WFH costs including car travel – when is home a place of work?

A recent income tax decision may have fringe benefits tax (‘FBT’) implications for employers and employees affected by the COVID-19 pandemic lock down rules and other work from home scenarios.

The decision in Hall v FC of T [2025] ARTA 600 concerned whether a taxpayer, an employee sports presenter and producer for the Australian Broadcasting Corporation (ABC), could deduct certain home office and car expenses in the 2020–2021 tax year under the Income Tax Assessment Act 1997 (ITAA 1997).

It should be noted the decision has been appealed by the ATO.

Facts

On relocating to Melbourne with his wife in June 2020, the taxpayer rented a 2-bedroom apartment in his own name. The second bedroom was to be used as a place for him to work from home. Prior to moving to Melbourne, the taxpayer was advised by his manager that he would need to work from home.

During the relevant income year, Melbourne was subject to mandatory lockdowns ordered by the Victorian Chief Health Officer due to the COVID-19 pandemic. The taxpayer worked at home for part of his duties due to these lockdowns and subsequent employer directions.

The taxpayer’s role with the ABC had 2 quite distinct parts:

• ABC Sport Digital Radio station (Digital Role), which comprised 75% of his employment related duties; and
• producing ABC live sports broadcasts (Live Role), which comprised the remainder of his employment-related duties. The Live Role could only be undertaken at his employer’s premises in Southbank (Southbank Studios).

During the relevant income year, the restrictions imposed by the Victorian Chief Health Officer and his employer prevented him from attending his usual place of employment (Southbank Studios) to perform the Digital Role. He was only allowed to attend the Southbank Studios to undertake the Live Role.

The taxpayer’s usual work week was from Thursday to Monday. His general pattern of work was a mix of either:

• solely performing his duties at home (Digital Role)
• commencing his Digital Role duties at home and then travelling to the Southbank Studios to undertake his Live Role duties, or
• a variety of the 2 roles depending on the sporting season.

The taxpayer asserted that he undertook his Digital Role from a laptop in the second bedroom of his rented apartment. This room was solely used for this purpose as he needed a quiet place to work from. The room was only sparsely furnished, which included a small desk, a dining chair and a bookcase. There was nothing to separate or distinguish that space from the rest of the apartment.

The taxpayer drove from his home to the Southbank Studios in his private car to undertake his Live Role.

To support his claims for a deduction for occupancy expenses (representing a portion of his rent attributable to the home office space) and car expenses for travel between his home and the employer’s premises, the taxpayer contended that:

• it was beyond his control where he worked, and he had to do the majority of his work from home; and
• he could only perform part of his employee duties at the employer’s premises.

The Decision

The Administrative Review Tribunal (ART) held that the taxpayer was entitled to deductions for occupation expenses (a proportion of rent on a residential property referable to a home office) and for car expenses (for travel from his home to his employer’s workplace and back) on the basis that for the 2020-2021 income year, as result of the Victorian Government-imposed restrictions and those of his employer, the second bedroom was the taxpayer’s main workplace for that year and he was entitled to a deduction for occupancy expenses.

In relation to his car expenses, the ART accepted that the taxpayer had kept reasonable records to base his claim on and had commenced his work on the relevant days from his home prior to travelling to the Southbank Studio (or another venue) and back home. As such, his claimed car expenses were ‘on work’ and therefore deductible.

Below is a link to the ATO’s Interim Decision Impact Statement on the case:

https://www.ato.gov.au/law/view/document?DocID=LIT/ICD/2022/8986/00001&PiT=99991231235958

FBT Implications?

From a FBT perspective, the decision raises some interesting issues:

1. Employers and employees impacted by strict lock down conditions may similarly be able to mount a case that such costs are ‘otherwise deductible’ in relation to occupancy costs or as work related car travel (being business trips for log book purposes) where there was no other workplace provided and an area of the employee’s home was set aside exclusively, or mainly, as a place of work or base of operations. Where an employer has met or reimbursed an employee’s costs or log book trips have been recorded as private travel and not business travel, this may allow previous treatment to be re-considered; and/or
2. Where the specifics of an employment arrangement dictate the employee is not provided with a workplace such that their home becomes their workplace (as opposed to for example, works from home as a matter of convenience) the potential of the ‘otherwise deductible’ rule applying or car trips being re-classified as ‘business’ should also be re-considered.

Prior year FBT returns may also be able to be amended.

We note that even if the standard 3-year amendment period has expired, the Commissioner has the discretion to allow a further period of time within which to object against an FBT assessment.

As noted previously, unfortunately the decision has been appealed and so employers will need to await the appeal outcome before deciding any action plan. Of course we will update TaxEd members as soon as we become aware of the appeal outcome.

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This article provides a general summary of the subject covered as at the date it is published. It cannot be relied upon in relation to any specific instance. TaxEd Pty Ltd and any person connected with its production disclaim any liability in connection with any use. It is not intended to be, nor should it be relied upon as, a substitute for professional advice.