Court case opens road for worker travel claims

THE recent full federal court decision in John Holland Group Pty Ltd v Commissioner of Taxation clarified an area of legislation that for many may have been considered well settled law.

The concept that travel to and from work is generally private travel relies on two old cases called Hayley and Lunney.

The basic premise was that the employees only commence work when they arrive there, their choice to live elsewhere is a personal choice and therefore the travel expenses were not incurred in the course of the employment but were incurred to get to work.

Over time there have been a number of cases that qualified the concept further, but the basic premise remained.

Back to the John Holland case, which although an FBT case, relied on the otherwise deductible rule which basically is that if the expense was incurred by the em- ployee and they could have obtained a deduction, then the employer, if instead paid the expense, would not be subject to FBT.

The travel expenses were flight costs from Perth to the work site and back.

John Holland employed workers in various remote locations on a 2 week/ 1 week roster. Accommodation on site was provided but not for families. As such almost all employees based themselves in Perth.

The employees were paid from when they arrived at Perth airport.

The court found that, as the workers commenced their duties at the airport, and living away from the site was not generally a choice, a departure from the Hayley Lunney concept was justified.

As such the employee could have claimed the deduction, if incurred, and therefore the employer would not be subject to FBT under the otherwise deductible rule.

Expect to see further court cases on the topic as this concept is massaged to support different scenarios to support employee travel claims.

Email David. Hall@ crowehorwath. com. au

This advice is general in nature, the personal opinion of the writer; readers should seek specialist advice before making decisions.