Can I claim a deduction for travel to work?

NO! Well maybe No.

The Full Federal Court in the John Holland Group case has concluded that the costs of certain travel for fly-in-fly-out employees travelling to work can be deductible (so if paid for by the employer there will be no FBT payable under the otherwise deductible rule).

In this case the employees lived in Perth and worked in Geraldton. The employer required to employees to be at Perth airport at a certain time each week, in uniform, and during the time in the airport, on the plane and travelling to the site (including no alcohol and language rules).

The Federal Court concluded that the employment started at the airport. Therefore the travel on the flight is deductible.

What does this mean for my trip to work today?

First, this case will probably be appealed by the Commissioner to the High Court.

Second, if you are at the direction of your employer during the travel (method and timing defined by the employer) like most FIFO arrangements it will be deductible.

Third, I am sure that if I sign an agreement with my employer to leave for work at 7:30, catch the 451 bus, wear a uniform, and not drink and swear on the bus (what will I do now on my bus trip?) the Commissioner will NOT let me claim a deduction. This decision is similar to the situation of an emergency surgeon who is called at home and gives the theatre staff instructions before jumping in the car. The work started on the phone so the travel is deductible. To get a deduction for the travel we need to show we have started working before the travel started.

Fourth, employers with FIFO employees will not have to pay FBT on the travel costs.

I can’t wait for the High Court case.

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About Ken Mansell

As a stay at home Dad most of the week this is my way of pretending I am still the tax counsel of ASX and SEC listed companies, working at big 4 firms, working at the Federal Treasury, on the Henry Review and at Parliament House for the previous government.
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