Private ruling: Travel expenses – home to work
Date of advice: 11 January 2019
Published: April 2019
Ruling period: Year ended 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you entitled to a deduction for the expenses you incur in travelling between home and your work locations? | A1: No

Relevant facts and circumstances: You are a medical practitioner. You are a sole trader and you pay a service fee for the use of the rooms and the staff at two workplaces (A & B). You are not employed by either of these businesses. You travel from home to work and when you finish work you travel directly home, no stops are made en route. A is located approximately XX km’s from your home and B is located approximately XXkms from your home. You work at A on Tuesday from 8am to 4.30pm and Wednesday from 7.45am to 11.30. You work at a clinic on Wednesday from 12pm to 4pm. You work at B on Thursday and Friday from 8am to 5pm. You have a dedicated room in your home that you use as an office. Your bookkeeper has access to your office and uses your work computer. Your total work hours performed at home is approximately 12 hours per week, 1 hour per morning and 1 hour per night, 6 days/nights a week. Your work duties at home consist of:- ● checking results and communications from patients and staff from the two work places. ● emailing patients from your work computer to answer questions with respect to their diagnosis, treatment, results and in response to their messages. ● Telehealth consultations on Wednesday afternoons with rural patients that can’t attend consulting rooms at A. ● business financial management You are on call to patients via email 24 hours per day, 7 days per week. At times these messages may require urgent action. You carry with you on each journey to work and back home the following four bags of equipment. 1. Emergency resuscitation equipment - Dimensions: 44cm x 27cm x 27cm. Approx. weight 2kg. 2. 2Microscope. Dimensions: 24cm x 21cm x 39cm, weight 8.2kg. 3. Work bag - Dimensions 46cm x 26cm x 30cm, weight 10.5kg.: 4. Pac Safe bag: Dimensions: 52cm x 33cm x 21cm, weight approx. 4kg. You don’t have secure storage facilities at either workplace to store your equipment and other practitioners use rooms on the days you don’t operate from the work premises. You carry S8 medications in your doctor’s bag in case of emergencies when travelling to/from work or at the work premises. You carry the microscope with you on each trip. You are currently completing a log book of your travel. The amount of travel attributable to work vs private usage will be determined by the log book method. You are a sole trader and pay for your own travel expenses.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1 | Income Tax Assessment Act 1997 Section 25-100

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 travel between home and the normal workplace as it is considered to be a private expense and not incurred in producing assessable income ( Lunney v. Federal Commissioner of Taxation [1958] ALR 225; 100 CLR 478). The cost of travel between home and work is generally incurred to put a person in a position to perform duties of employment, rather than in the performance of those duties. There are limited situations where it has been accepted that travel from home to work is deductible. This is where: ● the taxpayer's home constitutes a place of employment and travel is between two places of employment or business Garrett v FCT 82 ATC 4060, 12 ATR 684, ● the employment can be construed as having commenced at the time of leaving home FCT v Collings 76 ATC 4254, 6 ATR 476, ● you travel between home and shifting places of work, that is, an itinerant occupation FCT v Wiener 78 ATC 4006, 8 ATR 335, and ● the transportation of bulky equipment in some circumstances FCT v Vogt 75 ATC 4073, 5 ATR 274. In your circumstances it is not considered that the nature of your employment is inherently itinerant. | Detailed Reasoning - Transportation of bulky equipment: The question of what constitutes bulky equipment must be considered according to the individual circumstances in each case. In Crestani v. Federal Commissioner of Taxation 98 ATC 2219; (1998) 40 ATR 1037, a toolbox which measured 57 centimetres by 28 centimetres by 25 centimetres and weighed 27 kilograms was considered as 'bulky', in the sense of 'cumbersome', and the toolbox was not easily portable. The transport cost was 'attributable' to the transportation of such bulky equipment rather than private travel between home and work. In the case of bulky equipment, the cost is attributed to the transportation of the bulky equipment rather than private travel between home and work where the transportation of the equipment is essential and is not done as a matter of personal choice or convenience and there is no secure storage provide at the workplace. In FCT v. Vogt [1975] 1 NSWLR 194; 5 ATR 274; 75 ATC 4073), the taxpayer worked at various places and his employment created the necessity to transport his musical instruments. There was no other practical way of getting his instruments to the places where he was to perform and the associated travel deductions were allowable. The extreme bulk of the equipment was a decisive factor and the taxpayer was not merely keeping his violin, trumpet, bass, amplifiers and other musical equipment at home for safe-keeping and practice. In Case 43/94 94 ATC 387, a flight sergeant with the Royal Australian Air Force was denied a deduction for the cost of transporting his flying suit and other items used for work purposes. These items were carried in a duffle bag measuring 75 cm long x 55 cm wide x 50 cm deep and weighing 20 kilograms when packed, a suit bag which weighed 10 kilograms when packed, and a briefcase-sized navigational bag which contained charts, work manuals and study materials. It was held that the mode of transporting the items was simply a consequence of the means adopted by the taxpayer to convey him to work. It was considered that the duffle bag was not of sufficient size or weight to impede facile transport. According to Crestani’s Case, bulky refers to ‘not easily portable or cumbersome’. In your case we have determined that the equipment is easily portable and is not cumbersome. Your equipment is smaller in size and lighter than the work equipment considered in the Vogt and Crestani cases and is considered easily transportable in your vehicle and is not considered bulky and/or cumbersome. Furthermore, if the equipment is transported to and from work by the person as a matter of convenience or personal choice, the transport costs are private and no deduction is allowable paragraphs 139 to 140 of Taxation Ruling TR 95/18. In Sciberras v Commissioner of Taxation [2011] AATA 509, the taxpayer was a truck driver who carried a variety of things to work. In determining how bulky the equipment carried, it was accepted that some of the books and tools were not required, seldom used or a matter of personal choice. Subsequently they were not considered part of the aggregate. In your case, we consider the following equipment was not required or taken as a matter of personal choice; ● Emergency bag ● Microscope ● two hardcopy text books. After considering your specific facts, it is considered that your home to work travel is not an allowable deduction. Your home to work travel expenses enable you to arrive at your work place to earn your assessable income and are not incurred in the actual gaining or producing of your assessable income. Your travel is not considered to be undertaken to transport bulky equipment. Although you consider your equipment is necessary for your employment, the items are not considered to be bulky or heavy. Therefore, the equipment you carry is not considered to be of such bulk that it would change the primary purpose of your travel from one of transporting yourself to and from work to one of transporting the equipment. Although you may not have a locked office at either workplace, this does not mean that your travel is deductable. | Detailed Reasoning - Home as a place of operations: Paragraph 56 of Taxation Ruling 95/34 states that an employee’s home may constitute a base of operations if the work commenced 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. Taxation Ruling IT 2199 considers the deductibility of travelling expenses between places of employment and/or places of business. It states that, whether a taxpayer's home constitutes a place of business depends on the nature and the extent of the activities undertaken by the taxpayer at home. The fact that a room in the person's home is used in association with employment or business conducted elsewhere will not be sufficient to establish entitlement to a deduction for travel between home and the place of work. In the Federal Court Case FC of T v. Collings 76 ATC 4254; (1976) 6 ATR 476 it was held that the taxpayer, a computer consultant was allowed the expenses of travel between home and work as; 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. The circumstances where part of a home is considered to have the character of a place of business can be contrasted with the more common case where a taxpayer maintains an office or study at home as a matter of convenience (for example, so that he or she can carry out work at home which would otherwise be done at his or her regular place of business or employment). Examples of this include: ● a barrister who reads client briefs at home, ● a teacher who prepares lessons or marks assignments at home, and ● an insurance agent who maintains client files and occasionally interviews a client in his or her home office. In these circumstances the area of the home where the work is undertaken retains it’s private or domestic character and is not considered to be a place of employment or business. Furthermore, section 25-100 of the ITAA 1997 specifically 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. Section 25-100 denies a deduction for your travel expenses between home and your work place. In your case you travel on a regular scheduled basis between your home and your workplaces. You pay a service fee for the use of the rooms and staff at both work places. Your work places are considered your base of operations. It is acknowledged that you make and receive phone calls and you carry out some administrative and financial activities related to your employment at home. However, the work that you carry out at home is done as a matter of convenience and not sufficient for your home to be classed as a base of operations. Consequently, the motor vehicle expenses you incur in travelling between home and your workplaces and back home are inherently of a private or domestic in nature and therefore no deduction is allowable under section 8-1 of the ITAA 1997.