Travel costs for regular Fly In, Fly Out (FIFO) mine workers have been found to be tax deductible to the workers that incurred them, according to a landmark judgment from the Full Federal Court.
Creevey Russell Lawyers Principal Stuart O’Neill said the case of John Holland Group Pty Ltd v Commissioner of Taxation provides guidance on when work travel costs are considered part of employment and therefore deductible.
“The tax treatment of travel costs between home and work is generally non-deductible because such costs are considered to be incurred prior to starting work rather than being incurred to earn assessable income,” Mr O’Neill said.
“This is contrasted with travel costs that intrinsically form part of an employee’s duties, which are deductible to the employee who incurs them such as a travelling salesperson.
In John Holland’s case, workers were regularly required to fly from Perth to Geraldton to work for a few days, then fly back home to Perth.
“The Court held that their travel costs formed part of their employment and were therefore deductible,” Mr O’Neill said.
He said among the factors taken into account in the judgment was that John Holland employees were required to report to work at the Perth Airport and their employment duties continued until they returned back at the Perth Airport and the end of their stint.
“Employees were subject to the employer’s policies and procedures in relation to the conduct while travelling; and the project location was so remote that travel was considered a necessary part of the engagement of the workers,” Mr O’Neill said.
“By finding that the travel costs were incurred as part of their employment, the employer was able to reduce the taxable value of the travel costs for Fringe Benefits Tax (FBT) purposes under what is known as the ‘otherwise deductible rule.”