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Income tax: is the cost of travel between a primary production property, where a taxpayer resides, and a place of employment or business, deductible?

Preamble

Generally, no. The mere fact that a business of primary production is being carried on at the residential property does not automatically make deductible the expenses incurred in travelling between the property and the taxpayer's other business or employment. The Commissioner's view, as reflected in Taxation Ruling IT 2199, is that the expenses incurred in travelling from home to work are not deductible as they are outgoings of a private or domestic nature. The High Court has stated in relation to 'home to work' travel: '...it may be said to be a necessary consequence of living in one place and working in another...' (per Williams, Kitto and Taylor JJ in Hayley v. FC of T (1958) 100 CLR 478 at 501).

The purpose of the trip will usually determine whether the expenses related to it will be an allowable deduction. Travel by a taxpayer from their residential property, where a primary production business is also carried on, to work, will generally maintain its character as non-deductible private or domestic expenditure, i.e., it is travel to work and not on work. This principle is supported by the Board of Review decisions in Case Q49 83 ATC 237; Case 113 26 CTBR (NS) 776 and Case F43 74 ATC 245; Case 61 19 CTBR (NS) 420.

Exceptions: (a) If the taxpayer is undertaking some significant primary production related activity such as carrying produce or stock to market, or carrying feed or veterinary supplies home, the costs of travelling on that particular trip may constitute an allowable deduction. This travel may be considered to be on work or business (see FC of T v. Vogt 75 ATC 4073, (1975) 5 ATR 274). (b) If the employment circumstances of the taxpayer warrant it. For example, travel costs may be deductible where the taxpayer's employment is itinerant (see FC of T v. Wiener 78 ATC 4006, 8 ATR 335) or where the home constitutes a base of their non-primary production business activities or employment (see Garrett v. FC of T 82 ATC 4060, (1982) 12 ATR 684). Refer also to Taxation Rulings IT 112; IT 113; IT 2543 and TR 95/34.

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