Deductions for transport between workplaces
14 July 2004
A recently introduced provision in the legislation provides a specific deduction for transport expenses incurred in travelling between workplaces. 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, 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.