Private ruling: Work related expenses - accommodation
Date of advice: 16 July 2019
Published: September 2019
Ruling period: Year ended 30 June 2019
Date scheme commenced: 1 July 2018

Ruling: Q1: Can you deduct rental expenses and electricity costs incurred in relation to the accommodation you maintain at your worksite? | A1: No

Relevant facts and circumstances: You are employed by a contractor supplying services to a government department as a specialist officer working at a remote location on 7 days on and 7 days off drive in/drive out basis. This employment is located approximately XXX kilometres from your home in the nearest capital city. While you are at work you rent an accommodation unit at a cost of $XX per week. You also pay a bond and an electricity account. The unit is a standard accommodation unit with kitchen, bathroom and toilet, living room and a laundry. This cost is deducted from your weekly pay. You are obliged to rent this unit full-time even though you only occupy it for 1 week in 2 in order to ensure its availability for your use. You are free to choose to reside at this remote location at the end of your shift or to return to your home. However your work location is remote and provides limited services. You therefore find it impractical to relocate yourself and your family to the work location. Accordingly you have chosen to travel to and from every 7 days in order to attend your work location. Family and friends are permitted to stay at the accommodation unit you are renting although this is impractical in practice and you have only had your children stay with you on rare occasions. Nevertheless, there is no other impediment to having family and friends stay in your rented unit apart from the remoteness of the location and other practical issues. You transport all meals and necessary groceries to your unit when travelling to that location. You prepare meals during your rest time, using fresh and frozen foods that you bring with you when you travel to work. There is also a small shop on-site however this shop is an expensive option as it is remote, so you prefer to bring any necessary supplies with you each week.

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

Reasons for decision: Summary: An expense is deductible under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) if and to the extent to which it is incurred in gaining or producing your assessable income or in carrying on a business for that purpose. However you cannot claim a deduction for an expense that is of a capital, private or domestic nature. A deduction is only allowable if an expense: · is actually incurred · meets the deductibility tests · satisfies the substantiation rules. Taxation Ruling TR 2017/D6 deals with deductibility of travel and accommodation expenses, it specifically states - '16. Similarly, employee costs of relocating for work and living away from home to work are preliminary to the work and are not deductible. 54. Accommodation, meal and incidental 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. 96. Relocation or 'living away from home' accommodationinvolves accommodation, meal and incidental expenses for employees who relocate for work or live away from home to work. 97. Expenses in this category are not deductible, even though moving to a new location or working away from home may be required by the work. This can be concluded without referring to specific terms of employment. The fact that an employer has required the employee to relocate or live away from home does not alter the private nature of the expenditure. ' In your case, you incur the expenses as a result of 'living away from home' to work which can be contrasted with being required by your employer to travel to a different work location and sleep away from home from time to time. It is acknowledged that you find it more practical to reside in a rented unit at your work location due to the nature of your employment and you incur rental expenses as a result of this requirement. However, your situation fits within paragraphs 96 and 97. Therefore any expenses associated with living in this accommodation are private or domestic and not deductible. Accordingly, you are not entitled to a deduction for the rental expenses incurred while staying in a rental unit at a remote location under section 8-1 of the ITAA 1997.