 kilometres from his family home in Grafton. 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. He would return home on weekends. He claimed the costs of maintaining his caravan and other living expenses such as the cost of heating and lighting. 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 therefore were not deductible. In your case, the expenses incurred by the purchasing of a caravan to stay in close proximity to your work-place are not a requirement to the earning of assessable. The expenses would not be incurred but for the distance of your work place from your home, the expenses are a prerequisite to the earning of assessable income. That is, they are incurred in order to put you in a position to be able to earn income but are not incurred in the actual course of gaining or producing that income. A deduction is therefore not allowable for your accommodation and you cannot depreciate your caravan. Itinerant Worker The Act does not provide a definition of the word 'itinerant'. In the absence of a statutory definition, we must look to the ordinary usage of the word. The Macquarie Dictionary defines 'itinerant' as 'travelling from place to place' or 'one who travels from place to place especially for duty or business'. In FC of T v. Genys (1987) 17 FCR 495; 87 ATC 4875; (1987) 19 ATR 356 ( Genys case), the Federal Court held that the taxpayer's employment was not itinerant. The taxpayer was a registered nurse who used an employment agency to seek relief work with various hospitals. She was not continuously employed by any one hospital. When a hospital was in need of additional staff they contacted the agency which would then contact the taxpayer. It was integral to the decision in this case that the taxpayer did not travel after the commencement of her duties. She merely travelled to work and home again. Northrop J (FCR at 498; ATC at 4879; ATR at 359) described itinerant as 'shifting places of work' '...where the taxpayer travels between home and shifting places of work, that is, an itinerant occupation.' Having regard to the indicators of itinerancy set out in TR 95/34, a taxpayer's work is considered to be of an itinerant nature if: i) Travel is a fundamental part of the taxpayer's work, that is, a taxpayer is required to undertake several journeys between different workplaces per day to be able to perform his/her work ( Federal Commissioner of Taxation v. Wiener 78 ATC 4006; (1978) 8 ATR 33) ( Wieners case ). ii) There is a 'web' of work places in the taxpayer's regular employment. A web of workplaces will exist where the employee performs work at a single site and then moves to other sites on a regular basis as in Wieners case . However, the existence of a 'web' of work places will not exist if an employee performs work at more than one site and each site is regarded as a regular fixed place of employment. TR 95/34 states that if the teacher in Wiener's case had attended only one school each day instead of many, each school would be regarded as a regular place of employment. iii) The taxpayer continually travels from one work site to another. Continual travel refers to the frequency with which an employee moves from one work site to another. It envisages that the employee regularly works at more than one work site per day before returning to his or her usual place of residence. The nature of the taxpayer's employment arrangements, that is, whether they have one employer or several employers, is not sufficient to alter the character of the travel expenses. As you were not travelling in the course of carrying out employment duties and you work for multiple employers, you are not considered to be an itinerant worker. Therefore no deduction is available for your expenses you incurred when living away from your usual place of residence. Further to this the essential character of your expenditure is of a private or domestic nature.