Private ruling: Accommodation expenses
Date of advice: 9 April 2018
Published: June 2018
Ruling period: Year ended 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Q1: Are you entitled to a deduction for your accommodation expenses? | A1: No

Relevant facts and circumstances: You commenced work on a fly in fly out (FIFO) basis. Your point of hire was a capital city in a different state to your employment. Your work roster was a number of weeks on, followed by a period of time off. Your employer paid you a weekly allowance. Your payslip has your address as your previous place of residence, and shows the allowance as a local living subsidy. You have provided a letter from your employer which refers to the allowance as a ‘Living away from home allowance’ and shows your address as your previous place of residence. The allowance was not shown separately on your Payment Summary. You leased accommodation jointly with your spouse in the city where you were employed. You have provided an email from another person which states: ● you maintained a residence at their house ● during that period you stored your possessions in their garage ● you stayed there on less than five occasions, and ● you did not pay any rent as you only stayed intermittently. You have provided flight details which show that you travelled interstate on less than five occasions during the period you received the allowance. Your travel documents show your address as the rented accommodation in your city of employment. The copy of the work contract you have provided shows your address as your previous place of residence. Both of your most recent tax returns show your home address as your previous place of residence. You declared rental income and claimed rental expenses for your previous place of residence in your most recent tax return.

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, or relate to the earning of exempt income. Taxation Ruling TR 2017/D6 ( Income tax and fringe benefits tax: when are deductions allowed for employees' travel expenses? ) sets out the general principles for determining whether an employee can deduct travel expenses (including accommodation expenses) under section 8-1 of the ITAA 1997. It is a question of fact whether an expense for accommodation is incurred in gaining or producing assessable income or is of a private or domestic nature. It is only in limited circumstances that an employee’s accommodation expenses are deductible, as generally, accommodation expenses are of a private or domestic nature. This includes the ordinary costs of maintaining a home - this cost is preliminary to the work and is not incurred in the course of performing work activities. An employee working away from home for an extended period of time who is accompanied by their family is likely to have relocated, and is therefore not living away from home. In such cases, the accommodation (and living) costs at the new location are of a private nature and not deductible Accommodation expenses are incurred by an employee in performing an employee's work activities, and are therefore deductible, only where: a) the employee's work activities require them to undertake the travel b) the work requires the employee to sleep away from home overnight c) the employee has a permanent home elsewhere, and d) the employee does not incur the expenses in the course of relocating or living away from home. | Detailed Reasoning - Permanent home elsewhere: Expenditure on accommodation is only deductible where the employee has a permanent home elsewhere. For these purposes, 'permanent home' is the residential accommodation where the employee ordinarily lives when not temporarily absent for work and where they intend to return to live immediately after the work travel. Indicators that residential accommodation is an employee's permanent home include the employee's ownership or possession of the premises and occupation of the premises by members of the employee's family. Where an employee has a transient lifestyle with no fixed place of residence, accommodation costs are of a private or domestic nature. | Detailed Reasoning - Application to your circumstances: The information available indicates that, while at some point in time prior to commencing your employment interstate your home was in your state of recruitment, you have since abandoned that property as your home and now use it to produce rental income. When you rented your previous place of residence, you granted exclusive possession to the tenants and you no longer had the right to access or sleep there. The mere fact that you stored your possessions in the garage of someone else’s home and stayed there on some occasions during the period you were in receipt of the allowance is not sufficient to support your claim that this property was your permanent home. You did not have ownership or possession of the premises; nor did you pay any rent for the property. In addition, you executed lease agreements interstate jointly with your spouse, which is indicative of the fact that you did not maintain a home or have a usual place of residence elsewhere. Based on the above, you relocated interstate when you moved into the rental accommodation there. Accordingly, your accommodation expenses are the ordinary costs of maintaining a home which are private or domestic in nature and are not deductible under section 8-1 of the ITAA 1997.