Private ruling: Travel expenses
Published: December 2012
Ruling period: Year ended 30 June 2010
Date scheme commenced: 1 July 2009

Ruling: Q1: Are you entitled to a deduction for the accommodation expenses incurred while working away from home? | A1: No | Q2: Are you entitled to a deduction for the cost of travelling to and from City A? | A2: No. | Q3: Are you entitled to a deduction for travel expenses you incurred when travelling between two or more different work sites in City A? | A3: Yes. | Q4: Are you entitled to a deduction for parking expenses on days that you are parked near your place of work for 4 daylight hours or less? | A4: Yes.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1 | Income Tax Assessment Act 1936 Section 51AGA | Fringe Benefits Tax Assessment Act 1986 Section 136

Reasons for decision: Summary: Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for all outgoings to the extent to which they are incurred in gaining or producing assessable income, or are necessarily incurred in carrying on a business for that purpose. However, a deduction is not allowable for outgoings that are of a capital, private or domestic nature. Generally, accommodation expenses are private in nature and are not deductible. In Lunney v. FC of T (1958) 100 CLR 478 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. In that case it was held that the costs incurred by a taxpayer in travelling to the place where they work are expenses incurred in order to enable them to earn income but are not expenses incurred in the course of earning that income. The issue of expenses incurred in relation to accommodation near the work place while maintaining a family residence in another location was considered in FC of T v. Toms 89 ATC 4373; (1989) 20 ATR 466 ( Toms' Case ). In Toms' Case , the taxpayer was a forest worker who during the working week lived in a caravan in a bush camp 108 kilometres from his family home in Grafton. He claimed it was too far to travel each day to his work in the forest, so that it was necessary to establish a caravan at the camp. He would return home on weekends. The Federal court disallowed a forest's 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 and therefore were not deductible. In your case, you have incurred expenses for accommodation due to having your home in one city and your employment in another. Whilst the expenses would not be incurred but for the distance of your work place from your family home, the expenses are a prerequisite to the earning of assessable income. They are incurred in order to enable you to earn income but are not incurred in the course of gaining or producing that income. A deduction is therefore not allowable for your accommodation expenses under section 8-1 of the ITAA 1997. | Detailed Reasoning - Second work location: A deduction is generally allowable for the cost of travelling to and from an alternative workplace. For example, travel to and from a different centre for a workplace meeting or training is an allowable deduction. As highlighted in paragraph 34 of Miscellaneous Taxation Ruling MT 2027, an alternative destination is not a regular place of employment. In your case, you work at your second location in City A for several days a week. This second work location is a regular place of employment and therefore cannot be regarded as an alternative place of work. As the second location is a normal place of work for you, travelling to and from this workplace is not travelling on work, but rather travelling to and from work and is therefore regarded as a private expense. Therefore, the associated travel expenses are not an allowable deduction. | Detailed Reasoning - Travel between two or more different work sites.: On the days after commencing your duties, where you are required to travel to different work sites and your clients premises, it is accepted that a fundamental part of your work involves travel. That is, on these days your work is itinerant in nature. Therefore, you are entitled to a deduction under section 8-1 of the ITAA 1997 for the cost of travel between your main City A office and the various locations where you perform your employment duties. As your travel costs include car hire expenses, you are entitled to a deduction for these expenses. | Detailed Reasoning - Parking expenses: Section 51AGA of the Income Tax Assessment Act 1936 specifically deals with the deductibility of car parking expenses and provides that a deduction will not be allowed to an employee for car parking expenses incurred on a particular day if, on that same day: · the employee has a primary place of employment · the car is parked for one or more daylight periods exceeding four hours in total at, or in the vicinity of, that primary place of employment · the expenditure is in respect of the provision of the car parking facilities, and · the car was used for travel between the place of residence and that primary place of employment. Section 136 of the Fringe Benefit Tax Assessment Act 1986 provides that primary place of employment means the employer's business premises, or associated premises, from which or at which the employee performs duties of his or her employment. This section also provides that daylight period means so much of a period of time as occurs between 7.00am and 7.00pm on the same day. All periods of parking between 7am and 7pm must be added together to determine whether the four-hour threshold is met. If employees regularly leave and return to their primary place of employment during a day, all the periods must be aggregated to determine whether the total duration of parking exceeds four hours on that day. Any part of a period outside 7am or 7pm will be ignored with only the time during those hours being counted. The parking expenses you incur due to travel undertaken to your visit client's premises and other worksites, including returns to the office throughout the day, are deductible providing you are not parked near the office for a total of more than four hours in a daylight period, as defined above. On days where you are parked near the office for a total of more than four hours in a daylight period, the conditions of section 51AGA of the ITAA 1936 are met, and you are therefore prevented from claiming a deduction for these parking expenses.

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 are employed in a particular field. | Part of your responsibilities require you to travel to the company's offices in City A to work for x days a week and you then work the other x days in City B. | Whilst in City A you have secured a share accommodation, renting one bedroom in a two bedroom unit. | You pay for your own flights to and from City A each week. | The travel began at the time you took on a position with your employer, with a plan to move your whole family to City A soon afterwards. However due the natural disasters and few unexpected family changes they did not end up moving there. | You continue to maintain your home in City B with your family. | Your employer expects you to pay for your own travel and accommodation expenses whilst in City A. | There are several worksites in City A and you travel to these and those of your clients for business purposes. | You also incur costs in relation to a hire a car while in City A to enable you to travel to these various sites and incur some parking fees while at clients sites.