Private ruling: Deduction for living-away-from-home expenses
Published: October 2013
Ruling period: Year ended 30 June 2014 | Year ended 30 June 2015 | Year ended 30 June 2016
Date scheme commenced: 1 July 2013

Ruling: Q1: Are you entitled to claim a deduction for living away from home expenses that you incur? | A1: No.


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 allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income, except where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income. Living and accommodation expenses are ordinarily not deductible as they are private and domestic in nature. Where you are living away from home for work purposes, you move and take up temporary residence away from your usual place of residence so as to be able to carry out employment duties for a time at your workplace. In this type of situation, the living and accommodation expenses incurred while the person is living away from their usual home do not cease to be private and domestic in nature. That is, they are considered to retain their character as living expenses rather than becoming work related expenses. In your case, you are sometimes working and living in XX which is away from your home in XXX. You take up temporary residence near your work location so that you will be in a position to earn your income. It is the distance between your home and your work is what necessitates your having to stay away from home. The distance of travel does not change the private nature of the expense. A deduction is not allowed for the cost of travel between home and your normal workplace as it is generally considered to be a private expense. Travel between home and work is generally incurred to put the employee in a position to perform duties, rather than in performance of those duties (see paragraph 77 of Taxation Ruling TR 95/34). Certain expenditure is incurred in order to be in a position to be able to derive assessable income, for example unless a person arrives at work it is not possible to derive income. This does not mean that the expenditure is incurred in the course of gaining or producing assessable income. Rather, the expenses are incurred to enable the taxpayer to commence income earning activities ( Lunney & Hayley v. Federal Commissioner of Taxation (1958) 100 CLR 478; (1958) 11 ATD 404; (1958) 7 AITR 166 (Lunney's Case)). In FC of T v. Toms 89 ATC 4373; (1989) 20 ATR 466 the Federal Court disallowed a forest worker's deduction for the cost of maintaining a caravan and other living expenses. The taxpayer incurred the expenses in providing temporary accommodation at the base camp because the taxpayer had chosen to reside at a place far from the worksite. These expenses were dictated not by work but by private considerations as in your situation. The travel expenses are a prerequisite to the earning of assessable income. They are of a private nature and are incurred as a necessary consequence of living in one place and working in another ( Lunney's Case ). Accordingly, your living and accommodation expenses are considered to be of a private or domestic nature. These expenses do not have the character of an outgoing incurred in gaining assessable income, therefore, are not deductible.

Relevant facts: You live in XXX and work for part of your week in XX at your employers premises. Due to the distance involved you stay overnight in XX rather than travel home. | You incur living and accommodation expenses when working in XX and your employer does not reimburse you for these costs. | There are other days that you travel to visit clients. When travelling to visit clients your employer pays for your expenses.