Home to Work Travel

Normally home to work travel for an employee is not tax deductible as it is deemed private travel.

It is possible for an employer to make the employee’s home to work travel tax deductible for the employer if the following two requirements are met:

• The employer provides the employee with a work motor vehicle that is a taxi, panel van or utility. The utility can be two or four door, and the carrying capacity is irrelevant.

• The employee only uses the motor vehicle for travelling to and from work, and for work related travel. Any private use of the motor vehicle by the employee is minor, infrequent and irregular.

If the above two requirements are met the employer can claim a 100% tax deduction for the motor vehicle expenses incurred and also have no fringe benefits tax liability. In addition, this motor vehicle benefit is tax free to the employee as well.

An example of the tax savings in practice:

Tom operates an accounting practice and uses the company motor vehicle to visit clients as well as travel to and from work.

As the company motor vehicle is a four door utility, Tom’s travel from home to the office and return is deemed business use and tax deductible. The actual tax savings by making the travel to and from home tax deductible will depend on the distances travelled daily to work of course, but should be several thousand dollars per year.