Private ruling: Accommodation expenses
Published: August 2013
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Are you entitled to a deduction for accommodation expenses incurred in city B? | A1: No.

Relevant facts and circumstances: You work for a university in city B, however you generally work from your home office in city A. You regularly travel to city B for a number of days in a week for work purposes. You incur accommodation expenses while staying in city B.

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 a loss or an outgoing to the extent to which it is incurred in gaining or producing assessable income, except where the loss or outgoing is of a capital, private or domestic nature. In general, accommodation expenses are considered private expenses and consequently are not deductible. Court decisions and decisions of the Administrative Appeals Tribunal/Board of Review provide an independent view and confirm this. The Federal Court decision in FC of Taxation v. Toms 89 ATC 4373; (1989) 20 ATR 466, held that expenses incurred in relation to accommodation near the work place while maintaining a family residence in another location, were not an allowable deduction as they were considered to be private expenses. Although the expenditure must be incurred in order to put one in a position to be able to derive assessable income, it does not necessarily mean that the expenditure is incurred in the course of gaining or producing that income. Likewise in your case, the accommodation expenses are incurred to enable you to stay in the proximity of your work location in city B and are a prerequisite to the earning of assessable income, they are not expenses incurred in the course of gaining or producing your assessable income. Consequently you are not entitled to a deduction for accommodation expenses in city B under section 8-1 of the ITAA 1997.