Private ruling: Work related expenses – Accommodation, travel and meals.
Date of advice: 4 July 2017
Published: November 2017
Ruling period: Year ending 30 June 20XX
Date scheme commenced: 01 July 20XX

Ruling: Q1: Are your accommodation, travel, food and incidental expenses for time spent in Country A during an internship deductable? | A1: No.

Relevant facts and circumstances: You are a resident of Australia for taxation purposes. You were offered a short contract internship based in Country A with Employer B during December 20XX to February 20XX. During your internship you travelled to Country B in January 20XX and lived there for approximately a month and all work related expenses were paid for by your employer. After the period in Country B you returned to Country A to complete the remainder of the internship and then returned to Australia.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1

Reasons for decision: Summary: Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for all outgoings to the extent to which they are incurred in gaining or producing assessable income, or are necessarily incurred in carrying on a business for that purpose. However, a deduction is not allowable for outgoings that are of a capital, private or domestic nature. In considering the deductibility of travel expenses a distinction is made between travel to work and travel on work. Where the duties of the job require a taxpayer to travel in the course of undertaking their work duties, the taxpayer's expenses can be deducted. | Detailed Reasoning - Accommodation expenses: As with the general rules regarding travel between home and work, accommodation and living expenses are normally private or domestic in character. The occasion of the outgoing may give the expenditure the essential character of an income producing expense. An example is where the expenditure is incurred while away from home overnight on a work related activity. Where a taxpayer is away from home overnight in connection with an income producing activity, accommodation expenses are generally deductible. | Detailed Reasoning - Application to your circumstances: You have advised us that you were based in Country A for the duration of the internship and the travel to Country B and subsequent accommodation costs were paid for by your employer. In accepting a contract internship overseas the travel to Country A is considered travel to work which occurs prior to commencement of the internship rather than a fundamental part of your income producing activities. The essential nature of the costs related to your accommodation, meals and other incidental costs were not directly related to your internship and therefore remain private in nature. Based on these facts, you cannot claim these costs under section 8-1 of the ITAA 1997.