Private ruling: Work related expenses - accommodation - choice to work away from home
Date of advice: 14 September 2020
Published: November 2020
Ruling period: Year ended 30 June 2020
Date scheme commenced: 1 July 2019

Ruling: Q1: Are you entitled to a deduction for your accommodation expenses in City A? | A1: No.

Relevant facts and circumstances: Your home is in Town B. You are employed full-time in City A. You are expected to travel within State A and to State B on a regular basis. You rent an apartment which is in close proximity to your office in City A. Your employer does not reimburse you for this expense. Your family does not visit you in City A and stay in the apartment. When you travel to State B for work the apartment is unoccupied. You reside at your home in Town B with your family on weekends. When you are required to travel to work locations in State B your employer pays for your accommodation. You receive a travel allowance when you travel for work purposes.

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. Taxation Ruling TR 2017/D6 Income tax and fringe benefits tax: when are deductions allowed for employees' travel expenses? (TR 2017/D6) sets out general principles for determining whether an employee can deduct travel expenses under section 8-1 of the ITAA 1997. A travel expense includes airfares, accommodation, meal and incidental expenses (paragraph 2 of TR 2017/D6). As a general rule, expenditure for accommodation is of a private or domestic nature and not deductible. This includes the ordinary costs of maintaining a home and consuming food and drink to go about your daily activities, such as to attend work. These costs are preliminary to the work and are not incurred in the course of performing those activities (paragraph 51 of TR 2017/D6). Likewise, where accommodation expenses are incurred by an employee in living away from home to work, they are preliminary to the work and not deductible (paragraph 52 of TR 2017/D6). The private or domestic nature of these expenses often reflects a choice the employee has made. This includes an employee's choice about where to live (paragraph 53 of TR 2017/D6). The issue of expenses incurred for accommodation near the workplace 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 that case, a forest worker lived in a caravan in a bush camp near his workplace during the week and returned home on weekends. 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. The Federal Court 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 were therefore not deductible. Your circumstances are comparable to the taxpayer in Toms' case . You have made the choice to take up employment in City A and remain living in Town B. Your accommodation expenses in City A arise from this choice not from your employment. The expenses are a prerequisite or preliminary to your work and put you in a position to perform your employment duties rather than in performing those duties. Your accommodation expenses in City A are private in nature and not deductible.