Private ruling: Accommodation and travel expenses
Date of advice: 9 July 2015
Published: July 2015
Ruling period: Year ended 30 June 2013 | Year ended 30 June 2014 | Year ended 30 June 2015 | Year ended 30 June 2016 | Year ended 30 June 2017 | Year ended 30 June 2018
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you entitled to a deduction for the expenses incurred to travel between your residence and your accommodation close to your workplace? | A1: No. | Q2: Are you entitled to a deduction for the accommodation expenses incurred to maintain accommodation close to your workplace? | A2: No.

Relevant facts and circumstances: You applied for a job. At that stage you were living at City A. You were accepted into employment and you applied for relevant positions close by to where you live. You commenced employment and were only given a choice of positions within the City B urban area. You had to travel to City B from City A at your own expense and also find suitable living accommodation while working. Your employer was not accommodating and offered no solutions, and provided no assistance or reimbursement. You have had to find permanent accommodation in City B as your shift patterns change constantly. You have had to drive to and from that accommodation every week. When you finish your block of shifts you return to your residential address in City A.

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 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. Certain expenditure is incurred in order to be in a position to be able to derive assessable income, for example unless one arrives at work it is not possible to derive income. This does not mean that the expenditure is incurred in the course of gaining or producing assessable income. Rather, the expenses are incurred to enable the taxpayer to commence income earning activities ( Lunney & Hayley v. Federal Commissioner of Taxation (1958) 100 CLR 478; (1958) 11 ATD 404; (1958) 7 AITR 166). Generally accommodation and travel expenses incurred by a person, who lives away from home in order to carry out employment duties at the place of employment, will not be deductible. Expenses of this nature are private, or incurred before or after the activity of earning assessable income. The distance from a previous home does not alter the essential character of any accommodation expenses incurred as they remain private in nature. The issue of expenses incurred in relation to accommodation near the work place while maintaining a family residence in another location has been considered by the courts on a number of occasions. In the case Federal Commissioner of Taxation v. Charlton 84 ATC 4415; (1984) 15 ATR 711 ( Charlton's 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 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 decision 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 circumstances are considered to be comparable to those in Charlton's case and Toms' case. While we acknowledge that your employer allocated you a position some distance from your residential address, you still have a choice of where you live and who you are employed for. Consequently, any accommodation and travel expenses you may incur to stay in City B are considered to be private in nature. Also, these expenses will be incurred to put yourself in a position to perform your duties and not in the actual performance of those duties. Therefore, these expenses are not deductible under section 8-1 of the ITAA 1997.