Private ruling: work-related motor vehicle expenses
Published: November 2013
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q2: Are you entitled to claim work-related motor vehicle expenses for travel from - - your home directly to a client, then to the office - your home directly to a client, then directly home - your office to a client, then back to the office; and - your office to a client, and then home. | A1: Yes

Relevant facts and circumstances: Your regular work pattern involves you travelling from your home to either your employer's office or a client's premises, then between your employer and/or other clients, or event venues, before you return home. You are generally on call at all times. You also carry in your vehicle a laptop computer, stationery, folders, work to be completed at home and changes of clothing. Your employer pays you a motor vehicle allowance.

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. A deduction is generally not allowable for the cost of transport by an employee between home and his normal workplace as it is generally considered to be a private expense. The cost of travelling between home and work is generally incurred to put the employee in a position to perform duties of employment, rather than in performance of those duties. However, a deduction may be allowable in certain circumstances for the cost of travel between home and work. Miscellaneous Tax Ruling MT 2027 discusses the situations where travel from home to work may be deductible. It is accepted that where an employee uses their own motor vehicle to travel from their normal place of employment to clients, customers etc that this is clearly work-related motor vehicle usage, and these journeys will therefore be deductible. However, the position may be less clear where the employee travels from home directly to the client's premises and then on to the office. The determining factor is whether those journeys, had they begun from the normal place of employment, would constitute business travel. Generally, a journey from an employee's place of residence to their client's premises and then on to the office would be considered business travel where: - the employee has a regular place of employment to which he or she travels habitually; - in the performance of his or her duties as an employee, travel is undertaken to an alternative destination which is not itself a regular place of employment; and - the journey is undertaken to a location at which the employee performs substantial employment duties. As an illustration of this last point, travel to an employee's place of employment would not be accepted as business travel where the employee merely performs incidental tasks enroute such as collecting newspapers or mail. Substantial employment duties need to be performed at the alternative place of employment in order for it to be considered business travel and therefore deductible. The preceding principles apply equally to cases where an employee makes a business call in the afternoon and travels from there to home, rather than returning to the office. Applying the above to your circumstances, it is considered that you are required to use your own motor vehicle for work. However only the following journeys would constitute work-related motor vehicle use: - travel from your home directly to a client, then to the office - travel from your home directly to a client, then directly home - travel from your office to a client, then back to the office; and - travel from your office to a client, and then home. In some circumstances, a deduction may be allowable for home to work travel where the travel is attributable to the transportation of bulky equipment. In your case, the items that you carry in your vehicle are not considered bulky. Therefore, travel from your home directly to the office, or from the office and directly home, is not deductible.

Question 1: Are you entitled to claim motor vehicle expenses for travel from home directly to your office or from your office directly home?