According to Tax and Super Australia, it is “generally assumed” that there is a degree of flexibility within tax law over work travel claims that arise where the nature of the employment is deemed to be itinerant.
If a taxpayer does itinerant work, they are entitled to claim the cost of driving between workplaces and their home.
Several factors, such as travelling being a fundamental part of a taxpayer’s work, continual travel from one work site to another, and uncertainty about the location of a work site, may indicate that a taxpayer does itinerant work.
However, a recent case in the Administrative Appeals Tribunal (AAT) indicated that the evidence mounted by a taxpayer that their work is itinerant may need to be stronger than originally thought.
One 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,” said Tax and Super Australia.
“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.”
The AAT’s reasons included that Mr Hill was under no obligation with any employer to work at multiple sites, he did not have a “web” of workplaces and none of the employers paid him an allowance for travel such that it may indicate that travel was a fundamental part of his employment.
Further, the AAT said that Mr Hill made the lifestyle choice to work in regional towns and live in his motorhome.
“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,” said Mr Hill.
“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.”