Private ruling: Work related expenses - home to work travel – alternative work locations
Date of advice: 30 August 2017
Published: December 2017
Ruling period: Year ended 30 June 2017 | Year ending 30 June 2018 | Year ending 30 June 2019 | Year ending 30 June 2020
Date scheme commenced: 1 July 2016

Ruling: Q1: Are you entitled to claim a deduction for the cost of travelling directly between your home and your office, or directly between your office and home? | A1: No. | Q2: Are you entitled to claim a deduction for the cost of travelling from your home to a client’s premises and then onto the office (and vice versa)? | A2: Yes. | Q3: Are you entitled to claim a deduction for the cost of travelling between client’s premises and between your office and client’s premises? | A3: Yes. | Q4: Are you entitled to claim a deduction for the cost of travelling directly between your home and a client’s premises, or directly between a client’s premises and your home? | A4: Yes.

Relevant facts and circumstances: You are an employee. You provide technical support and advice to clients at more than 70 locations in your region. On some occasions you start your day with meetings via video conference with your team, manager or head office. Some days you are in your office all day, other days you are out visiting clients. You could visit as many as X clients in one day. You carry a laptop computer and equipment to configure Information Technology items at your client’s premises. You also carry other equipment such as a tool box, serial cables, patch leads, fibre optic leads and other connectors. The types of trips you could undertake in one day include: ● from your home to your office, and from your office to your home ● from your home to a client’s premises and back home again ● from your home to your office, from your office to a client’s premises, and from the client’s premises to your home ● from your home to a client’s premises, from the client’s premises to your office, and then from your office to home ● from your home to a client’s premises, from that client’s premises to another client’s premises, and then from that client’s premises to your home, and ● from your home to a client’s premises, from that client’s premises to your office, from your office to another client’s premises and then from that client’s premises to your home. You are not paid a travel allowance by your employer. Your employer has vehicles available for your use when you are required to travel and visit clients. However, you use your own car as some of the client’s premises are closer to your home than your office, or in the opposite direction to your office.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 8-1

Reasons for decision: Summary: You are not entitled to a deduction for expenses incurred to travel (in either direction) directly between your home and your regular place of work, your office. However, you are entitled to a deduction for the cost of travelling: ● from home to a client’s premises and then on to your office or directly home ● between your office and a client’s premises, and between client’s premises ● from your office to a client’s premises and then back to the office or directly home. | Detailed Reasoning - Detailed reasoning: You can deduct from your assessable income any loss or outgoing to the extent that it is incurred in gaining or producing your assessable income except where the loss or outgoing is capital or private in nature (section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)). The expenses of travelling between home and a place of work are generally not deductible as these expenses are of a private nature ( Lunney v. FC of T (1958) 100 CLR 478 ( Lunney's Case )). Lunney's Case considered the issue of whether fares paid by taxpayers to enable them to go day by day to their regular place of employment and back to their home are deductible. The Full High Court held that the costs incurred by a taxpayer in travelling to the place where they regularly work are expenses incurred in order to enable them to earn income but are not expenses incurred in the course of earning that income. The principle in Lunney's Case (that the cost of travel between home and work is generally incurred to put you in a position to perform your duties, rather than in the performance of those duties) has been considered in numerous more recent decisions. These decisions confirm that the general principle is not altered by the availability of transport, the lack of suitable public transport, the erratic hours and times of the travel, or the ‘on-call’ nature of the work. However, there are certain circumstances where it has been accepted that the cost of travelling between home and a regular place of work is deductible, such as: ● where the taxpayer is required to carry bulky equipment ● where the home can be regarded as a base of operations, or ● where the taxpayer’s work is itinerant. Transport of bulky equipment A deduction is allowable if transport costs can be attributed to the transportation of bulky equipment rather than to private travel between home and work (see FC of T v. Vogt 75 ATC 4073; 5 ATR 274). However, if the equipment is transported to and from work as a matter of convenience, it is considered that the transport costs are private and no deduction is allowable. A deduction is also not allowable if a secure area for the storage of equipment is provided at the work place. In your case, you transport a laptop computer and equipment to configure Information Technology items. You also carry other equipment such as a tool box, serial cables, patch leads, fibre optic leads and other connectors. However, it is clear from your working arrangements that you are able to store this equipment at your office and could pick it up when you go there to get your employer supplied vehicle each morning. In addition, while you may use your laptop at home, a laptop is designed to be portable, and is not on its own considered bulky. As you transport the laptop and equipment as a matter of convenience you are not entitled to a deduction for your home to travel on the basis that you are transporting bulky equipment. Home as a base of operations A taxpayer’s home may constitute a base of operations if their work commences at or before the time of leaving home to travel to work and the responsibility for completing it is not discharged until the taxpayer attends at their regular place of work. Whether a taxpayer’s home constitutes a base of operations depends on the nature and extent of the activities undertaken at home. In your case, when you are travelling from your home to the office or to a client’s premises, you do not commence your work before leaving home - you are simply travelling from home to work. The mere receipt or making of phone calls, or the undertaking of other minor tasks at home is not sufficient for your home to be classed as a base of operations. Itinerant work A deduction is allowable for the cost of traveling between home and work if an employee’s work is itinerant. Taxation Ruling TR 95/34 Income tax: employees carrying out itinerant work - deductions, allowances and reimbursements for transport expenses provides guidelines for establishing whether an employee is carrying out itinerant work, and states that the following are indicators of itinerancy: ● travel is a fundamental part of the employee's work ● the existence of a 'web' of work places in the employee's regular employment, that is, the employee has no fixed place of work, and ● 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. However, MT 2027 provides that there will be cases where, while the nature of the work is not inherently itinerant, a taxpayer will be required in the ordinary course of their duties to visit clients. In such cases, the total journey from home to the client’s premises and on to the office is deductible where: ● the taxpayer has a regular place of work to which he or she travels habitually ● in the performance of his or her duties travel is undertaken to an alternative destination which is not itself a regular place of work, and ● the journey is undertaken to a location where the taxpayer performs substantial work duties. In your case, while you do undertake travel to attend at numerous of work sites in your area, your regular place of work is your office and you do not continually travel from one work site to another. Some days you work all day from your office, and other days you travel to only one or two work sites. As such, your work is not inherently itinerant. However, while your work is not inherently itinerant, you are entitled to a deduction under section 8-1 of the ITAA 1997 for the cost of travelling: ● from home to a client’s premises and then on to your office or directly home. ● between your office and a client’s premises, and between client’s premises. ● from your office to a client’s premises and then back to the office or directly home. You are not entitled to a deduction for travel expenses incurred to travel in either direction between your home and your office. These expenses are not incurred to gain or produce your assessable income; rather, they are incurred to enable you to commence, or return home after completing, your income earning activities. These expenses are considered to be private or domestic in nature.