NO.078

Deductibility of Travel Expenses

The Government will amend the income tax legislation concerning the deductibility

of expenses incurred by taxpayers in travelling between two places of unrelated

income earning activity.

Legislative amendment is required as a result of the High Court’s decision

earlier this year in Commissioner of Taxation v Payne. The Commissioner

took action because the pilot’s expenses were for travel between his farming

property where he lived and also had a business, and the airport where he worked.

In finding that the expenses were not related to deriving income from either

activity, the court upheld the Commissioner’s view but on broader grounds.

The amendment is necessary to maintain deductibility for relevant expenses

incurred in travelling between two places of unrelated income earning activity,

to accord with the Commissioner’s long held views as expressed in published

rulings and TaxPack. For example, the amendment will retain deductibility for

expenses of travelling directly from one job to a second job, and also for

expenses of travelling from the usual workplace to an alternative workplace

and between the alternative workplace and home.

I am informed by the Commissioner that assessments for the year ending 30 June

2001 will be based on his rulings and TaxPack.

The amendment will take effect from the 2001-02 income year.

MELBOURNE

8 October 2001

Contact: David Alexander (02) 6277 7340