If you fly in, fly out for work, or any of your colleagues do, there’s a persistent and costly myth doing the rounds: that part of your home-to-work travel is automatically tax deductible because of a well-known court case. A recent Tribunal decision has shown just how badly that assumption can backfire, denying the vast majority of one taxpayer's travel claims and serving as a clear warning for anyone in a similar position.

‍What this means in practice

A few clear, practical takeaways emerge from recent court cases for anyone working FIFO orsimilar arrangements:

1. Travel while off duty is almost never deductible

Regardless of distance orinconvenience. Factors that support a travel claim being genuinely “on work” include:

• Your employer specifically directs the travel;
• You’re already on duty at or before the time of travel;
• You’re being paid for that specific time; and;
• You're under your employer’s direction and control while travelling.

No single factor decides it, the ATO and Tribunal look at the whole picture, with your actual roster terms (when does “on-duty” legally start and stop?) doing most of the work.

2. Distance alone proves nothing

‍The fact your work site is genuinely remote, that local labour isn’t available, or that your trip takes hours, doesn’t make the travel “on work.” It’s still private travel to a far-away regular workplace, just a longer version of an ordinary commute.

3. Doing a bit of work while travelling doesn’t help your claim

If a task could be done from anywhere, doing it from a hotel room mid-trip doesn’t transform that leg of your journey into deductible travel.

4. Accommodation and meal claims need John Holland-level facts to succeed at all

‍Even where transport might be arguable, overnight accommodation and meal costs at or near your work site are only deductible where you’re genuinely travelling “on work”(rostered, paid, directed) and you’re not effectively “living away from home”at that location, which becomes harder to argue the longer and more routine your FIFO arrangement becomes.

The one genuine exception worth knowing about

There's a separate, narrower exception that can help some employees: the “geographically distant workplaces” rule. If you're required, with genuine regularity, to workfor the same employer at two or more locations that are meaningfully far apart, not as a one-off secondment, but as an ongoing feature of your role, travel to the more distant location can be deductible.

For example, Ted works Monday to Wednesday at his employer’s Sydney CBD office, then drives to the NSW North Coast each Thursday to work from his employer’s office there until Friday evening, returning home that night. Because this is a genuine, regular, dual-location working pattern (not a secondment, and not simply his personal choice about where to live), Ted can deduct his travel to the NorthCoast office.

The key distinguishing features from a FIFO arrangement: Ted has two genuine, concurrent regular workplaces for the same role, the travel is a necessary consequence of his duties rather than a function of where he chooses to live, and it isn't simply a long commute to his one and only workplace.

If you'd like to understand what you can and can't claim, reach out to us today

If you’re a FIFO worker (or you employ them), it’s worth taking a hard look at exactly what your roster terms say about when “on duty” legally begins and ends because that single detail is doing most of the work in determining what, if anything, is deductible. Assuming John Holland’s case protects part of your travel, without your own facts genuinely matching that case, is a real and growing audit risk based on these recent decisions.

This article is general in nature and does not constitute tax advice. It discusses the Full Federal Court's decisions in John Holland’s case and Bechtel's case, the Tribunal’s decision in the CBRX case, and ATO guidance in TR 2021/1 and TR2021/4. Speak with us about how these principles apply to your specific circumstances.