Private ruling: Deduction for travel expenses
Published: August 2012
Ruling period: Year ended 30 June 2013 | Year ended 30 June 2014 | Year ended 30 June 2015 | Year ended 30 June 2016
Date scheme commenced: 1 July 2012

Ruling: Q1: Are you entitled to a deduction for travel expenses? | A1: No

Relevant facts and circumstances: Your residence in one state and usually work in that state and there are times when you travel to another state to work at an associated business. This requires that you travel from your residence to the airport to fly interstate. You drive your car to the airport and the car is driven home, and when you return you are collected at airport to be driven home. Your work is not itinerant, you do not carry bulky equipment and you do not commence your work prior to leaving home Your employer pays only for the cost of the accommodation and the air travel.

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 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. In Lunney v. FC of T (1958) 100 CLR 478 ( Lunney's Case ) the Full High Court laid down the principle that for a deduction to be allowable it is not enough for the expenditure to be an essential prerequisite to the derivation of assessable income. In that case it was held that the costs incurred by a taxpayer in travelling to the place where they work are expenses incurred in order to enable them to earn income but are not expenses incurred in the course of earning that income. Lunney's Case settled the principle that travel to and from work is ordinarily not deductible under section 8-1 of the ITAA 1997. This travel is considered to be of an essentially private or domestic nature. A deduction is generally not allowed for the cost of travelling to and from work, because the expenses are not considered to be incurred in producing assessable income. These expenses are incurred as a consequence of living in one place and working in another and any expenses incurred to enable a taxpayer to commence their income earning activities are therefore considered private in nature. In your case, you do not carry bulky goods for work, you are not an itinerant worker and are not travelling between places of employment or starting work before departure. You incur travel expenses to enable you to work in a different city to where you live. As in Lunney's Case , these expenses are a prerequisite to the earning of assessable income. They are incurred in order to enable you to earn income but are not incurred in the course of gaining or producing that income. A deduction is therefore not allowable for your travel expenses.

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