Private ruling: Accommodation expenses
Date of advice: 14 November 2019
Published: February 2020
Ruling period: Year ended 30 June 2019
Date scheme commenced: 1 July 2018

Ruling: Q1: Are the accommodation expenses you incurred whilst working away from your usual place of residence deductable? | A1: No.

Relevant facts and circumstances: Your usual residence is a state in Australia. Currently you live in in a City A in Australia, where you work for ABC co. You were initially employed on the Project A which finished in 20XX. There were no other projects with this company in City A. However, they had a project B on the City B that you decided to join in order to continue employment with this company. While working on project B you were on a swing shift where you would work in City B for X time and return to City A for your "off" time. You obtained accommodation in City B while working on this project while also maintaining the accommodation in City A. You have not received an accommodation allowance from your employer. While in City B you paid $XX for accommodation in City A.

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 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. To satisfy the first limb of section 8-1 of the ITAA 1997, the loss or outgoing must be relevant and incidental to the operations or activities from which the assessable income is produced: Ronpibon Tin NL v. Federal Commissioner of Taxation (1949) 78 CLR 47; 8 ATD 431; (1949) 4 AITR 326. This principle is also expressed in terms of there having to be a sufficient nexus or connection between the outgoing and the production of assessable income. Taxation Ruling TR 2017/D6 sets out the Commissioner's view on "when are deductions allowed for employees' travel expenses?" Expenditure on accommodation, meals and incidentals is only deductible where the employee is travelling in performing their work activities and not living away from home, for example to a conference interstate or specific training course at the request of their employer. Where accommodation, meal and incidental expenses are incurred by an employee in relocating to a place of work or in living away from home to work, they are preliminary to the work and not deductible. In FC of T 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 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. It was determined that the expenses were dictated not by work but by private considerations. Accommodation, meal and incidental expenses when incurred by an employee in performing an employee's work activities are deductible, only where: ● the employee's work activities require them to undertake the travel ● the work requires the employee to sleep away from home overnight ● the employee has a permanent home elsewhere, and ● the employee does not incur the expenses in the course of relocating or living away from home. Whilst you usually reside in another state to your chosen full time employment location, your employer has not required you to undertake travel, or to sleep away from home whilst gaining or producing your assessable income. In your case, the accommodation expenses incurred are private or domestic in nature as you have chosen to accept contracts for full time employment away from your normal place of residence. The costs of your accommodation are not incurred in performing an employees work activities. Therefore the accommodation expenses are not deductable, as your expenses reflect your choice about where to live and are private in nature.