Private ruling: Food and accommodation expenses
Published: August 2012
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: Are you entitled to a deduction for food and accommodation while working in City B? | A1: No.

Relevant facts and circumstances: You live in City A and have been employed by an employer in City A on a casual basis. You were informed of a temporary urgent need for people with your skills in City B. Your supervisor in City A encouraged you to apply for a position in City B to gain personal experience and bring back insight and knowledge when you returned. You took up a temporary contract with a different employer in City B. During this time, you lived in rented accommodation in City B while your spouse remained in your private residence in City A. You incurred expenses in relation to food and accommodation while working in City B. Since the completion of your work contract in City B, you have returned to City A and resumed your duties with your original employer.

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. Generally, travel and accommodation expenses incurred by an employee who lives away from home to carry out the duties of his employment will not be deductible. Expenses of this nature have been found to be private or incurred before or after the activity of earning assessable income. Meal expenses are also inherently private in nature and generally not deductible. In FC of T v. Toms 89 ATC 4373; (1989) 20 ATR 466, the Federal Court disallowed a forest worker's deduction for the cost of maintaining a caravan and other living expenses. The taxpayer incurred the expenses in providing temporary accommodation at the base camp because the taxpayer had chosen to reside at a place far from the worksite. These expenses were dictated not by work but by private considerations. In your case you lived in rented accommodation while you completed your temporary work contract in City B. The accommodation expenses you incurred enabled you to stay in proximity to your work place and arrive at work on time. They were a prerequisite to the earning of assessable income and were not expenses incurred in the course of gaining or producing that income. Further, the essential character of the accommodation and food expenses was of a private or domestic nature as they arose due to your choices of where to work and where to live. The fact that your employer in City A encouraged you to undertake the work in City B does not alter the nature of the expenses. Accordingly your accommodation and food expenses are not deductible under section 8-1 of the ITAA 1997.

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