Private ruling: Work related expenses: accommodation
Date of advice: 19 February 2018
Published: June 2018
Ruling period: Year ended 30 June 20XX | Year ended 30 June 20YY
Date scheme commenced: Summer 20ZZ

Ruling: Q1: Are rental expenses incurred when your employer requires that you live on-site deductible? | A1: No

Relevant facts and circumstances: You are employed by a university as a residential college leader at their student accommodation. You are required to reside onsite to provide leadership and pastoral supervision of students. Your employer charges you rent for single-occupation furnished premises, three meals a day, room content insurance, cleaning of the room and Internet access. Your employer does not subsidise or reimburse your accommodation or food expenses. You have another address that you will return to when your contract is complete. You have specifically cited paragraphs from TR 2017/D6 You must be available for work during shifts on a regular basis by which you cannot leave the premises. You are required to be available on-call as and when required. You are also employed as a professional. You have been employed since Summer 20XX. You have worked as a non-resident tutor since Winter 20XX and have since progressed to the role of resident tutor which encompasses pastoral care. You are enrolled as a student on a full-time basis at a local University. You would normally commute to/from University to your home. You would otherwise maintain your residence as a home. You do not consider accommodation at the student accommodation as a home as otherwise you would return to your family home nearby when not required at the student accommodation. You unnecessarily incur rental expenses due to the duties of your position at the student accommodation as a direct result of your terms of employment and duties as a pastoral carer and tutor. Whenever present at the work site you are contractually obliged to provide ward and duty of care to students, and therefore the rental expenses are incurred in the course of earning your income. You maintain a business which is run from your home. You typically spend between 1 and 3 nights per week at the student accommodation as your contract requires a minimum of YYY hours of work distributed across the duration of the contract which runs for ZZ weeks. You are expected that you be present to provide pastoral care on teaching nights and also for formal dinners. You pay for accommodation whether you are working or not and your room is only occupied by you. It is left vacant when you are not on the premises. You pay $X per week which provides 3 meals per day, access to all facilities for study and recreation, gym membership, room content insurance, cleaning services and Wi-Fi access. The business you operate at home is that of a freelance professional.

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

Reasons for decision: Summary: An expense is deductible under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) if and to the extent to which it is incurred in gaining or producing your assessable income or in carrying on a business for that purpose. However you cannot claim a deduction for an expense that is of a capital, private or domestic nature. A deduction is only allowable if an expense: ● is actually incurred ● meets the deductibility tests ● satisfies the substantiation rules. Taxation Ruling TR 2017/D6 deals with deductibility of travel and accommodation expenses, it specifically states – ‘16. Similarly, employee costs of relocating for work and living away from home to work are preliminary to the work and are not deductible.13 …. 54. Accommodation, meal and incidental expenses are incurred by an employee in performing an employee’s work activities, and are therefore deductible, only where: (a) the employee’s work activities require them to undertake the travel (b) the work requires the employee to sleep away from home overnight (c) the employee has a permanent home elsewhere, and (d) the employee does not incur the expenses in the course of relocating or living away from home. …. 63. In this draft Ruling, ‘sleep away from home’ does not describe the activities of employees who: • are on duty while sleeping at a workplace near their home – for example, a hostel worker, care worker or overnight supervisor at a boarding school, or • choose to sleep near their workplace, rather than returning home between their work shifts. …. 96. Relocation or ‘living away from home’ accommodation involves accommodation, meal and incidental expenses for employees who relocate for work or live away from home to work. 97. Expenses in this category are not deductible, even though moving to a new location or working away from home may be required by the work. This can be concluded without referring to specific terms of employment. The fact that an employer has required the employee to relocate or live away from home does not alter the private nature of the expenditure. ‘ It is acknowledged that you are required to reside in the campus due to the nature of your employment and you incur rental expenses as a result of this requirement. However, you fit exactly within paragraph 63 as you ‘ are on duty while sleeping at a workplace near their home – for example, a hostel worker, care worker or overnight supervisor at a boarding school ‘– your workplace is near to your home therefore you are not “sleeping away from home”. Therefore any expenses associated with living in this accommodation are private or domestic and not deductible. Accordingly, you are not entitled to a deduction for the rental expenses incurred while staying at the student accommodation under section 8-1 of the ITAA 1997.