Private ruling: Work related expenses
Date of advice: 29 July 2016
Published: September 2016
Ruling period: Year ending June 2016.
Date scheme commenced: 1 July 2015.

Ruling: Q1: Can you claim a deduction for your travel and accommodation while volunteering for a standards committee whilst your employer continued to pay you while you were away? | A1: No.

Relevant facts and circumstances: You are a qualified employee. You are employed by Company A who has contracted you to Company B. You have been appointment to a committee. The committee meets for approximately a week each quarter in various locations. The committee does not pay you for your contributions. This is on a volunteer basis. You pay for your own flights and accommodation to attend these meetings. A letter from your employer Company A advises that they encourage employees to participant in self-development and voluntary industry support. This letter also states that Company B also approve for you to attend these meetings and will pay you your full entitlements whilst at the meetings.

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

Reasons for decision: Summary: Travel 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. Lunney v. Commissioner of Taxation [1958] ALR 225; 1958 0311H HCA; 100 CLR 478; (1958) 11 ATD 404; (1958) 32 ALJR 139 introduced what is now regarded as the essential character test. This test requires that for an expense to be deductible, it must have the essential character of a business or income producing expense. The taxpayer in this case sought to deduct the cost of travelling from his home to his work. The expenses were disallowed as being private and domestic, establishing the broad principle that costs incurred because of living in one place while working in another cannot be regarded as deductible. The reasons given by the High Court were twofold. In addition, paragraph 21 of TR 2005/13 explains that any expenditure incurred by a volunteer in the course of providing unpaid services is not deductible under section 8-1 of the ITAA 1997 as a loss or outgoing incurred in gaining or producing assessable income. In your case as you were not travelling in the course of carrying out employment duties. You were carrying out a different activity, not directly related to your current employment, on a volunteer basis. Therefore no deduction is available for your travel expenses incurred despite the fact your employer choose to allow you to continue receiving your employment entitlements. This is a private agreement between yourself and your employer. Accommodation 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. In your case, you incurred expenses for accommodation to enable you to volunteer in a different location for a committee that is not providing you with an assessable income. The expenses you incur in order to perform your volunteer work are not related to the gaining or producing of assessable income. Therefore, you are not entitled to a deduction for these expenses. Further to this the essential character of your expenditure is of a private or domestic nature.