The Australian Tax Office's latest ruling on work-related travel deductions ignores the realities of employees who work from home because they are expected to be on call outside of normal working hours.
The draft ruling also bans individuals from claiming travel expenses from home to work, even if the employee is on-call when they are travelling and required to respond to work emails, phone calls and texts.
The draft ruling gives an example of "Mischa", an employee who works in the Geelong CBD, lives 30 kilometres from the office and travels between home and work by train.
The ruling says her travel from home and the office is not work travel and therefore not deductible for income tax returns or fringe benefits tax, even though she is paid to be "on-call" to manage work problems out of ordinary work hours and does work tasks at home and on the way to work.
"The ruling probably doesn't deal very well with the working from home situation. In 2017, employees are operating on an agile working basis and in some circumstances employers require employees to work from home," KPMG partner Hayley Lock said.
According to the ruling, she cannot claim the travel expenses because she has chosen to start work at home rather than her regular location and the trip between her home and the office is a normal daily journey, "reflecting her private choice about where to live".
The ruling comes as tax commissioner Chris Jordan has vowed to crack down on work expense rorts. According to the latest data, taxpayers collectively claimed $2 billion in work-related travel for income tax deductions in the 2015 financial year.
The ruling also comes as companies are encouraging hot desking and desk sharing and planning to reduce average space per employee to less than 9.3 square metres.
Ms Lock said the ruling could also mean higher fringe benefits tax for executives who live in one city but are paid to work in another.
For example, an executive who lives in Melbourne on the weekend with his or her family, but who flies to Sydney from Monday to Friday on company funds and lives in accommodation paid for by the company will be liable for fringe benefits tax under the ruling, she said.
