Private ruling: Deduction for living away from home expenses
Published: November 2012
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: Are you entitled to a deduction for your travel, meals and accommodation expenses? | A1: No

Relevant facts and circumstances: You live in one location and you work for a company and during the 2011-12 financial year you were required to work away from home at two different locations where you incurred expenses for travel, meals and accommodation. You worked at the first location for part of the year and were away from home for a certain number of nights and you received a living away from home allowance. You worked at the second another part of the year and were away from home for a certain number of nights where your employer paid for your accommodation, and included the cost of your airfares in your gross wages.

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. 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 an indication of deductibility. Expenditure on the daily necessities of life (e.g., accommodation, food and drink) is generally not deductible as it is not incurred in gaining or producing assessable income and is also considered to be private or domestic in nature. Exceptions to this are where you are undertaking work related travel and are required to stay away overnight. However, no deduction is allowable if a taxpayer is merely maintaining accommodation close to their usual work location for convenience. Additionally, a deduction is not allowed for the cost of travel between home and your normal workplace as it is generally considered to be a private expense. The distance of travel does not change the private nature of the expense. 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. While it is acknowledged that your usual home is in one location, it is not considered that your travel to the two work locations is work related travel. It is the distance between your home and your work is what necessitates your having to stay away from home. Your trips between your home and your accommodation and the two work locations were not travelling on work; rather, you were travelling to work. It follows that expenses for accommodation and meals were private expenses to enable you to be close to your work and commence your employment duties. These expenses are not regarded as work related expenses and are not incurred in earning your assessable income. In your case, you lived at the two work locations where you were working at the time. Accordingly, your accommodation and meal expenses are considered to be of a private or domestic nature. The expenses do not have the character of an outgoing incurred in gaining assessable income. Therefore, you are not entitled to a deduction for your accommodation or meal expenses under section 8-1 of the ITAA 1997, as these expenses were not incurred in gaining or producing assessable income, but rather the expenses were a prerequisite to your employment.

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