Can you claim motor vehicle expenses for travel to work?
want to know, can you claim motor vehicle expenses for travel to work?
If you genuinely use your car for work related purposes you most certainly can claim a tax deduction for your motor vehicle expenses against your income. But as always there are tricks and traps you need to be aware of and generally a deduction is NOT available for motor vehicle expenses for travel to work itself …(Please note we are focusing on work related tax deductions, and while similar principles apply for business related deductions, they are not addressed in this post.)
Travelling to and from work
First things first, lets clear up a common misunderstood requirement …As stated above, for the majority of taxpayers, the cost of traveling to and from work is NOT tax deductible!Though there are some exceptions where possibly this general rule won’t apply and you may be lucky enough to be able to claim costs incurred for travel to work (though as an exception to the rule, this won’t apply for most people).
Shifting places of work
If you have “shifting” places of work (referred to as “itinerancy”) it may be accepted you are required to incur transport costs (including motor vehicle expenses) as a result of the nature of your work.In this case you can be considered to be travelling in the performance of your duties from the moment of leaving home.The following characteristics indicate you have shifting places of work:
- travel is a fundamental part of the employee’s work, and/or
- there is an existence of a ‘web’ of work places in the employee’s regular employment, that is, the employee has no fixed place of work, and/or
- the employee continually travels from one work site to another, including that the employee must regularly work at more than one work site before returning to his or her usual place of residence.
Other factors that may indicate itinerancy (to a lesser degree) include:
- the employee has a degree of uncertainty of location in his or her employment (that is, no long term plan and no regular pattern exists),
- the employee’s home constitutes a base of operations (be careful, this would not apply to many people),
- the employer provides an allowance in recognition of the employee’s need to travel continually between different work sites (again be careful here, receiving an allowance doesn’t prove you have incurred the costs nor that you actually have shifting places of work, it simply may be an indicator).
Examples of shifting places of work and itinerancy as provided by the ATO include –
Concetta has supervisory responsibilities for a chain of fashion stores. Her duties require her to travel to several stores each day to assess each store’s performance and to attend head office weekly to file reports. Concetta does not visit the stores in a regular pattern. Travel is a fundamental part of Concetta’s employment because the nature of the job itself makes travelling a necessary element of her duties. She is considered to be engaged in itinerant employment.Elio sells equipment and supplies for a pharmaceutical company. He is required to travel to many clients each day to obtain sales of his company’s products. He attends the employer’s office monthly to complete paperwork. Elio’s work requires him to travel to several workplaces (a ‘web’ of work places). As he performs his duties at many different locations, his employment would be regarded as itinerant.
Examples provided by the ATO where the cost of traveling to and from work is NOT considered to meet the above requirements and therefore is NOT considered deductible include –
Eleni is an agency nurse who travels to several hospitals to relieve staff shortages. She is employed by the hospital for whom she performs the duties. Eleni remains at the one hospital until completion of her shift. Travel is not a fundamental part of Eleni’s employment, as she is not required to travel in the performance of her work once she commences duty. Eleni’s employment is not considered to be itinerant. Leo works for an accountancy firm and attends head office three days a week. He works the remaining two days at a suburban office. Leo’s work does not display a ‘web’ of work places because:(a) upon commencement he is not required to travel in the course of his duties, and
(b) Leo has two regular places of work. Jason is employed as a builder’s labourer. He generally works at a single building site for two to three months before moving to another site. Jason is not engaged in itinerant work because:(a) each work site is considered to be a regular or fixed place of employment;
(b) there is no continual travel between work sites;
(c) travel is not a fundamental part of his duties; and
(d) there is no web of work places in his employment.
Carrying Bulky Equipment to Work
A deduction may also be allowable if the transport costs can be attributed to the transportation of bulky equipment rather than to private travel between home and work. But again, this will only apply to a small number of taxpayers. And often, it will only apply to taxpayers who already qualify for the deduction above for having shifting places of work.It is important to understand, if the equipment is transported to and from work by the employee as a matter of convenience or personal choice, it is considered that the transport costs are private and therefore NO deduction is allowable.Further a deduction is not allowable if a secure area for the storage of the equipment is provided at the work place, even if the employee chooses not to use it.Finally, as stated it only applies to bulky goods, goods that by their nature could not be carried, or taken on a bus or train. Briefcases, laptops, a handful of work papers and/or files and similar items will not qualify.
An example provided by the ATO where this exception can apply is as follows –
Enrico is a bricklayer who is employed at a building site for six months. He carries a cement mixer, a ladder, shovels, trowels and other equipment to and from the site each day. A secure storage area is not provided at the work site. Enrico is not engaged in itinerant employment. However, a deduction is allowable for the cost of travelling between home and work due to the carriage of bulky equipment.
An example provided by the ATO where this exception wont apply is as follows –
Suzette is employed as an electrician. She travels daily between several work sites, carrying a small tool box. Suzette would not be allowed a deduction for the cost of transport between home and work on the basis that she is required to carry bulky equipment (Editors Comment: Basically a tool box is not considered bulky). However, she would likely qualify for a deduction on the basis that her employment is itinerant.