Private ruling: Travel expenses
Date of advice: 28 February 2017
Published: April 2017
Ruling period: Year ending 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Questions and answers | 1. Are you entitled to a deduction for meals and drink while on secondment? | No. | 2. Are you entitled to a deduction for car hire and accommodation to return home after your secondment? | No.

Relevant facts and circumstances: You are a full-time employee. Your employer has seconded you to their office in another state. The initial secondment was for 6 months and has been extended for a further 3 months. Your employer pays for your accommodation in the other state and airfares back to your home state. Your employer made available to you XX return airfares back to your home state for the first 6 months of the secondment and a further X trips back for the 3 month extension. You have a mortgage on a property in your home state which is being rented out for the duration of your secondment. You are responsible for the costs associated with meals and drink. You will hire a car to make the return trip back to your home state and will also have accommodation expenses.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 8-1

Reasons for decision: Summary: According to section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997), you can deduct a loss or outgoing if it is incurred in producing your assessable income except where the outgoing is of a capital, private or domestic nature. You have incurred an expense for meals and drink while you are on secondment to the interstate office. This expense is of a private nature as you would of incurred the same or similar expense if you remained working from your home state office. The costs associated with meals and drinks are not an allowable deduction under section 8-1 of the ITAA 1997. You will incur an expense for car hire and accommodation for your return home at the end of your secondment. This travel expense is not an allowable deduction under section 8-1 of the ITAA 1997 as you are returning home. A deduction is generally not allowable for the cost of travel between home and work as it is considered to be a private expense. Expenditure incurred in travelling to work is a prerequisite to the earning of assessable income rather than being incurred in the course of producing that income. That is, the duties of an employee do not commence until the arrival at a place of work and will cease upon departure from work. The essential character of the expenditure is of a private or domestic nature, relating to personal and living expenses and therefore not an allowable deduction. ( Lunney v FCT (1958) 100 CLR 478). The fact that the travel may be outside normal working hours, or involves a second or subsequent trip, does not change the above principle. However, a deduction may be allowed for home to work travel expenses in certain exceptional circumstances, for example: ● the employees home constitutes a place of employment and travel is between two places of employment, ● the employees employment is inherently of an itinerant nature, and ● the employee has to transport by vehicle bulky equipment necessary for employment. None of the above situations apply to you and therefore the costs associated with the car hire and accommodation for your return trip home is not an allowable deduction. You are not entitled to a deduction under section 8-1 of the ITAA for meals and drink along with the car hire and accommodation for the return trip back to your home state.