Peter Costello

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Deductibility of Travel Expenses

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

8 Oct 2001

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