Private ruling: Deductions for transport and accommodation expenses
Published: July 2012
Ruling period: Year ended 30 June 2013 | Year ended 30 June 2014 | Year ended 30 June 2015
Date scheme commenced: 1 July 2012

Ruling: Q1: Are you entitled to a deduction for the cost of travelling between your home and place of work? | A1: No. | Q2: Are you entitled to a deduction for accommodation costs incurred near your place of work? | A2: No.


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

Reasons for decision: Detailed Reasoning - Transport costs: 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 the course of gaining or producing assessable income, but are not allowable to the extent that they are of a capital, private or domestic nature. Taxation Ruling 1995/34 (TR 95/34) examines the deductibility of transport expenses for employees carrying out itinerant work. Transport expenses are outlined in paragraph 76 as including public transport fares and the running costs associated with using motor vehicles, motor cycles, bicycles, etc., for work-related travel, but not travel expenses such as accommodation or meals. At paragraph 77 of TR 95/34, it is provided that deductions are generally not allowable for the cost of transport by an employee between home and his or her normal work place as it is generally considered to be a private expense. The cost of travelling between home and work is generally incurred to put the employee in a position to perform duties of employment, rather than in the performance of those duties. Paragraph 8 of Taxation Ruling IT 2543 provides that there are exceptions to this rule, summarised as follows: · the taxpayer's home constitutes a place of employment and travel is between two places of employment or business; · the taxpayer's employment can be construed as having commenced before or at the time of leaving home; · the taxpayer has to transport by vehicle bulky equipment necessary for employment; · the taxpayer's employment is inherently of an itinerant nature (for example, if the taxpayer has no fixed place of work, travels continuously from one work site to another, or travel is a fundamental element of the work undertaken); · the taxpayer is required to break his or her normal journey to perform employment duties (other than including incidental duties such as collecting newspapers, mail, etc.) on the way from home to the usual place of employment, or from the place of employment to home. Your situation does not correspond with any of the above exceptions. It is considered that the cost of travel between your primary residence and your alternate dwelling at the work site will be private in nature, and thus a deduction for these expenses cannot be allowed under section 8-1 of the ITAA 1997. The fact that you receive a travel allowance does not change the private nature of the travel. | Detailed Reasoning - Accommodation costs: As a general rule, expenditure on meals and accommodation while working away from home is not allowed as a deduction. These costs are essentially 'living expenses' of a private or domestic nature. The fact that income cannot be earned unless certain expenses are necessarily incurred is not determinative of deductibility. Where it has been established that a property used to accommodate a taxpayer amounts to a second residence, the Courts and the Administrative Appeals Tribunal have consistently held that the essential character of the expenses incurred is of a private or domestic nature unconnected with income-producing activities and, therefore, the expenses are not deductible. The reasoning in these cases is that a taxpayer's choice to establish a residence is not dictated by travel needs, but by considerations of a private or domestic nature. It follows that the required connection between second residence expenses and a taxpayer's income-producing activities is absent. In FC of T v. Toms 89 ATC 4373; (1989) 20 ATR 466 the Federal Court disallowed a forest worker's deduction for the cost of maintaining a caravan and other living expenses. The taxpayer incurred the expenses in providing temporary accommodation at the base camp because the taxpayer had chosen to reside at a place far from the worksite. These expenses were dictated not by work but by private considerations. In your case, you have incurred accommodation costs at a location close to your workplace. Your accommodation expenses are considered to be of a private and domestic nature. Accordingly, a deduction for these expenses cannot be allowed under section 8-1 of the ITAA 1997.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Relevant facts: You intend to commence full-time permanent work as an employee. | The work site is several hours away from your principal residence. | You will be residing at a dwelling near the work site during the week. | You will incur accommodation costs to stay at this dwelling. | You will travel between this dwelling and your principal residence most weekends. | You receive a travel allowance from your employer in respect of this travel. | You carry out all of your work duties at one site, and do not transport any bulky items during your travel.