Private ruling: Travel expenses
Published: February 2015
Ruling period: Income year ended 30 June 2014 | Income year ended 30 June 2015 | Income year ended 30 June 2016
Date scheme commenced: 1 November 2013

Ruling: Q1: Are your travel and accommodation expenses deductible under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: No

Relevant facts and circumstances: Your previous employment was terminated in x. You started looking for suitable work in X. In x, a company offered you a Y based job for a period of two years. You accepted the job as you could not find any suitable work in X. You work on a fly in fly out basis because you did not want to relocate as the job is not permanent. Your employer has not reimbursed you or paid any of travel and accommodation costs.

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) deals with general deductions and allows a deduction for all losses or outgoings to the extent to which they are incurred in gaining or producing assessable income, except to the extent that they are outgoings of a capital, private or domestic nature. Generally the expenses of travel to and from work are not deductible. This is either because such expenditure is private in nature, or because it is not an expense incurred in gaining or producing assessable income. The case of Lunney & Hayley v. Federal Commissioner of Taxation (1958) 100 CLR 478; (1958) 7 AITR 166; (1958) 11 ATD 404 settled the principle that travel to and from work is ordinarily not deductible. The Full High Court held that costs incurred by a taxpayer in travelling to the place where they work are expenses incurred in order to enable them to earn income but are not expenses incurred in the course of earning that income. The travel is considered to be of an essentially private or domestic nature. While we recognise your particular circumstances, the distance of the travel or the reason behind needing to travel that distance to and from work do not change the character of the expense. The cost of your travel between home and work is private or domestic in nature and, as such, no deduction for travel is allowable. | Detailed Reasoning - Reasonable amounts in TD 2013/16: The amounts in TD 2013/16 are a substantiation exception, they essentially allow you to claim deductions without having to substantiate. The expenses are still required to be deductible and incurred. Further you are required to receive a bona-fide allowance to access the substantiation exception.