It is generally assumed that there is a degree of flexibility within the tax law over particular work travel claims that arise where the nature of the employment is deemed to be itinerant.
If you do itinerant work (or have shifting places of work) you can claim the cost for driving between workplaces and your home. Note that you cannot count your home as a workplace unless you carry out itinerant work.
The ATO says that the following factors may indicate that you do itinerant work:
- travel is a fundamental part of your work due to the very nature of your work, not just because it is convenient to you or your employer
- you have a “web” of work places you travel to throughout the day
- you continually travel from one work site to another
- your home is a base of operations – if you start work at home and cannot complete it until you attend at your work site
- you are often uncertain of the location of your work site
- your employer provides an allowance in recognition of your need to travel continually between different work sites and you use this allowance to pay for your travel.
Flexible, up to a point
In case the above factors give some impression of allowing for a very wide degree of flexibility, one recent Administrative Appeals Tribunal (AAT) decision adds to the factors to be considered if making claims for home-to-work travel in the case of itinerant work.
A taxpayer (Mr Hill) claimed he was entitled to deductions for certain work-related travel expenses for meals and accommodation on the basis that he was employed in itinerant work.
On the face of it, he seemed to fit the bill. During the year, Hill undertook a number of employment arrangements and engaged in various roles. Each job was in a different location, each were short-term and seasonal in nature, and all were in the mining industry.
Mr and Mrs Hill owned a house, which he asserted was their usual place of residence. However with the exception of one location, he stayed with his wife in a motorhome that they towed to rented caravan sites near each of the locations where he had work. It was found however that they returned home for short periods, sometimes weeks, between each job.
The AAT considered some of the ATO’s factors and concluded that the taxpayer was not an itinerant worker, and could not make his claims.
Its reasons included the following:
- travel was not a fundamental part of the taxpayer’s work as it did not arise out of the nature of his employment with each employer. That is, the taxpayer was under no obligation with any employer to work at multiple sites
- employment duties did not commence at the usual place of residence or at the various caravan parks where he parked his motorhome
- when he finished the work at each workplace, he returned home for up to three weeks before commencing at another workplace
- the taxpayer did not have a “web” of workplaces, and the location of each workplace was known to the taxpayer with a large degree of certainty
- the taxpayer was not required to travel between different workplaces as part of his employment; he would travel between the caravan park where he parked his motorhome and the same workplace for the relevant period of each employment. None of his employers required him to travel from where he was staying to different workplaces
- none of the employers paid him an allowance for travel such that it may indicate that travel was a fundamental part of his employment.
The AAT further remarked as follows:
- the taxpayer’s duties did not involve him travelling from workplace to workplace as is essential for itinerancy
- he made a lifestyle choice to work in regional towns and live in his motorhome
- he was not required to travel to these different locations in the course of his employment. Rather, he chose to travel from his home to undertake work in these locations
- each work place may be regarded as a regular or fixed place of employment, even if there was some uncertainty about the length of time that he would be employed at each location.
The key message
Over the past few years, the ATO has been setting its sights on incorrectly claimed work-related travel expenses (for example, car expenses, flights and accommodation). This focus is expected to continue, and the ATO has warned that it will pay extra attention to people whose work-related deductions are higher than expected. As can be seen from the above, your clients’ entitlement to a deduction for work-related travel expenses will be subject to, will depend on, their individual circumstances.
Click above to download the free PDF, “Deductibility of car and travel expenses”, a Tax & Super Australia Case law in action Insights paper containing the more technical details of the AAT case referred to above (Hill and Commissioner of Taxation (Taxation)  AATA 514).