An employee may deduct the costs of travel between the transit point and their regular place of work provided they can establish their employment is the ‘occasion’ for the transport expense.
In some cases, employees (typically fly-in-fly-out (‘FIFO’) employees) report to work in a location other than the one in which they carry out their substantive duties of employment. Such employees are generally required to travel to a location (i.e., a ‘transit point’) from which they need to undertake further travel to reach their regular place of work (e.g., a mine site).
The costs of travel between home and a transit point are generally not deductible, as they are a prerequisite to the commencement of an employee’s work duties. An employee may, however, deduct the costs of travel between the transit point and their regular place of work provided they can establish their employment is the ‘occasion’ for the transport expense.
For travel between a transit point and a regular place of work to be deductible, the need for a transit point must fit within what would reasonably be expected by the duties of employment (e.g., the remoteness of a work location), rather than the employee’s private characteristics (e.g., where they live in relation to where they report for work). Matters to be taken into consideration in determining whether this is the case include:
- Whether the employee has commenced employment duties from the transit point.
- Whether the employee is substantively under the direction and control of their employer while travelling between the transit point and their regular place of work.
- Whether other relevant factors listed in paragraph 11 of TR 2019/D7 (as discussed in previous articles on this topic) are present. For example, it is more likely to fit within the duties of employment where travel occurs on work time and the employee is being paid while they travel between the transit point and their regular place of work.
In determining whether an arrangement exhibits the above characteristics, it is important to have regard to the arrangement’s form and substance, the employee’s employment contract, any applicable award and the practical needs of employment.
The absence of the features listed above may prevent a FIFO employee from deducting any part of their costs of travel from home to a regular place of work, even where the travel is undertaken though a transit point.