Private ruling: Deductions
Date of advice: 29 November 2016
Published: April 2017
Ruling period: Year ended 30 June 20YY
Date scheme commenced: 1 July 20XX

Ruling: Questions and answers | Are you entitled to a work related deduction for flights and accommodation to get to your work place? | No. | Are you entitled to a work related deduction for the costs associated with excess baggage to transport equipment required to perform your job? | Yes.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You are a fly in fly out worker. You work interstate away from your home. You pay for your flights from point A to point B and your employer pays for your flights from point B to the work site. You are required to stay overnight in point B depending on flight schedules, this cost is not covered by your employer. You have a work roster which you know between 12 and 72 hours in advance of where you will be working. You need to carry some equipment with you to the work place and this incurs excess baggage costs.

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

Reasons for decision: Summary: According to section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997), you can deduct a loss or outgoing if it is incurred in producing your assessable income except where the outgoing is of a capital, private or domestic nature. The courts have concluded that accommodation and meal expenses incurred while working away from home are essentially living expenses of a private or domestic nature and therefore are not deductible. The expenses you incur enable you to stay in proximity to your work place. They are a prerequisite to the earning of assessable income and are not expenses incurred in the course of gaining or producing that income. In the case Federal Commissioner of Taxation v. Charlton 84 ATC 4415; (1984) 15 ATR 711 ( Charltons Case ), the taxpayer was a pathologist employed to carry out autopsies for the local coroner in Bendigo. He rented a flat in Bendigo while maintaining a permanent family home in Melbourne, located approximately 150kms away. There was evidence that there was difficulty in finding motel accommodation in Bendigo and the taxpayer was reluctant to make the round trip back to Melbourne without rest. The taxpayer claimed that the rental expenses were incurred in the production of assessable income. Justice Crockett of the Supreme Court of Victoria allowed the Commissioner's appeal and ruled: The Commissioner contends (correctly in my view) that, if the taxpayer should choose to reside so far from the place where it is necessary for him to be in order to gain his income that he, not only needs to incur expense in travelling to that place but, also to incur expense in the provision to him of some accommodation transitory or discontinuous in its use and secondary to or temporarily supplemental of his actual home, then that expense, too, is for the same reason non-deductible. The taxpayer's election to live in Melbourne and not in Bendigo meant that the rental expended on the flat in order to enable him to secure accommodation in which to recuperate from the rigours of travel and the nature of his work was an expenditure dictated not by his work but by private considerations. This is supported by the decisions in Federal Commissioner of Taxation v. Toms 89 ATC 4373; (1989) 20 ATR 466 ( Toms Case ), where the Federal Court held that expenses incurred in relation to accommodation near the work place while maintaining a family residence in another location were not an allowable deduction as they were considered to be private expenses. Your case is comparable to that of the taxpayers in Charltons case and Toms case. You live away from your workplace and incur expenses in relation to flights and accommodation. The flights and accommodation put you in a position to carry out your job. However these expenses are considered to be private in nature and are not deductible under section 8-1 of the ITA 1997. The excess baggage costs associated with the transport of your equipment to be able to perform your job is an allowable deduction under section 8-1 of the ITAA 1997.