Private ruling: Travel expenses
Ruling period: Year ended 30 June 2010
Date scheme commenced: 1 July 2009

Ruling: Q1: Are you entitled to a deduction for the accommodation and meal expenses incurred while working away from home? | A1: No | Q2: Are you entitled to a deduction for the cost of travelling between City A and City B? | A2: No. | Q3: Are you entitled to a deduction for travel expenses you incurred when travelling between two or more different worksites in City B? | A3: Yes.


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 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. Generally, accommodation expenses are private in nature and are not deductible. 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. The Federal court disallowed a forest's worker's deduction for the cost of maintaining a caravan and other living expenses. The taxpayer incurred the expenses in providing temporary accommodation at the base camp because the taxpayer had chosen to reside at a place far from the worksite. These expenses were dictated not by work but by private considerations and therefore were not deductible. In your case, you have incurred expenses for accommodation, meals and travel to enable you to commute between your home in one town and your employment in another town. Whilst the expenses would not be incurred but for the distance of your work place from your family home, the expenses are a prerequisite to the earning of assessable income. They are incurred in order to enable you to earn income but are not incurred in the course of gaining or producing that income. A deduction is therefore not allowable for your accommodation, meals and travel expenses under section 8-1 of the ITAA 1997. Your travel between your arranged accommodation in City B and your work is also a private expense and is not deductible. | Detailed Reasoning - Travel between two or more different work sites: On the days after commencing your duties, where you are required to travel to several different work sites, it is considered you are travelling on work rather than to work. The travel is undertaken in the performance of your duties. Therefore where you finish work at one work site and travel directly to the next work site in order to continue your work with your employer, you will be entitled to claim a deduction for your travel expenses for this portion of your journey.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns. | Relevant facts: You live and work in City A. | You accepted a short term contract to work in City B. | This contract involved a 24/7 work environment and could call for extended hours of work beyond the normal 9am-5pm work day. | Due to the distance between your home and City B and the long hours required when working in City B you decided to rent an apartment in City B rather than returning home each day. | While in City B you were required to travel to different work sites using your own vehicle or public transport, either buses taxis or trains. | You could work at several different sites on any given day, travelling onto the next job as required. | You incurred expenses relating to this travel, including tolls, fees and charges.