Private ruling: Work related expenses
Date of advice: 7 July 2020
Published: August 2020
Ruling period: Year ended 30 June 2020
Date scheme commenced: 1 July 2019

Ruling: Q1: Are the expenses incurred while travelling to your employment an allowable deduction? | A1: No.

Relevant facts and circumstances: You work as a locum in your industry which is your sole source of income. You are employed via a locum agency. You work in various places which are in mostly rural locations. The contracts you work under are for a period of a few days to two weeks at a time. You are usually paid via the locum agency. The cost of your flights, car expenses and accommodation are paid by the organisations that offer the contracts. The costs you incur are for the travel to and from the airport, food and other incidentals related to travel and living expenses.

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 all lossesand 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. Generally, accommodation, meal and incidental expenses are private in nature and are not deductible. In Lunney v. FC of T (1958) 100 CLR 478 ( Lunney's Case ) the Full High Court laid down the principle that for a deduction to be allowable it is not enough for the expenditure to be an essential prerequisite to the derivation of assessable income. Firstly, although certain expenditure must be incurred in order to be able to derive assessable income, in that unless one arrives at work it is not possible to derive income, it does not necessarily mean that the expenditure is incidental and relevant to the derivation of assessable income or that it was necessarily incurred in the course of gaining or producing assessable income. It is a prerequisite to the earning of assessable income rather than being incurred in the course of gaining that income. The second reason is that the essential character of the expenditure is of a private or domestic nature, relating to the personal and living expenses as part of the taxpayer's choice of where to live, in choosing to live away from and at what distance from work. The policy of the Commissioner of Taxation is to allow a deduction where all the particular facts which give rise to a deduction in Vogt 75 ATC 4073; Collings 76 ATC 4254; Ballesty 77 ATC 4181 or Wiener 78 ATC 4006 are present. The general policy is that the expenses of travel between home and work are not deductible are contained in Taxation Ruling 2017/D6. The facts of this case are comparable with Lunney in that for people pursuing a profession, expenses of travelling in habitually going from home to a regular place of employment are not deductible. In your case you are not able to claim as a deduction the expenses related to your travel and accommodation to and from your locum work as they are incurred in order to put you in a position to carry out the work. The cost of your meals are not an allowable deduction. When meal expenses are incurred in living away from home for work, they are preliminary to work and are not deductible as they are private and domestic in nature.