Private ruling: Deduction-home to work travel
Published: June 2012
Ruling period: Year ended 30 June 2011 | Year ended 30 June 2012
Date scheme commenced: 1 July 2010

Ruling: Q1: Is the cents per kilometre allowance you receive assessable income? | A1: Yes. | Q2: Are you entitled to claim a deduction for travel expenses between your home and your place of work? | A2: No .


Relevant legislative provisions: Income Tax Assessment Act 1997 section 6-5 Income Tax Assessment Act 1997 section 6-15 Income Tax Assessment Act 1997 section 15-2 Income Tax Assessment Act 1997 section 8-1 Income Tax Assessment Act 1997 section 25-100

Reasons for decision: Summary: Allowance Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of an Australian resident includes ordinary and statutory income derived from all sources during the income year. However, if an amount is exempt income, it is not assessable income (section 6-15 of the ITAA 1997). Under section 15-2 of the ITAA 1997 your assessable income includes the value to you of all allowances, gratuities, compensations, benefits, bonuses and premiums received in respect of your employment, either directly or indirectly. Taxation Determination TD 93/196 states at paragraph 2 that motor vehicle expenses payments are included in the assessable income of an employee if: · they are received as an allowance; or · they are received as a cents per kilometre reimbursement In your case, labour hire firm pays you a travel allowance based on a cents per kilometre rate for travel between your home and work in town A. The allowance is required to be included as part of your assessable income under section 15-2 of the ITAA 1997. | Detailed Reasoning - Travel between home and work: Expenses of travelling between home and work are generally not deductible under section 8-1 of the ITAA 1997 as the expenditure is of a private nature. The distance travelled or the frequency of such travel does not change the nature of the travel. A deduction is generally not allowable for the cost of travel between home and 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. The case of Lunney v. Commissioner of Taxation [1958] ALR 225;1958 - 0311H - HCA;100 CLR 478;(1958) 11 ATD 404;(1958) 32 ALJR 139 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. 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 taxpayers expenses can be deducted ( Taylor v. Provan 1975 AC 194). However there are situations where it has been accepted that travel by employees from home to work is deductible. These are if: · the taxpayer's employment is inherently of an itinerant nature · the taxpayer has to transport, by vehicle, bulky equipment necessary for employment · the taxpayer's employment can be construed as having commenced before, or at the time of leaving home · the taxpayer's home constitutes a place of employment and travel is between two places of employment or business, and · the taxpayer is required to break his or her normal journey to perform employment duties (other than including incidental duties such as collecting newspapers, mail, etcetera.) on the way from home to the usual place of employment, or from the place of employment to home. | Detailed Reasoning - Application to your circumstances: From the information provided the first, second, third and the fifth circumstances are not relevant in your case; however, the fourth circumstance is relevant and is discussed below. Section 25-100 of the ITAA 1997 allows a deduction between workplaces in certain circumstances. Travel between workplaces is travel directly between the two places. 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. The Commissioner's views regarding the deductibility of costs incurred in travelling between home and work are contained in Taxation Rulings MT 2027, IT 112, IT 2199, IT 2543 and TR 95/34. IT 2199 states that claims incurred in travelling directly between two places of employment should be allowed where the taxpayer does not live at either of the places and the travel has been undertaken for the purpose of enabling the taxpayer to engage in income producing activities. The fact that a room in the employee's home is used in association with employment conducted elsewhere will not be sufficient to establish entitlement to a deduction for travel between two places of work. In Case Q55 , 83 ATC 296 the taxpayer who did some work at home by choice was disallowed his claim for travel between home and work. Working at home was not a condition of the taxpayer's employment and suitable working facilities were made available for him by the company. The taxpayer elected to carry out some of his duties at home because it was more convenient for him. Similarly in your case, you undertake some work from home. Your agreement with the labour hire firm does not stipulate where or when you are required to carry out your duties. The fact that a room in your home is used in association with your engagement work in town A is not sufficient to establish entitlement to a deduction between home and work. It is arguable any use of your home to undertake work related activities appears to be a matter of personal convenience as you have suitable work facilities in town A. In travelling to and from your workplace it is not considered that you are travelling on work or travelling directly between two workplaces. The nature of your job does not require you to do the work in two places. The cost of travel between home and work is incurred to put you in a position to perform your duties, rather than in the performance of those duties. In addition, the need for the travel has arisen as a result of your personal choice to work and live in town A. While the labour hire firm may pay you an allowance when you travel from your home to town A, the receipt of an allowance does not mean that you are automatically entitled to claim a deduction. Travel expenses must meet the deductibility requirements of section 8-1 of the ITAA 1997 as noted above. Given these facts, it is considered you are not travelling on work but incurred the expenditure as a result of personal choice to live and work in separate locations. Therefore, travel expenses incurred between your home and town A are considered to be private in nature and not deductible under section 8-1 of the ITAA 1997.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Relevant facts: The arrangement that is the subject of the private ruling is described below. This description is based on the following documents. These documents form part of and are to be read with this description. The relevant documents are: | a private ruling application | a copy of work agreement. | You hold professional qualifications. | You are engaged with a labour hire firm. | You were placed with a local authority. | You commuted from home to town A at the beginning of the week and returned home at the end of the week. | The local authority provides you with an office to undertake your duties. | You undertake some bookwork at home. | Your home is not a place of business. | You do not carry bulky or heavy equipment to your place of work in town A. | The labour hire firm pays you a travel allowance based on a cents per kilometre rate set by the Australian Taxation Office to travel between your home and town A.