We are looking at the option of providing ongoing working from home (WFH) arrangements to our corporate staff based on a 3 days in the office/2 days at home, or one week in the office/one week at home cycle.
If it is the employee’s choice to work from home for some of the time, then is it correct to say that travel from home to the usual office is private in nature? Would this differ if the travel was from home to another work location that is not the usual work location (e.g. for a meeting at a particular work place)?
If it is not the employee’s choice to work from home (e.g. forced lockdown restrictions or where there is not enough office capacity) – would travel between home and the usual office be business travel? Would this differ if the travel was from home to another work location that is not the usual work location (e.g. for a meeting at a particular work place)?
The following paragraphs are taken from Taxation Ruling TR 2021/1:
75. The mere fact that an employee undertakes some work duties at home at their convenience does not make expenses of travel to their regular place of work deductible. This is because the travel itself is not explained by the employment duties and is thus not part of the employment. This treatment will not change even if the travel occurs during work hours. Moreover, travel from home to a regular place of work in this situation is still explained by where an employee chooses to live in relation to their regular place of work, which is a private or domestic matter. It does not matter whether the work at home occurs informally or as part of a regular arrangement with the employer.
Example 12 – travel between home and work location when working at home for convenience – transport expenses not deductible
76. Nico works as a travel agent. As he has a small child, his employer allows him to work from home rather than in the office. Nico has a home office that he uses exclusively for work. At least twice per month, Nico is required to attend the office for regular staff meetings. Nico’s home office is not a place of business because Nico’s employer would normally accommodate him at their office. At Nico’s request they have agreed to let him work from home so that he can work at whatever time is convenient for him within an extended bandwidth. The transport expenses relating to travel from Nico’s home to the office are not incurred in gaining or producing his assessable income and are private in nature. Nico works from home for his mere convenience so he can look after his small child and work flexible hours. Accordingly, his travel from home to his regular place of work at the office is not explained by his work duties, that is, the travel is not relevant to the practical demands of carrying out Nico’s work duties. It is a consequence of Nico’s choice to work from home rather than in the office. Nico is not entitled to claim a deduction for his transport expenses.
77. The fact that the employee might choose to undertake their duties at a location other than home or a regular place of work at their convenience does not make the cost of travel to that place deductible. For example, a person working remotely cannot deduct the cost of travel to a resort that they choose to work from. Such expenses are not incurred in gaining or producing an employee’s assessable income and are private in nature.
78. Where an employee has an area of their home set aside as their sole base of operations because their employer provides them with no other location to work from, that area of their home becomes their regular place of work. Such an employee will be entitled to a deduction for expenditure incurred in travelling to perform their duties, such as travel to a client’s premises.
Based on the above paragraphs, working from home a few days a week at the employee’s choice will not make the travel to the usual workplace/office deductible, however, travel to a place that is not the usual workplace/office (i.e. an alternative workplace) should be deductible as per normal guidelines.
If it is not the employee’s choice to work from home due to forced lockdowns or no workspace is provided for them by the employer, the argument is that the home has become their base of operations as per paragraph 78 above. Travel from their base of operations to the office or alternative workplaces would then appear to be deductible travel.