Private ruling: Home to work travel expenses
Published: December 2014
Ruling period: Year ended 30 June 2014.
Date scheme commenced: 1 July 2013.

Ruling: Questions and answers | 1. Are you entitled to a deduction for home to work travel expenses on the occasions that you are officially rostered on to perform after hours work? | Yes. | 2. Are you entitled to a deduction for home to work travel expenses on the occasions that you are not officially rostered on to perform after hours work? | No.

Relevant facts and circumstances: In addition to your regular office hours, your employment contract also includes an after-hours roster. When you are rostered on, you are on-call from the time you finish work in the office until the next morning when you arrive back in the office. You sometimes also work after hours when you are not officially rostered on. When you are rostered on, your employment contract requires you to carry bulky tools and equipment.

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 deductions to the extent that expenses are incurred in gaining or producing assessable income, or in carrying on a business to gain or produce assessable income, except where the expenses are of a capital, private or domestic nature. The decision in Lunney and Hayley v FCT (1958) 100 CLR affirmed the position that expenses of travelling between home and a place of work are generally not deductible as the expenditure is of a private nature. 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. However, expenses incurred in travelling between home and work are allowable deductions in certain situations. One of those situations is where the employee's home constitutes a base of operations. This exception to the general rule has been explained in a number of taxation rulings in different contexts including Taxation Ruling TR 95/34, paragraphs 56 to 62, and Miscellaneous Tax ruling MT 2027, paragraphs 17 to 22. An employee's home may constitute a base of operations if the work is commenced at or before the time of leaving home to travel to work and the responsibility for completing it is not discharged until the employee attends the work site. Whether an employee's home constitutes a base of operations depends on the nature and extent of the activities undertaken by the employee at home. In FC of T v. Collings 76 ATC 4254; (1976) 6 ATR 476 for example, a computer consultant's employment required her to be on call 24 hours a day. She was provided with a portable terminal that was connected to her employer's computer through the telephone line. It was common for her to receive telephone calls at home and give advice to workers at the office any time a problem arose. If she was unable to resolve the problem over the telephone or through the portable computer she would return to the office in order to get the computer working. The Court accepted that there were two separate and distinguishable facets of her employment. While she commuted regularly to her work, she was also required to be ready on call at all other times. The Court held that, on the occasions the taxpayer returned to work after hours: (a) she had commenced performance of her duties before leaving home and travelled to work to complete those duties. Her obligation was more than just being on stand-by duty at home; and (b) she did not choose to do part of the work in two separate places. The two places of work were a necessary obligation arising from the nature of the special duties of her employment. Rath J said (ATC at 4262; ATR at 484): I am not concerned with those normal daily journeys that have their sole relation to a person's choice of his place of residence; I am concerned with journeys which begin as a result of performance of the duties of the employment at the taxpayer's home. The journey from home to the office is undertaken, not to commence duty, but to complete an aspect of the employment already under way before the journey commences. In your case, when you are working on the after-hours roster, you are required to carry bulky equipment with you at all times. The after-hours roster begins when you finish working in the office and ends when you return to the office the next morning. Your situation is similar to an employee whose home constitutes a base of operations, and your home to work travel while you are on call can be likened to traveling between two places of work. Therefore, you are entitled to a deduction for home to work travel expenses on the occasions you are on the after-hours roster. However, your home to work travel expenses when you are not officially on the after-hours roster are not deductible as this is a normal private expense. The fact that you may possibly be called in to work when not rostered on does not amount to a necessary obligation required by your employment and is not similar to the situation where an employee's home constitutes a base of operations.