Private ruling: Work related accommodation expenses
Date of advice: 4 August 2025
Published: 7 October 2025
Ruling period: Year ended 30 June 20YY
Date scheme commenced: DD MM 20YY

Ruling: Q1: Can you claim a deduction under section 8-1 of the Income Tax Assessment Act 1997 for accommodation expenses incurred the night before a rostered work period? | A1: No.

Relevant facts and circumstances: You are a worker for X who is employed on a temporary contract basis with X. Your place of residence is in X XX, XX. You were offered a temporary Contract as X with X where the principal place of work is in X which had commenced on DD MM 20YY and anticipated to last until DD MM 20YY. The contract offer letter issued by X has specifically stated the following • Occupational Health and Safety. That employer is committed to provide a safe and healthy work environment. • Travel and Accommodation Documentation. The employee must submit original travel and accommodation documents for any employer-or-client-paid or reimbursed expenses. • Accommodation. It will be provided to the employee in accordance with the client's requirements and located in a manner deemed appropriate for the performance, as agreed by the client. A letter from X states that you are usually required to travel to and be present in X the day prior to the commencement of each rostered period, in recognition of the demanding work schedule involving X-hour shift across an X days-on, X days-off roster. Your employer covers flights and accommodation during the rostered period but does not pay for the night before. Below are the details of the travel itinerary and the protocols to be followed during the trip; • You leave home at X on Day X and drive your personal vehicle to the airport, which is approximately a X journey and park your car at the airport. • You check in at the airport and board your flight around X. You aim to book the same airline and flight each time to maintain consistency in your travel routine. • You typically arrive in X around X and take an Uber to a nearby hotel, which you book independently (the accommodation is near the X airport). • At X on Day X, an Uber collects you and takes you to the airport for your chartered flight. • You are required to wear full PPE and workwear during the chartered flight from X to the worksite. • An employer-arranged bus picks you up from the airport, takes you to the canteen to collect a crib meal, and then drops you off at the worksite, where you finish at X. Your employer's Fatigue Management Procedure states that individuals are expected to arrive at work sufficiently rested to be able to safely perform their duties for the duration of the work period. Individuals must: • Ensure they obtain adequate sleep to prevent fatigue. • Ensure their activities outside working hours do not compromise their capacity to work safely and effectively. • Exercise particular care to prevent fatigue at critical times such as returning to site, shift change and commuting.

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

Reasons for decision: Summary: Can you claim a tax deduction under section 8-1 of the Income Tax Assessment Act 1997 for accommodation expenses incurred the night before a rostered work period? | Summary: The accommodation expenses incurred the night before a rostered work period, even when required by the employer to ensure adequate rest before a X-hour shift, are not deductible under section 8-1 of the ITAA 1997. These expenses are considered private and domestic in nature, and not sufficiently connected to the performance of income-producing activities. | Detailed Reasoning - Detailed reasoning: Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 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. Paragraph 17 of Taxation Ruling TR 2021/4 Income tax and fringe benefits tax: employees: accommodation and food and drink expenses, travel allowances, and living-away-from-home allowances(TR 2021/4)clarifies, 'The occasion of the outgoing on accommodation and food and drink must be found in the employee's income-producing activities, rather than in the personal circumstances of where the employee lives'. In this case, you are required by your employer to travel the day before a rostered work period to ensure adequate rest before commencing a X-hour shift. However, this travel is not directly linked to the performance of work duties. Instead, it is related to personal readiness, which is a private circumstance. Paragraph 25 of TR 2021/4 states that, "An employee cannot deduct accommodation and food and drink expenses they have incurred where, due to their personal circumstances, they live far away from where they gain or produce their assessable income. These expenses are living expenses and are not deductible (see paragraphs 9, 14 and 15 of the Ruling). As such, the accommodation expenses incurred do not meet the criteria for deductible travel, are classified as living expenses, and are considered private in nature, as they relate to rest and not the actual performance of work duties. Paragraph 26 of TR 2021/4 further states that, "In these circumstances, the expenses are incurred because the employee's personal circumstances are such that they keep their usual residence, rather than relocate. The occasion of the outgoing for accommodation and food and drink is not found in the employee's income-producing activities, meaning that these expenses are not incurred in the course of gaining or producing the employee's assessable income. They are private and domestic in nature". In John Holland Group Pty Ltd v Commissioner of Taxation [2015] FCAFC 82, the Full Federal Court found that the employees' arrival at X airport from their homes was not travel in the employees' derivation of income, and any expenditure incurred by the employees from their homes to X airport would not have been deductible, but , the employees were relevantly at work from arrival at X airport and were deriving income from that point. It was also noted by the Full Court that the distance between an employee's home and place of work is not sufficient to make deductible the expense of travel from one place to the other. The criteria for deductibility is not that there is a great distance to travel from home to work but that the travel is a part of the employment. In your case, the accommodation expenses are incurred to enable you to stay in the proximity of your work location and are a prerequisite to the earning of assessable income. Expenditure on your accommodation is not deductible, even though the expenditure has a causal connection with the earning of income. The expenditure is inherently of a private or domestic nature and not incurred in gaining or producing your assessable income. Therefore, no deduction is allowable under section 8-1 of the ITAA 1997 for your accommodation expenses.