John Holland Group Pty Ltd vs Federal Commissioner of Taxation [2015] FCAFC 82

A long long time ago, in a galaxy far far away, a man named Mr Lunney attempted to deduct the cost of his train tickets to and from work each day from his assessable income for tax purposes, and was disallowed by the High Court because these costs amounted to "living expenses".  The majority of the High Court ruled that once Mr Lunney reached his company's place of work, further travel expenses incurred on that day between different places of work was deductible as it directly related to the production of his assessable income.

The question posed in this case amounts to weather or not a rail maintenance worker can claim that his work 'begins at Perth airport', and hence can deduct the cost of plane tickets to and from work-sites.  If so, the ITAA 1997 provides that John Holland Group can deduct the cost of plane tickets which would be deductible in the hands of an employee.  The income of John Holland Group employees amounts to consideration paid to him for work performed according to a contract with John Holland Group, which specifies that he begins getting paid on arrival at Perth airport.  Was this enough to convince the Full Federal Court that gaining his assessable income included flying to a work-site?  Yes.

"The cost of travel for which Mr Lunney claimed a deduction, and which the court did not allow, was not the travel from the company’s office at No. 11 Darling Harbour to the various ports to carry out his work, but from his domestic residence in Narraweena to his employer’s office at No. 11 Darling Harbour. Counsel for John Holland Group and John Holland contended that the equivalent outgoing in this case (which the employees would not be able to deduct) would be the cost of travelling from the employees’ individual residences to Perth airport, but that the employees’ arrival at Perth airport was equivalent to the arrival of Mr Lunney at the office of his employer at No. 11 Darling Harbour. In other words that arrival by the employees at Perth airport was the employees’ arrival at work from which they then travelled to Geraldton to undertake other tasks. The employees were submitted to be “in” their employment from the moment of their arrival at Perth airport and were not travelling “to” their employment at Geraldton. In contrast, the Commissioner contended that the employees were employed, and paid, to undertake activities at Geraldton and that their employment did not include their travel from Perth airport to Geraldton."  (p 53)

"Travelling from Perth airport to Geraldton was part of the employment of those employees. Each of the employees commenced their “rostered on” duties on arrival at Perth airport and took the flights because they were directed to do so and were required to do so as part of their employment obligations. The terms of employment of the “workforce” employees provided that the employees commenced their “rostered on” employment duties from their time of arrival at Perth airport."  (p 58)

"In my view, there is no reason why Perth Airport should not be a point at which the employees duties and remuneration for performance of those duties both commences and ceases. The contract of employment so provides. The fact that Perth Airport is not an area or premises owned or leased by John Holland, is irrelevant. In this respect, there is no difference between Perth Airport and No 11 Darling Harbour."  (p 44)

"From the time the John Holland employees, both Workforce and Staff, checked in at Perth Airport they were travelling in the course of their employment, subject to the directions of John Holland and being paid for it. That situation subsisted until they disembarked the plane at Perth Airport at the end of their rostered-on work time. At no time during that period were they travelling to work; they were travelling on work and the cost of doing so under the statutory hypothesis in s 52(1) FBTAA would be an allowable deduction to them under s 81 of the ITAA 1997."  (p 45)

"The case under consideration in Lunney was of “ordinary people” paying fares “to enable them to go day by day to their regular place of employment or business and back to their homes”; it was not about the specific demands occasioned by employment that required, as part of the employment, travel to a remote place. The employees in this case are required to travel as part of their employment to a remote location. Accordingly, the appeal should be allowed."  (p 64)

http://www.austlii.edu.au/au/cases/cth/FCAFC/2015/82.html