Travel between work places
Travel between home & work in the course of
employment
On 29 June 2004, the Tax Laws Amendment (2004 Measures No. 1) Act 2004 received
Royal Assent. The Act contains a new provision which provides a specific
deduction for transport expenses incurred in travelling between workplaces (new
section 25-100 of the ITAA 1997). This provision applies retrospectively from 1 July 2001.
It is important to note that while travel to
and from the taxpayer's home is specifically excluded under this provision, it
is not intended to override the general deduction provision in section 8-1 of
the ITAA 1997, which continues to allow a deduction for home to work travel
incurred in the course of gaining assessable income.
The new provision provides an individual
taxpayer with a specific income tax deduction for transport expenses where the
following conditions are met:
- the individual incurs transport expenses in travelling directly
between workplaces
- the purpose of the travel between workplaces is to earn assessable
income at the second workplace
- at the time of the travel between workplaces the income earning
activities at the first workplace had not permanently ceased, and
- the individual does not reside at either place.
A workplace includes:
- a place where an individual earns assessable income as an employee
- a place where an individual earns assessable income in a capacity
other than as an employee, and
- a place where an individual earns assessable income by carrying on
a business or business activities.
A deduction can be claimed for transport
expenses incurred in travelling directly between:
- two places of employment
- two places of business, and
- a place of employment and a place of business.
No deduction is available if the individual
does not travel directly from the first workplace to the second workplace, or
engages in a private or domestic activity during the time they travel from the
first workplace to the second workplace.
In addition, a deduction is not allowable for
transport expenses incurred in travel between workplaces if, at the time of
travel, the individual has permanently ceased their assessable income-earning
activities at the first workplace.
This provision restores the law to its
position prior to the High Court's decision in Commissioner of Taxation v Payne [2001] HCA 3 (known as
Payne's case) and follows a Treasurer's Press Release. The Tax Office has been
administering the law as if the provision has already been enacted. Taxpayers
and their advisers will not see any change in the law.
Substantiation
Transport expenses incurred in travel between
workplaces are subject to the substantiation rules of Division 900 of the ITAA
1997. Where such expenses are car expenses Subdivision 900-C applies. For other
expenses eg fares, Subdivision 900-B applies.
Application
Section 25-100 applies for the 2001-2002 and
subsequent income years. The legislation applies retrospectively so as to
maintain the deductibility of transport expenses incurred in travel between
workplaces before and after the High court decision in Payne’s case. Taxpayers
will not be adversely affected by the retrospective commencement of the
legislation.
Travel between work places
The situation is a little less clear when there are several places of employment. If a taxpayer travels from his home to his place of employment we say the occasion of the travel costs is found in his choice to live some distance from his place of employment
But if the taxpayer travels from one place at which income is produced to another at which income is produced the location of his domestic residence is no longer relevant. Now the occasion of the outgoing is found in his need to transport himself from one location to another in the course of the actions giving rise to his income
Travel between 2 locations at which income is produced?? - Allowable!!
Travel between jobs for 2 different employers also qualifies for deduction However, if the trip is broken by a visit home, no deduction is allowed Remember, any trip between home and place of employment is not allowable Refer Green v FC of T (1950) 81 CLR 313
Travel between home & work print in the course of employment
refer CCH Master Tax Guide - para 14-230 These are the facts of Collings' case - refer CCH Master Tax Guide para 14-230 From the time the consultant received the call and suggested the unsuccessful remedies over the phone, she was already undertaking the duties which gave rise to her income....So when it was necessary to travel from home to the computer, she was already in the course of her employment She was travelling between 2 places of income production.
It is important to bear in mind that this situation only existed on the emergency call. Travel to and from work in the normal course would not be incurred in gaining income
