Private ruling: Travel & accommodation expenses
Date of advice: 14 February 2017
Published: April 2017
Ruling period: Year ended 30 June 2016. | Year ending 30 June 2017.
Date scheme commenced: 1 July 2015.

Ruling: Q1: Are you entitled a deduction for your travel expenses between Town A and Town B? | A1: Yes. Issue 2 | Q2: Are you entitled to a deduction for hotel accommodation expenses incurred in Town A? | A2: Yes. | Q3: Would you be entitled to a deduction for rental accommodation expenses incurred in Town A? | A3: Yes.

Relevant facts and circumstances: You are employed in a particular role by a company. You are required to split your time between Town A and Town B where you have a dedicated workspace at both locations. You commenced working from both the Town A and Town B offices in 20XX. You reside in Town B with your family. You typically spend three days per week working from Town A and two days working from Town B. Your employment is not itinerant in nature. A letter of transfer from your employer does not provide any details on your work arrangements or additional payments in relation to travel. Another letter from your employer states that you are required to work in both the Town A and Town B offices. You were previously in receipt of a living away from home allowance; however, your employer does not pay you any allowance, or cover your travel or accommodation expenses. When in Town A, you reside in hotel type accommodation but have previously stayed in rented premises. You are again considering staying in a rented premise as it would be cheaper to rent accommodation on a long term basis rather than stay in hotels. You would only store the requisite furniture and work clothes in rented accommodation in Town A. You usually travel between the office and your accommodation in Town A/Town B. You are not accompanied by family members when in Town A.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 8-1 | Income Tax Assessment Act 1997 subdivision 900-B

Reasons for decision: Summary: You are entitled to a deduction for your travel expenses between Town A and Town B and accommodation expenses in Town A as you are travelling on work. You will be entitled to a deduction for the rent paid on your accommodation when the expense is not disproportionate to what you would have otherwise spent on suitable commercial accommodation. As you do not receive a travel allowance you cannot rely on the exception from substantiation provisions in Subdivision 900-B of the ITAA 1997. You must have the necessary written evidence to substantiate your deduction claims for accommodation, meals and incidentals. You will need to keep receipts/records in relation to your travel and accommodation expenses. | Detailed Reasoning - Detailed reasoning: Travel expenses Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for all outgoings to the extent to which they are incurred in gaining or producing assessable income, or are necessarily incurred in carrying on a business for that purpose. However, a deduction is not allowable for outgoings that are of a capital, private or domestic nature. In considering the deductibility of travel expenses a distinction is made between travel to work and travel on work. Where the duties of the job require a taxpayer to travel in the course of undertaking their work duties, the taxpayer's expenses can be deducted ( Taylor v Provan 1975 AC 194). A deduction is generally not allowable for the cost of travel by an employee between home and their normal workplace as it is considered to be a private expense. The cost of this travel is incurred to put you in a position to perform your duties of employment, rather than in the performance of those duties. In your case, you are required to travel between Town B and Town A in the course of undertaking your duties in your role. Travel is fundamental to your role. Therefore you are considered to be travelling on work and your travel expenses including flights, taxis and accommodation are deductable under section 8-1of the ITAA 1997. Accommodation expenses As with the general rules regarding travel between home and work, accommodation and living expenses are normally private or domestic in character. The occasion of the outgoing may give the expenditure the essential character of an income producing expense. An example is where the expenditure is incurred while away from home overnight on a work related activity. Where a taxpayer is away from home overnight in connection with an income producing activity, accommodation expenses are generally deductible. Taxation Ruling TR 1999/10 Income tax and fringe benefits tax: Members of Parliament - allowances, reimbursements, donations and gifts, benefits, deductions and recoupments provides some guidance on the deductibility of expenses on an additional property purchased or rented as accommodation for work related travel. Paragraph 328I of TR 1999/10 provides that a deduction is allowable for expenses incurred in relation to financing, holding and maintaining an additional property purchased or rented if it is occupied by the taxpayer as accommodation in the course of travelling for work, except to the extent the expenses are of a capital, private or domestic nature. You have indicated that you would be travelling alone while your family remains in Town B. You would not be spending any additional nights at the rented premises, and will only be storing the necessary items and furniture for you to reside there. In your case, you can claim the cost of hotel accommodation or rented accommodation under section 8-1 of the ITAA 1997, so long as the expense incurred in relation to rental accommodation is not disproportionate to what you would have otherwise spent on suitable commercial accommodation and you are not renting the property from a related party.