An employee must be able to demonstrate that their travel to the more distant work location is not merely attributable to a choice of where to live.
A question that arises for an employee, who has two (or more) regular places of work that are geographically distant from each other, is whether travel to the more distant work location to perform their employment duties may be regarded as an incident of their employment (and therefore deductible), rather than a prerequisite to the commencement of their work duties or private.
Unlike ordinary travel between home and a regular place of work (which is generally not deductible), in TR 2019/D7, the ATO considers that an employee with multiple places of work that they regularly travel to may be entitled to deduct their costs of travel to the more distant work location.
For a deduction to be available, an employee must be able to demonstrate that their travel to the more distant work location is not merely attributable to a choice of where to live. Instead, the distance (or remoteness) of the work location must cause the need for travel to be part of that for which they are employed. In other words, the travel must be a necessary consequence of their employment duties, which need to be performed in more than one location.
In this regard, for an employee who regularly works in more than one location, the ATO generally accepts that expenses they incur in travelling to a distant work location are necessary incident of employment and therefore deductible provided:
- the travel fits within their duties of employment and is relevant to the practical demands of carrying out their work duties; and
- the travel involves an overnight stay from home.
Refer to paragraph 11 of TR 2019/D7, which lists additional factors to be taken into consideration in determining the deductibility of these expenses.
- Example:
Kathy lives in Adelaide and works in the CBD. While she is primarily based in Adelaide, she is also required by her employer to attend meetings in their Sydney head office twice a week. She generally flies from Adelaide to Sydney every Sunday night and returns to Adelaide every Tuesday night.
While her costs of travel between home and the Adelaide office are not deductible (being ordinary travel between home and a regular place of work), according to TR 2019/D7, she may deduct her costs of travel between home and Sydney (where the head office is located) due to the following factors:
- She performs employment duties at both offices.
- Her travel to Sydney is relevant to the practical demands of carrying out her work duties.
- She is travelling to Sydney at the request of her employer.
- The distance between both office (i.e., in Adelaide and Sydney) creates the need for travel to be part of that for which she is employed. That is, the need for travel arises as a necessary consequence of her employment duties and not merely because she chooses to live in Adelaide.
- Her travel involves overnight stays from home and may be distinguished from her travel to the Adelaide office (which is ordinary travel between home and a regular place of work).
A deduction is not, however, available for an employee travelling to a more distant work location where their need for travel results from personal circumstances. An example of this is an employee who is fundamentally based in a work location distant from their home, but is allowed, by their employer, to undertake some of their work duties at another location close to home. In these circumstances, the employee’s travel to the distant work location is attributable to their choice of where to live, and is not necessitated by their work duties.