Private ruling: Work related expenses
Published: February 2015
Ruling period: Year ending 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Are you entitled to a deduction for rent, electricity, gas and cleaning? | A1: No

Relevant facts and circumstances: You and your spouse have resided at your residence for a period of time. You were offered an employment position which is some distance from your residence. Your employment responsibilities require you to attend events that are held outside of standard business hours. It would be unfeasible for you to undertake a two or more hour commute each day from your residence. It was not an option to relocate your family closer to your new employment. Accordingly, you obtained rental accommodation closer to your employment as well as maintaining your residence. You have incurred expenses in relation to rent, electricity, gas and cleaning.

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. 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). The expenses you have incurred enable you to stay in proximity to your work place and arrive at various work related events 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. Further, the essential character of the expenditure is of a private or domestic nature as it arises due to your choice of where to live and at what distance from work. You will therefore not be entitled to a deduction for rent, electricity, gas and cleaning expenses under section 8-1 of the ITAA 1997.