Private ruling: Work related deductions – motor vehicle – medical profession
Date of advice: 14 March 2018
Published: June 2018
Ruling period: Year ended 30 June 2013 | Year ended 30 June 2014 | Year ended 30 June 2015 | Year ended 30 June 2016 | Year ended 30 June 2017
Date scheme commenced: 1 July 2012

Ruling: Q1: Are you entitled to a deduction for the expenses you incur in travelling between home and the work location allocated to you by the agency? | A1: No

Relevant facts and circumstances: You work through an agency under the following system: ● you do not have a set place of work ● the agency call you or you call them to find out where your next shift is which can be at various locations ● generally you are notified on the day of employment where your employment location will be ● your location of employment changes daily ● you usually do standard shifts of eight - ten hours per day at the one work location ● you do not change between work locations once you have started your shift at a location ● you are not provided with an allowance for work related vehicle or travel expenses.

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 motor vehicle expenses, it is necessary to consider whether the expenses are incurred in travelling in the course of producing your assessable income. | Detailed Reasoning - Travel between home and work: 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. Federal Commissioner of Taxation (1958) 100 CLR 478; 11 ATD 404 ( Lunney’s case )). A transport expense is not deductible unless the work requires the employee to undertake the travel. Travel to start work is not incurred in performing the work activity but is preliminary to the work. Ordinary home to work travel is not incurred in gaining or producing the employee’s assessable income, they reflect the employee’s private choice about where to live (see paragraphs 15, 23, and 36 of Draft Taxation Ruling 2017/D6: Income tax and fringe benefits tax: when are deductions allowed for employees’ travel expenses? ). 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 Income tax: employees carrying out itinerant work - deductions, allowances and reimbursements for transport expenses (TR 95/34)). This principle is not altered by the performance of incidental tasks en route or the use of a car because using public transport is impracticable. However, there are situations where it has been accepted that travel by employees from home to work is deductible. These include: ● where the taxpayer has to transport, by vehicle, bulky equipment necessary for employment ● where the taxpayer's employment is inherently of an itinerant nature ● where the home can be regarded as a base of operations ● where the taxpayer incurs expenses for travel between two places of business or work. | Detailed Reasoning - Itinerancy: The question of whether an employee's work is itinerant is one of fact, to be determined according to individual circumstances. It is the nature of each individual's duties and not their occupation or industry that determines if they are engaged in itinerant work. Further, itinerant work may be a permanent or temporary feature of an employee's duties. TR 95/34 provides guidelines for establishing whether an employee is carrying out itinerant work. The ruling states that the following characteristics are indicators of itinerancy: 1. travel is a fundamental part of the employee's work 2. the existence of a 'web' of work places in the employee's regular employment, that is, the employee has no fixed place of work 3. the employee continually travels from one work site to another. An employee must regularly work at more than one work site before returning to his or her usual place of residence 4. other factors that may indicate itinerancy (to a lesser degree) include: ● the employee has a degree of uncertainty of location in his or her employment (that is, no long term plan and no regular pattern exists) ● the employee's home constitutes a base of operations ● the employee has to carry bulky equipment from home to different work sites ● the employer provides an allowance in recognition of the employee's need to travel continually between different work sites. Whilst the above characteristics are not exhaustive, they provide guidelines for determining whether an employee’s work is itinerant. It is considered that no single factor on its own is necessarily decisive. | Detailed Reasoning - Agency Nurses: The question of whether agency nurses are itinerant workers was considered in the Federal court case of FC of T v Genys 87 ATC 4875; (1987) 19 ATR 356 ( Genys’ case ). In that case the taxpayer was a nurse who worked casual relief shifts for various hospitals. When she was needed, an employment agency with whom she was registered contacted her by telephone, often at very short notice. The nurse used her car to travel to work. No deduction was allowed for the travel. The courts held that the nurse was not an itinerant worker. She did not travel between two places of employment once she commenced her duties and the mere receipt of telephone calls from the agency did not constitute the nurse's home as her place of work; her duties commenced when she arrived at the relevant hospital. In reaching the conclusion Northrop J stated that the mere fact that the taxpayer did not have a regular place of employment in the sense of a permanent employment at one hospital is not sufficient to take the case outside the general principles expressed in Lunney’s case . A similar decision was reached in the Board of Review Case R8 84 ATC 157 where the taxpayer was actually employed by the agency. The Board held that the taxpayer’s employment did not involve sufficient travel to be considered itinerant, as the taxpayer was doing no more than travelling from home to their various places of employment. TR 95/34 provides the following example at paragraph 27: Eleni is an agency nurse who travels to several hospitals to relieve staff shortages. She is employed by the hospital for whom she performs the duties. Eleni remains at the one hospital until completion of her shift. Travel is not a fundamental part of Eleni's employment, as she is not required to travel in the performance of her work once she commences duty. Eleni's employment is not considered to be itinerant. Taxation Ruling TR 95/15 Income tax: nursing industry employees – allowances, reimbursements and work-related deductions (TR 95/15) deals with nursing industry employees and states that no deduction is allowable for agency nurses' travel from home to work. However, if the nurse is regularly required to work at several different locations within a single shift, he or she may be an itinerant employee. TR 95/15 includes information about common work-related expenses incurred by nursing employees and the extent to which they are allowable. Paragraph 23 of TR 95/15 advises that for agency nurses: A deduction is not allowable for the cost of obtaining employment through an agency, including preparation of resumes, calls to the agency as well as telephone/mobile rental, beepers, pagers and answering machines used for contacting the agency. A deduction is also not allowable for the cost of travel to and from employer hospitals, clinics etc… | Detailed Reasoning - Travel is a fundamental part of the employee’s work: In your case, you are registered with an agency and perform work on a shift by shift basis at nominated sites, within a given area. You have indicated that you remain at that location until completion of your shift. Accordingly, it is considered that travel is not a fundamental part of your work. | Detailed Reasoning - Existence of a web of work places: 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 FC of T v. Wiener (1978) 8 ATR 335 ( Wiener’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 Wiener's case had attended only one school each day instead of many, each school would be regarded as a regular place of employment. In your case, you do not work at more than one location on any given day. Your duties commence when you start your shift at each location and finishes at the end of the shift. Although you work in a number of different locations, your duties do not require you to go from one location to another in the one shift. Accordingly, it cannot be considered that you have a web of work places. | Detailed Reasoning - Continual travel from one work site to another once you commence your duties at the chosen work site: 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 before returning to his or her usual place of residence. While you do perform your duties at more than one work location, you have indicated that once you commence your shift you remain at that location until completion of your shift. Therefore continuous travel between work sites is not considered a part of your regular employment duties. | Detailed Reasoning - Degree of uncertainty of location: Another factor that may indicate itinerancy, to a lesser degree, is if the employee has a degree of uncertainty of location in his or her employment. The element of uncertainty of location is generally another distinct characteristic of itinerant employment. 'Uncertainty' in this context, relates only to uncertainty of location, and not to uncertainty of employment. This can be contrasted with a worker who has a fixed place of employment and is aware of the location of the work place. In your case, you are either notified in advance or on the morning of the location you are required to work. Given this fact there may be a degree of uncertainty of location in your employment; however, this degree of uncertainty surrounding your employment, is not enough to counter the above indicators of itinerancy in your case. | Detailed Reasoning - Home constitutes a base of operations: Whether an employee’s home constitutes a base of business operations depends on the nature and the extent of the activities undertaken by the employee at home. An employee’s home may constitute a base of business operations if the work is commenced at or before the time of leaving home to travel to work and the responsibility for completing the work is not discharged until the taxpayer attends the worksite ( FC of T v. Collings 76 ATC 4254; (1976) 6 ATR 476). In your case, your work does not commence before or at the time of leaving home, but when you commence your shift at the relevant location. You do not make the decisions as to where you would work or the hours of your work nor decisions about the care of patients whilst at home (as in Genys’ case ).Therefore, your home cannot be considered to be your base of income producing operations. | Detailed Reasoning - Bulky equipment: A deduction may be allowable for home to work travel if the transport costs can be attributed to the transportation of heavy, bulky or cumbersome equipment, rather than to private travel between home and work. You have not indicated that you are required to carry bulky equipment for your work. We consider that you would not be required to transport bulky equipment between home and your place of employment. Therefore the transport of bulky equipment is not relevant in your case. | Detailed Reasoning - Conclusion: 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, 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 the agency. You are not required to travel from one site 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. This decision applies regardless of whether you are an employee or an independent contractor.