Private ruling: A Deduction for Travel and Accommodation Expenses
Date of advice: 3 March 2016
Published: April 2016
Ruling period: Year ended 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Are you entitled to a deduction for travel to and from a city and for accommodation overnight in that city? | A1: No.


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 deals with general deductions and allows a deduction for all losses or outgoings to the extent to which they are incurred in gaining or producing assessable income, except to the extent that they are outgoings of a capital, private or domestic nature. Generally the expenses of travel to and from work are not deductible. This is either because such expenditure is private in nature, or because it is not an expense incurred in gaining or producing assessable income. The case of Lunney & Hayley v. Federal Commissioner of Taxation (1958) 100 CLR 478; (1958) 7 AITR 166; (1958) 11 ATD 404 settled the principle that travel to and from work is ordinarily not deductible. The Full High Court held that costs incurred by a taxpayer in travelling to the place where they work are expenses incurred in order to enable them to earn income but are not expenses incurred in the course of earning that income. The travel is considered to be of an essentially private or domestic nature. Although the cost of travel between home and work is generally incurred to put the employee in a position to perform duties of employment, rather than in the performance of those duties (see paragraph 77 of Taxation Ruling TR 95/34), there are situations where it has been accepted that travel by employees from home to work is deductible. Taxation Ruling IT 2543 summarises these situations as follows: a) the taxpayer's home constitutes a place of employment and travel is between two places of employment or business; b) the taxpayer's employment can be construed as having commenced before or at the time of leaving home; c) the taxpayer has to transport by vehicle bulky equipment necessary for employment; d) the taxpayer's employment is inherently of an itinerant nature; e) the taxpayer is required to break their normal journey to and from their usual place of employment to perform employment duties. Your situation does not correspond with any of the above situations. In your case, the cost of travel to the capital city in the other state and for the overnight accommodation is not deductible as it is considered to be a private expense.

Relevant facts: You live in one Australian state and work at a worksite in another state. | Your employment contract states that your point of hire is the capital city of the state that you live in and states this will be the basis for all decisions in relation to Fly-in/Fly-out (FIFO), relocation and repatriation arrangements and will generally be fixed for the duration of your employment. | Your employment contract states that you are required to work a regular rostered shift for 8 days at a time at your primary work location in the other state. | You travel to the capital city in the other state as it is closest capital to the worksite where you work. | You incur flight and travel expenses to travel to and from the other capital city and for accommodation overnight while there.