Digital capabilities, a growing “gig economy” and the changing nature of employment means that many Australians are becoming more mobile in their income-earning activities, or in some circumstances become practically nomadic chasing work. With the ATO on the lookout for “red flags” for taxpayers making false work travel claims, it’s worth looking at the ATO’s definition of itinerant workers and how this can lead to accessing certain tax deductions.
As well as some vehicle-related costs, genuine work-related travel claims can include meals and accommodation. But the group of workers who are typically eligible to correctly make such claims can be labelled as “itinerant”, which is the term the ATO uses. For reference, see taxation ruling TR 95/34.
Broadly, the definition of “itinerant” refers to shifting places of work. While itinerant work is generally held to be undertaken by certain trades or classifications of workers, such as those working in primary production or mining, “itinerancy” can apply to any individual worker subject to their employment satisfying certain characteristics and criteria. But it’s important to get it right.
The characteristics or indicators of itinerant work are that:
- travel is a fundamental part of the employee’s work
- the existence of a “web” of work places in the employee’s regular employment (that is, the employee has no fixed place of work)
- the employee continually travels from one work site to another. An employee must regularly work at more than one work site before returning to his or her usual place of residence
- other factors that may indicate itinerancy (to a lesser degree) include:
- the employee has a degree of uncertainty of location in his or her employment (that is, no long term plan and no regular pattern exists)
- the employee has to carry bulky equipment from home to different work sites
- the employer provides an allowance in recognition of the employee’s need to travel continually between different work sites.
The ATO has stated that the above characteristics, while not exhaustive, do give some guideline for determining itinerancy. However it says that no single factor should be relied upon, and that individual circumstances and the nature of work duties can also be factors in any final determination.
The tax legislation does not provide a definition of the term itinerant. Therefore the ATO approach in labelling employment as being itinerant in nature, and eligible for certain travel expense deductions, is not arrived at by a prescriptive approach, but rather through the use of concocted case studies.
The following examples can be helpful in determining if the above characteristics or indicators have been met, and if therefore you have a “reasonably arguable” position in regard to claiming certain travel expenses.
Travelling is a fundamental part of the job
Travel must be a central feature of the employee’s duties, and the very nature of the work means that it must be carried out in different locations.
Example: Mary has supervisory responsibilities for a chain of retail outlets. Her duties require her to travel to several stores each day to assess each store’s performance and to attend head office weekly to file reports. She does not visit the stores in a regular pattern. Travel is a fundamental part of Mary’s employment because the nature of the job itself makes travelling a necessary element of her duties. She is considered to be engaged in itinerant employment. Readmore
