Private ruling: Home to work travel and accommodation expenses
Published: September 2011
Ruling period: Year ended 30 June 2009 | Year ended 30 June 2010 | Year ended 30 June 2011
Date scheme commenced: 1 July 2008

Ruling: Q1: Are you entitled to claim your return airfares and overnight accommodation expenses for travelling between your home and the nominated place of departure under a fly-in / fly out arrangement? | A1: No.

Relevant facts and circumstances: You were hired through a labour hire company, on a short term contract basis. The contract periods ranged from three to six months at a time and the company would contract you when further work was available. You worked on a cyclical roster. You only worked at one location within each short term contract, but you were contracted to work at different locations within the financial year. You were required to pay for your own return airfares between your home and the nominated place of departure. You also paid for overnight accommodation when you had an early morning flight. The company paid for the return flights between the nominated place of departure and the work location. You did not carry any bulky tools or equipment.

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 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. Certain expenditure is incurred in order to be in a position to be able to derive assessable income, for example unless a person 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 ( Lunney's case )). A deduction is, generally, not allowable for the cost of travel by an individual between home and their normal workplace as it is considered to be a private expense. The cost of travel between home and work is generally incurred to put the employee in a position to perform duties, rather than in performance of those duties (see Taxation Ruling TR 95/34). The lack of suitable public transport, the erratic hours and times of employment, the time of travel, the distance of travel and the unavailability of residential accommodation near the place of work are not factors which will alter the essential character of travel between home and work. In your case, you have incurred costs for return airfares to travel between your home and the place of departure as nominated by the company under a fly-in / fly-out arrangement. The expenses are incurred by you in putting yourself in a position where you can perform your duties, rather than in the performance of your duties. Therefore, you are not entitled to claim a deduction for the return airfares you incurred for travelling between your home and the nominated place of departure. | Detailed Reasoning - Accommodation expenses: As discussed above, some expenses are incurred in order to put you in a position to be able to earn your assessable income. For example, unless you get yourself to work it is not possible to earn your income. Such expenses are incurred before you have commenced your duties and thus before your income is being earned (Lunney's case). Similarly, accommodation expenses incurred by an individual who lives away from home to carry out the duties of their employment will not be deductible. Expenses of this nature have been found to be private or incurred before or after the activity of earning assessable income. The accommodation expenses incurred by you to enable you to catch an early morning flight are a prerequisite to the earning of assessable income and are not expenses incurred in the course of gaining or producing that income. Further, the essential character of the expenditure is of a private or domestic nature as it arises due to the choice of where you live and where you work. Therefore, the overnight accommodation expenses are not incurred in gaining or producing your assessable income and are not deductible.

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