Private ruling: Mobile Accommodation
Date of advice: 4 September 2015
Published: September 2015
Ruling period: Year ended 30 June 2014 | Year ended 30 June 2015 | Year ending 30 June 2016
Date scheme commenced: 1 July 2013

Ruling: Q1: Can the partnership claim a deduction for the decline in value of the mobile accommodation? | A1: No. | Q2: Can the partnership claim a deduction for mobile accommodation park fees and electricity expenses associated with the use of the mobile accommodation as accommodation? | A2: No.


Relevant legislative provisions: Income Tax Assessment Act 1997 section 8-1 Income Tax Assessment Act 1997 section 40-25

Reasons for decision: Summary: The accommodation expenses are considered to be incurred in order to put the partner in a position to earn assessable income rather than in the course of earning assessable income. The accommodation expenses are also considered to be private in nature. Therefore the expenses are not deductible. | Detailed Reasoning - Detailed Reasoning: 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. Generally, the purchasing of plant and equipment are of a capital nature and may be deductible under Division 40 of the ITAA 1997. Section 40-25 of the ITAA 1997 allows a deduction for the decline in value of a depreciating asset to the extent that it is used for the purpose of producing assessable income. | Detailed Reasoning - Accommodation expenses: Certain expenditure is incurred in order to be in a position to be able to derive assessable income, for example unless one arrives at work it is not possible to derive income. This does not mean that the expenditure is incurred in the course of gaining or producing assessable income. Rather, the expenses are incurred to enable the taxpayer to commence income earning activities ( Lunney & Hayley v. Federal Commissioner of Taxation (1958) 100 CLR 478; (1958) 11 ATD 404; (1958) 7 AITR 166). Generally accommodation expenses incurred by a person who lives away from home in order to carry out his or her work duties, at the place of work, will not be deductible. Expenses of this nature are private, or incurred before or after the activity of earning assessable income. The issue of expenses incurred in relation to accommodation near the work place while maintaining a family residence in another location has been considered by the courts. In Federal Commissioner of Taxation v. Toms 89 ATC 4373; (1989) 20 ATR 466 ( Toms Case ) the Federal Court disallowed a forest worker's deduction for the cost of maintaining a mobile accommodation 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. However, accommodation expenses will be allowable where they are incurred by a taxpayer while they are travelling in the course of undertaking their work duties, for example, where the taxpayer's work is itinerant such as in the case of a travelling salesperson or an interstate truck driver. For a taxpayer's work to be considered itinerant, they must be required to travel between multiple work sites before returning home. It is not sufficient that the taxpayer has different work sites if they are not normally required to travel between the work sites before returning home. Case U97 87 ATC 584; AAT Case 68 (1987) 18 ATR 3491 ( Case U97 ) involved a relief fireman who worked at a number of different fire stations. He would work at a fire station for a number of days before being allocated to another fire station for another period. The Tribunal stated that although the taxpayer had more than one work place, he was not required to travel between work places before returning home and therefore his work was not itinerant. We consider that the partnership's circumstances are similar to that in Case U97 in that although the partner has more than one work place during the year, their work is not itinerant as they are not required to travel between multiple work places before returning home. The partnership's circumstances are also comparable to that in Toms Case in that accommodation expenses are being incurred because the partner's normal residence is located a substantial distance from where they work. The accommodation expenses are not incurred in the course of earning assessable income, rather they incurred in order to put the partner in a position to earn assessable income. The accommodation expenses are considered to retain their inherently private nature. Therefore, the partnership's accommodation expenses, being the depreciation of the mobile accommodation, mobile park fees and electricity expenses, are not deductible.

Relevant facts: The partnership operates a business. | The business is operated in locality A. | The business will operate at a number of sites in locality A during a year. It will operate at one site for a period before moving to another site for a period. | The partnership has purchased mobile accommodation for a partner to stay in when working in locality A as the partner is not able to commute to work as their main residence is located a substantial distance away from locality A. | The mobile accommodation is kept close to the site where the business is currently operating.