Private ruling: Travel expenses
Published: November 2012
Ruling period: Year ended 30 June 2011
Date scheme commenced: 1 July 2010

Ruling: Q1: Are you entitled to a deduction for accommodation, meals and travel expenses incurred while working away from your family home? | A1: No


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 allows a deduction for all outgoings to the extent to which they are incurred in gaining or producing assessable income, or are necessarily incurred in carrying on a business for that purpose. However, a deduction is not allowable for outgoings that are of a capital, private or domestic nature. In Lunney v. FC of T (1958) 100 CLR 478 the Full High Court laid down the principle that for a deduction to be allowable it is not enough for the expenditure to be an essential prerequisite to the derivation of assessable income. In that case it was held that the costs incurred by a taxpayer in travelling to the place where they work are expenses incurred in order to enable them to earn income but are not expenses incurred in the course of earning that income. The issue of expenses incurred in relation to accommodation near the work place while maintaining a family residence in another location was considered in FC of T v. Toms 89 ATC 4373; (1989) 20 ATR 466 ( Toms' Case ). In Toms' Case , the taxpayer was a forest worker who during the working week lived in a caravan in a bush camp 108 kilometres from his family home in Grafton. He claimed it was too far to travel each day to his work in the forest, so that it was necessary to establish a caravan at the camp. He would return home on weekends. He claimed the costs of maintaining his caravan and other living expenses such as the cost of heating and lighting. It was held that the expenses incurred in relation to the temporary accommodation near the workplace while maintaining a family residence in another location were dictated not by his work but by private considerations, and therefore were not deductible. In your case, you were working at two regular places of employment in City B and City A during the financial year. It is considered that during this period you were living away from home for work rather than travelling on work. That is, during this period you were living in City B and you travelled because your work location had been moved for that period. Travel was not a part of your actual work duties. As you were not travelling in the course of carrying out employment duties, no deduction is available for accommodation, meals and travel expenses you incurred when working away from your usual place of residence. Further to this the essential character of your expenditure is of a private or domestic nature. The expenses incurred by you to stay in close proximity to your work-place were a prerequisite to the earning of assessable income and were not expenses incurred in the course of gaining or producing that income. A deduction is therefore not allowable for your accommodation, meals and travel expenses.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Relevant facts: You have lived in City A for many years. | You were contracted to work in City B for a number of weeks. | In early 20XX you were offered a fulltime position as an employee with the same employer. | This position required you to work in City B, as well as City A. | In the financial year you worked approximately X days and of these, Y days were worked in City B and around Z days in City A. | You have incurred expenses for airfares, accommodation, meals and transfers in City B from the airport and minor incidental expenses. These costs have not been reimbursed by your employer.