Private ruling: Work related travel expenses
Date of advice: 3 November 2017
Published: April 2018
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Am I entitled to claim travel expenses incurred in unreimbursed travel related expenses incurred while undertaking a secondment in Australia? | A1: No

Relevant facts and circumstances: You are an employee of an overseas resident company which has negotiated an agreement for you to undertake a short-term secondment of YY days in Australia where you will provide services to an Australian company. You entered Australian on a temporary work visa. Your normal employment arrangements with your overseas employer will continue while you undertake this secondment including salary and normal allowances. You did not bring any family members to join you in Australia and will stay at accommodation supplied by the Australian company. You retained your permanent place of abode in Country A and are obliged to return there after the secondment to continue your employment with your current employer. You intend to lodge Australian taxation return(s) and will assert non-resident status in those return(s). You will declare your normal salary and any allowance(s) paid during the secondment. You have incurred various expenses during the secondment such as daily meals, mobile phone costs, publications and miscellaneous minor equipment purchases such as various adaptors to allow you to operate your equipment while in 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 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. Accommodation expenses are ordinarily not deductible as they are private and domestic in nature. An exception is where a taxpayer is travelling in the course of performing their work duties, for example, an interstate truck driver who travels away from home overnight. In these types of cases, the accommodation, meal and incidental expenses incurred while the taxpayer is travelling are incidental to the proper carrying out of their employment function and cease to be of a private and domestic nature. However, it is important to distinguish taxpayers who travel in the course of carrying out their employment duties from taxpayers who are living away from home. In the latter case, the taxpayer moves and takes up temporary residence away from their usual place of residence so as to be able to carry out employment duties for a time at the new (but temporary) workplace. For taxpayers who are living away from home, there is a change of job location and a temporary change of residence to a place at or near that location. For example, an employee who is transferred for three months to an office in another city and takes up temporary accommodation in that city whilst maintaining their own usual place of residence would be in this category. In this type of situation, the accommodation, meal and incidental 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. Taxation Ruling TR 2017/D6 discusses the difference between travelling on work and living away from home for work. It states that – 16. … employee costs of relocating for work and living away from home are preliminary to the work and are not deductible. also 48. Relocation travel involves travel undertaken in relocating for work. Expenses incurred in undertaking this travel are not deductible. also 72. Whether an employee is living away from home depends on the facts of each case. Relevant factors are: (a) the time spent working away from home (b) whether the employee has a usual place of residence at a previous location (c) the nature of the accommodation, and (d) whether the employee is, or can be, accompanied by family or visited by family or friends. | Detailed Reasoning - Time spent working away from home: 73. The longer an employee spends working away from home, the more likely that the employee is living away from home. Whether an employee is considered to be travelling in performing their duties or living away from home depends on the circumstances. The time period is just one factor. In your case, you were transferred to Australia for XX days to undertake a secondment. It is considered that for this period you were living away from home for work rather than travelling on work. TR 2017/D6 also contains the following – 79. An employee may live and make their home in any kind of accommodation, including huts and caravans. If the accommodation has amenities common in a home, such as an equipped kitchen and laundry, this would support the view that the employee is living away from home. 80. Where an employee works away from home for a considerable period and, for that period, stays in settled accommodation (such as a house, unit or apartment), this would support the view that they are living away from home. Given that you will be staying in a home provided by the Australian company suggests you are staying in settled accommodation and, if so, this supports the view that you are living away from home. It is considered that the circumstances disclosed in your application do not carry sufficient weight for the expenses to be characterised as deductible. Accordingly it is not considered that travel was a part of your actual work duties. Rather, your work location had changed and you were required to take up temporary residence near your new work location. Therefore, your accommodation expenses are considered to retain their character as living expenses. As these expenses are private and domestic in nature, a deduction is not allowable.