Private ruling: Deduction for travel living expenses
Published: October 2013
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Are you entitled to a deduction for travel and living expenses when you are providing overnight residential care? | A1: No.

Relevant facts and circumstances: You are employed as a residential care worker and as part of your duties you are required to stay overnight at a residential care house. You do this for half of your work days and your overnight stays are not sequential and you are paid a sleepover allowance. This allowance is included in your gross income and taxed.

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) generally allows a deduction for any loss or outgoing to the extent that it is incurred in gaining or producing assessable income. It is settled law that expenses of travelling to work are not deductible as they are not incurred in gaining the assessable income, but as a pre-requisite to gaining assessable income ( Lunney v FC of T; Hayley v FC of T (1958) 100 CLR 478). In considering the deductibility of travel expenses, a distinction is made between travel to work and travel on work. It is only if the duties of the job require a taxpayer to travel that the taxpayer's expenses can be deducted ( Taylor v Provan 1975 AC 194). In your case, you are travelling to work and any expenditure incurred is not an allowable deduction under section 8-1 of the ITAA 1997 . Furthermore any travel expenses are as a result of living in one place and working in another, and so are private in nature. As a general rule, expenditure on meals and similar items while working away from home is not allowed as a deduction as it is not incurred in gaining or producing assessable income and is also considered to be private or domestic in nature. These costs are essentially 'living expenses' of a private or domestic nature. The fact your income cannot be earned unless certain expenses are necessarily incurred is not an indication of deductibility. Paragraph 38 of Taxation Ruling MT 2030 discusses the meaning of living-away-from-home allowance and states that: A living-away-from-home allowance is paid where the employee has moved and taken up temporary residence away from his or her usual place of residence so as to be able to carry out employment duties for a time at the new (but temporary) workplace.' The allowance you receive is not a living-away-from-home allowance as you are not required to move to a temporary residence - ie you are not considered to be living away from your usual place of residence. The sleepover allowance is paid as compensation for the inconvenience you suffered as a result of occasionally spending the night at a client's residence. Your situation is distinguished from instances of travelling away from home overnight as you are simply attending your normal place of work notwithstanding the fact you may sleep during your duty shift. Therefore, in your situation, you are not travelling or living away from home for work and any expense you incur is not an allowable deduction.