Private ruling: Accommodation and meals
Published: May 2014
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Are you entitled to a deduction for accommodation and meal expenses? | A1: No.


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. 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 established a second residence at a location close to where you were posted to. It is not relevant when considering the deductibility of expenses that an assessable allowance was paid to you. Allowances paid in order to compensate a person for the inconvenience of having to live in another location remain assessable. However the receipt of these allowances does not automatically entitle a person to a deduction for expenditure incurred in relation to the allowances. Your accommodation and meal expenses are considered to be of a private and domestic nature. Accordingly, a deduction for these expenses is not allowable.

Relevant facts: You were posted away from your family home and rented accommodation. | You were eligible for fully subsidised accommodation and reunion travel, food and utilities and a separation allowance. | Instead of paying the landlord directly, your employer paid the allowances to you. | You were relocated for over 100 days during the 2012-13 financial year.