Private ruling: Relocation expenses
Published: July 2013
Ruling period: Year ending 20 June 2014
Date scheme commenced: 1 July 2013

Ruling: Q1: Can you claim a deduction for relocation expenses? | A1: No

Relevant facts and circumstances: You are currently employed. You were approached by a manager from a different state. You have accepted a new role with an increased remuneration package. Your employer is not assisting you with any expenses you will incur in relocating to your new office.

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. Taxation Ruling IT 2614 examines the deductibility of relocation expenses. The ruling states that expenses incurred in relocating to take up an appointment with a new or existing employer are not allowable deductions as they are private or domestic in nature. This is so, regardless of whether an allowance has been paid, or if the relocation was involuntary. Taxation Ruling IT 2481 also discusses this type of expense. At paragraph 9 the ruling states the expenditure is not incurred in gaining or producing income and is not deductible as the taxpayer is not travelling on work, but to work. This is consistent with the view in the Federal Court case Fullerton v. FC of T 91 ATC 4983; 22 ATR 757 ( Fullerton's case ). In Fullerton's case , it was held that the shortfall between the costs of relocation and the employer's partial reimbursement was not a loss or outgoing incurred in the gaining or producing of income, notwithstanding that the relocation was in response to the changing necessities of work. In your case, you will incur relocation expenses to take up a new employment position. Your employer will not be providing you with any relocation assistance. The relocation expenses will not be incurred in gaining or producing your assessable income; they will be incurred to put you in a position to earn that income. Relocation expenses are a prerequisite to earning assessable income and are additionally of a private nature. Accordingly, you can not claim a deduction for relocation expenses under section 8-1 of the ITAA 1997.