Private ruling: Income tax - Deductions - Work related expenses - Home to work travel
Date of advice: 27 July 2018
Published: September 2018
Ruling period: For the financial year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you entitled to claim a deduction for the portion of public transport expenses incurred from home to your work places being various work locations? | A1: No | Q2: Are you entitled to claim a deduction for expenses incurred in travelling from one workplace to another workplace? | A2: Yes | Q3: Are you entitled to claim a deduction for incidental expenses including telephone, postage and printing expenses deductible? | A3: Yes

Relevant facts and circumstances: You are employed to provide home care services (domestic duties including cleaning and washing) to a variety of clients. You are paid casual rates and do not receive holiday leave. You work a number of days per fortnight for your employer. Your employer provides you with a list of clients in advance. The service is provided in the client’s home at their address. The service is provided regularly on a weekly or fortnightly basis to each client. Occasionally there may be one off jobs over a limited period where you are notified one to two days ahead. The list of clients may be modified when clients are added or removed. You purchase a 28 day travel pass. You also occasionally use the travel pass on weekends. You typically spend one to three hours at each client’s address. You do not transport bulky equipment. You are not paid for travel time. You travel by public transport from your home to the client’s home. Occasionally you are required to travel from one client’s home to another client’s home. Occasionally you attend your employer’s office. This may occur before the first job for the day, between jobs or after the last job of the day. You are required to attend training sessions once or twice a year as notified by your employer. Your work schedule and any changes are forwarded to you by text message and/or telephone. You access email at the local library where you print documents in which you incur an expense. You are required to provide your employer, weekly by post or otherwise, a written record of the work performed. You are not reimbursed for your travel. You also provide home care services to private clients and are paid cash. The private clients are arranged on an ad hoc basis. You declare your income from your private clients but do not have an ABN or issue invoices. Your income in previous years has been below the income tax free threshold.

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 a loss or outgoing to the extent to which it is incurred in gaining or producing assessable income, except where the loss or outgoing is of a capital, private or domestic nature, or relates to the earning of exempt income. In considering whether you are entitled to a deduction for travel and work related expenses, it is necessary to consider whether the expenses are incurred in the course of producing your assessable income. | Detailed Reasoning - Travel between home and work: 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 that the taxpayer's expenses can be deducted. A deduction is generally not allowable for the transport expenses incurred by an employee between their home and their normal workplace as it is considered private in nature. The cost of such travel is generally incurred to put the employee in a position to perform their duties of employment, rather than in the performance of those duties. However, a deduction may be allowed for home to work transport expenses in certain exceptional circumstances, established in Taxation Ruling TR 95/34 Income tax: employees carrying out itinerant work - deductions, allowances and reimbursements for transport expenses , where: ● the employees home constitutes a place of employment and travel is between two places of employment, ● the employees employment is inherently of an itinerant nature, and ● the employee has to transport by vehicle bulky equipment necessary for employment. TR 95/34 provides guidelines as to when a taxpayer's work is considered to be itinerant. These guidelines have been established through the views taken by the Courts, Boards of Review and the Administrative Appeals Tribunal in deciding when an employee's work is itinerant. The following characteristics have emerged from these cases as being indicators of itinerancy: ● Travel is a fundamental part of taxpayer's work, that is, a taxpayer is required to undertake several journeys between different workplaces per day to be able perform his/her work ( Federal Commissioner of Taxation v. Wiener 78 ATC 4006; (1978) 8 ATR 33) ( Weiner's case ). ● There is a ‘web' of work places in the taxpayer's regular employment. A web of work places will exist where the employee performs work at a single site and then moves to other sites on a regular basis as in Weiner's 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 Weiner's case had attended only one school each day instead of many, each school would be regarded as a regular place of employment. ● The employee continually travels from one work site to another. An employee must regularly work at more than one site before returning to his or her usual place of residence. | Detailed Reasoning - Your situation: In your case, your work does not commence before or at the time of leaving home, but when you commence your duties at the relevant location. You are not required to undertake several journeys between different workplaces to be able to perform your duties. Therefore, your home cannot be considered to be your base of income producing operations as you are not considered to be commencing your duties from the moment you leave home. You are aware you will be working in one location, at a residence, as advised by your employer. Occasionally you will be directed to work at a different location on the same day. However you do not regularly work at more than one residence and there is no web of workplaces which you will visit during one day. Your duties commence when you start at each location and finishes when you finalise your duties at that location. Although you work in a number of different locations, your duties do not always require you to go from one location to another. The transport of bulky equipment is not relevant in your case. In considering all the factors provided in TR 95/34, it is viewed that in your particular circumstances, while there is a degree of uncertainty of the location of your shifts occasionally, your travel is not an essential feature of your duties. You are aware you will be working in one location on a given day as advised by your employer. You are not required to travel from one location to another as a consequence of your duties and there is no web of workplaces which you will visit during one day. Accordingly, your job is not considered to be itinerant, and your travel from home to work is private in nature. Your travel is merely a prerequisite to the earning of assessable income; it is not incurred in the course of gaining of producing your assessable income. Therefore you are not entitled to a deduction for travel on the basis of itinerancy, under section 8-1 of the ITAA 1997. | Detailed Reasoning - Travel between two workplaces: Section 25-100 of the ITAA 1997 allows a deduction for expenditure to the extent that it is incurred when travelling between workplaces. Section 25-100 of the ITAA 1997 states: ‘If you are an individual you can deduct a transport expense to the extent that it is incurred in your travel between workplaces.' However, subsection 25-100(3) of the ITAA 1997 states that travel between two places is not travel between workplaces if one of the places you are travelling between is a place at which you reside. Section 900-220(3) defines a ‘transport expense' as a loss or outgoing to do with transport, including the decline in value of a depreciating asset used in connection with transport. Occasionally you are required to attend to work from one client's residence to another. You are entitled to a deduction for the transport expenses you incur when you travel between the various workplaces (or locations). | Detailed Reasoning - Incidental Expenses: Telephone and internet costs A deduction is allowable for the cost of work related telephone calls. Generally, work-related calls may be identified from an itemised telephone account. If such an account is not provided, a reasonable estimate of call costs, based on diary entries of calls made over four weeks with relevant accounts, is accepted by the Commissioner. Where the telephone or mobile phone is also used for private purposes, it is necessary to apportion the expenses. In your case you use your phone for work related purposes. You are entitled to claim as a deduction the work-related percentage of your telephone accounts and internet service fees. Please ensure you keep a diary or some other record to show the work related portion of your phone and internet usage. Printing and postage A deduction is allowable under section 8-1 of the ITAA 1997 for the purchase of postage and printing costs used for work-related purposes. If an item or article is used for both work-related and other purposes, then the cost must be apportioned and a deduction claimed only for that portion which is work-related. You have incurred expenses for postage and printing which were purchased for use for your work. As the items have been used for work-related purposes, a deduction is allowed. | Detailed Reasoning - Further issues for you to consider: As with other work related expenses, transport expenses incurred to travel between workplaces are subject to the substantiation rules of Division 900 of the ITAA 1997.