ATO Guidelines on Commuting and Work-Related Travel Deductions
Navigating tax deductions for travel expenses between home and work can be a challenge. The Australian Taxation Office (ATO) has clear rules about what does and does not qualify as deductible travel expenses. Understanding these rules can help employees and employers manage their tax obligations more effectively.
Non-Deductible Travel Expenses
Generally, the costs of ordinary travel between an employee’s home and their regular workplace are not tax-deductible. This is because such travel is considered a prerequisite for starting work rather than an activity that directly generates income. Here are some situations where travel remains non-deductible, regardless of the circumstances:
- Completing work tasks at home before heading to the office.
- Conducting work activities, like reading emails, while commuting.
- Commuting during regular work hours.
- Living far from the workplace.
- Multiple trips to the workplace within the same day (e.g., returning to school for parent-teacher meetings).
- Limited travel options due to the location of the home or workplace.
- Receiving a travel allowance.
- Working overtime or during unusual hours (night shifts, for example).
- Stopping to complete a minor work-related task during the commute (like picking up newspapers).
What Defines a Regular Place of Work?
A regular place of work is generally where an employee consistently starts and finishes their daily duties. However, determining this can be complicated if an employee does not have a fixed work location or if they work at multiple sites. Factors such as the terms of the employment contract, common practices, and the nature of the work can influence where the regular workplace is considered to be.
Furthermore, it’s possible for an employee to have multiple regular workplaces if they routinely need to visit different locations as part of their job.
Exceptions to the Rule
There are exceptions to these rules. For instance, travel expenses may be deductible for employees who:
- Are ‘on call’ and need to travel to a location for urgent work.
- Must transport bulky equipment necessary for their job.
It’s crucial for both employers and employees to be aware of these rules to ensure compliance and to understand their rights and responsibilities regarding travel deductions.
Should you have any questions or need assistance, feel free to reach out to Tax Ideas Accountants & Advisers at +61 2 83181545 or book an appointment through our live calendar.
- Deductibility of Employee Transport Expenses (1)
- Deductibility of Employee Transport Expenses (2) – General Deduction Principles
- Deductibility of Employee Transport Expenses (3) – Key Principles of TR 2019/D7
- Deductibility of Employee Transport Expenses (5) – Geographically Distant Places of Work
- Deductibility of Employee Transport Expenses (6) – Changing Regular Place of Work
- Deductibility of Employee Transport Expenses (7) – Exceptions
- Deductibility of Employee Transport Expenses (8) – Alternative Work Location
- Deductibility of Employee Transport Expenses (9) – Between Home and a ‘Transit Point’
