Private ruling: Work Related Expense - rent, electricity and gas
Date of advice: 10 November 2015
Published: November 2015
Ruling period: Year ended 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Are you entitled to claim a deduction for any portion of the expenses incurred for rent, electricity and gas related to your onsite accommodation? | A1: No.

Relevant facts and circumstances: You are employed as a Business and Operations Manager of an apartment complex. It is a condition of your employment that you live onsite. You are required to be available by your employer in order to supply support/assistance to the tenants of the building. You have incurred expenses for rent, electricity and gas while living on site.

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 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. The fact that income cannot be earned unless certain expenses are necessarily incurred is not determinative of deductibility. As a general rule, the cost of accommodation is not tax deductible, as it is essentially a living expense which is considered to be a private or domestic outgoing ( Federal Commissioner of Taxation v. Green (1950) 81 CLR 313; (1950) 9 ATD 142; (1950) 4 AITR 471). In your case, you live in rented accommodation in the building where you work. Even though it is a requirement as part of your employment agreement that you live on site, the essential character of the expenditure is of a private or domestic nature. The rent, electricity and gas expenses are a prerequisite to the earning of your assessable income and are not expenses incurred in the course of gaining or producing income. Therefore, you are not entitled to claim a deduction for any portion of these expenses under section 8-1 of the ITAA 1997.