Private ruling: Work related expenses
Published: August 2014
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Question and Answer | Are you entitled to a deduction for rent and meal expenses you incurred whilst working in country X?. | No

Relevant facts and circumstances: You were required to work in country X for a period of time by your employer. You lived in rental accommodation. You were not paid any form of travel allowance. Whilst you were away you maintained your home in Australia. You wish to claim the additional expenses you incurred due to the location of your employment. These expenses are rent, based on actual rent paid, and food expenses, which are an estimate based on the reasonable amount for employees with a salary less than $100,840 provided by the Commissioner in TD 2011/17.

Relevant legislative provisions: Section 8-1 of the Income Tax Assessment Act 1936

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, accommodation and incidental expenses are not allowed as a deduction as the costs are essentially living expenses of a private or domestic nature. However, these expenses will be deductible if they are incurred while travelling in the performance of duties of employment. Any deduction (regardless of whether it is related to reasonable amounts) will be only be allowable if the expenditure is actually incurred, is allowable as a deduction and the requirements of the substantiation provisions are satisfied. ATO ID 2002/616 states that: "accommodation expenses incurred by the taxpayer enable them to stay in proximity to their work place and arrive at work on time. They are a prerequisite to the earning of assessable income and are not expenses incurred in the course of gaining or producing that income." An example can be found in Case 29 78 ATC 281, here a taxpayer was promoted to a position in a country town, his family remained in the family home. His claim for rental expenses was disallowed as it was held that the cost was private and domestic in nature, the AAT upheld the decision. Similarly, meal expenses incurred by a university lecturer during the period of a temporary appointment away from the taxpayer's home town were held to be expenditure of a private or domestic nature and so non-deductible ( Case H37, 76 ATC 312). Your costs were incurred because your home was in Australia and you rented a place where you were sent for your employment incountry X. Your costs were incurred in staying in a location where your employment was rather than in the course of carrying out your work duties. In your case, you incurred accommodation and food expenses as a result of your normal dwelling being in Australia, and your employment being in xcountry X. The accommodation and food expenses that you incurred in country X were incurred to put you in a place closer to your place of employment, and were not related to the actual performance of your duties as an employee. Your accommodation and food expenses in country X were not incurred in the course of gaining or producing your employment income and are private in nature. Accordingly, you are not entitled to any deduction for these expenses under section 8-1 of the ITAA 1997.