Private ruling: Income tax deductions - accommodation
Date of advice: 30 August 2018
Published: October 2018
Ruling period: 30 June 2019
Date scheme commenced: 1 July 2018

Ruling: Q1: Will the cost incurred for renting a room on a nightly basis whilst on call duty, be deductible? | A1: No

Relevant facts and circumstances: You have accepted a position at a hospital in State A. You are required to be On Call for emergencies from time to time. While On Call you are required to be no further than a commute time of 20 minutes. You live in XY that is outside of the 20 minute commute time. You are considering renting accommodation nearer the hospital on the nights you are on call. You are not entering into a long-term rental and will be returning home to XY when not on call.

Relevant legislative provisions: Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)

Reasons for decision: Summary: Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for a loss or an outgoing to the extent to which it is incurred in gaining or producing assessable income, except where the loss or outgoing is of a capital, private or domestic nature. In general, accommodation expenses are considered private expenses and consequently are not deductible. Court decisions and decisions of the Administrative Appeals Tribunal/Board of Review provide an independent view and confirm this. The Federal Court decision in FC of Taxation v. Toms 89 ATC 4373; (1989) 20 ATR 466, 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. Although the expenditure must be incurred in order to put one in a position to be able to derive assessable income, it does not necessarily mean that the expenditure is incurred in the course of gaining or producing that income. In your case, the accommodation expenses are incurred to enable you to stay in the proximity of your work location and are a prerequisite to the earning of assessable income. They are not expenses incurred in the course of gaining or producing your assessable income. Consequently you are not entitled to a deduction for accommodation expenses under section 8-1 of the ITAA 1997. Your submission referred to TR 2017/D6 and information from paragraphs 39 - 42 - Special Demands Travel. This reference involves travel between home and a regular work location where: the journey, or part of the journey, is included in the activities for which the employee is paid under the express or implied terms of their employment and this is reasonable because of the special demands of the work. This part of the Taxation Ruling does not apply to accommodation expenses but to travel specifically, therefore cannot be considered in reference to your question.