Private ruling: Work related expenses
Published: March 2014
Ruling period: Year ending 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Q1: Are you entitled to a deduction for cost of flights incurred when you travelled between assignment sites while working? | A1: No | Q2: Are you entitled to a deduction for the cost of flights to Australia to allow you to work in Australia? | A2: No. | Q3: Are you entitled to a deduction for work related expenses of hotel accommodation and meals while you were working in Australia? | A3: No. | Q4: Are you entitled to a deduction for work related expenses for professional licence fees? | A4: No. | Q5: Are you entitled to a deduction of a portion of work related expense for internet and phone, postage and fuel expenses incurred for the period you were working in Australia? | A5: Yes. | Q6: Are you entitled to a deduction for cost of obtaining a work visa to work in Australia? | A6: No.

Relevant facts and circumstances: You worked as a travelling professional. You first arrived in Australia on a work visa from Country B and later returned. During the time you were in Australia you were assigned to work and live at a number of different sites staying for various periods at each site. You paid for all of your travel tickets when travelling on assignment between sites. You were reimbursed for these costs which were included in your assessable income. You were not provided with a travel allowance or any other allowance in your employment contract. You were provided with accommodation during the time you stayed in Australia as it was necessary for emergency calls. Between assignments you were responsible for your own accommodation. You were provided with a car for work use only and paid for the petrol. You incurred the following expenses: · Professional licenses fees · Travel to and between assignments and meetings including costs of travel to Australia. · Hotels · Internet and phone · Postage - professional use only · Petrol · Visa costs You have kept a diary for one month of your internet and phone expenses.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1 | Income Tax Assessment Act 1997 Division 900

Reasons for decision: Summary: The costs you incurred for accommodation, meals and flights while working in Australia are of a private nature. They are not incurred in gaining or producing your assessable income and are not deductible. Costs incurred for travel to Australia are considered private in nature and are not deductible. You are not allowed a deduction for your professional licence fees as they are incurred prior to you arriving in Australia. You are allowed a deduction for work a portion of your related expenses for your internet and phone. Work related expenses for postage and fuel are an allowable deduction for the period you were working in Australia. The costs that you incurred in making your visa application were not related to the production of your assessable income and 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, 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. The case of Lunney v. Commissioner of Taxation [1958] ALR 225;1958 - 0311H - HCA;100 CLR 478;(1958) 11 ATD 404;(1958) 32 ALJR 139 ( Lunney's Case) settled the principle that travel to and from work is ordinarily not deductible under section 8-1 of the ITAA 1997. This travel is considered to be of an essentially private or domestic nature. The cost of trips between home and work may be deductible if you are regarded as an itinerant worker. Taxation Ruling TR 95/34 deals with itinerant workers and provides that an employee's work may be considered itinerant if travel is a fundamental part of the employee's work or if a 'web' of work places exist in the employee's regular employment. An employee may also be considered itinerant if the employee continually travels from one work site to another, and regularly works at more than one work site before returning to his or her usual place of residence. None of the above characteristics correspond to your circumstances. Although you have worked at a number of places, this does not constitute a 'web' of work places, since each period of employment is regarded as being at regular and fixed places of employment. Also, continual travel between work sites prior to returning home each day is not an aspect of your employment. In your case you incurred costs in travelling from one work site on assignment to another site spending various periods at each site where your accommodation is provided at each site. These costs enable you to get to a point where your assessable income can be earned. That is to say, the travel is to work, rather than on work. As such, your travel expenses are not incurred in gaining or producing assessable income. You are therefore not entitled to claim a deduction for the costs of flights between assignments. Similarly, costs incurred for travel to Australia are considered private in nature and are not deductible. | Detailed Reasoning - Accommodation and meals: Generally, accommodation and meal expenses incurred by an employee who lives away from home to carry out the duties of his 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. This is supported by the decision in Federal Commissioner of Taxation v. Toms 89 ATC 4373; (1989) 20 ATR 466, where the Federal Court held that expenses incurred in relation to accommodation near the work place while maintaining a family residence in another location were not an allowable deduction as they were considered to be private expenses. In your case, you are not living away from home as each assigned accommodation is your home while you are living and working in Australia. Accordingly, your accommodation and meal expenses are of a private and domestic nature, and incurred to enable you to work. They are not incurred during the actual performance of your work. They are a prerequisite to the earning of assessable income and therefore are not expenses incurred in the course of gaining or producing that income. Therefore you are not entitled to a deduction for meal and accommodation expenses. | Detailed Reasoning - Professional licence fees: You incurred costs associated with renewing membership and registration as a specialist allowing you to work in Australia. The professional fees were paid prior to your arrival in Australia and were therefore not incurred in gaining or producing assessable income. They were incurred a point too soon. Therefore you are not entitled to a deduction for the professional fees. | Detailed Reasoning - Internet, phone, postage and fuel expenses: You are required to use your internet and phone for work purposes while on work assignments. You have incurred work related expenses for the use of your internet and phone calls. You maintained a diary over a period of one month for those expenses that are related to your work. You have incurred expenses for postage for work related items. You were provided with a car that was to be used for work only, travelling between sites but you were required to pay for the fuel. You incurred cost for fuel. As these expenses are directly related to your employment, you are entitled to a deduction for the work related portion of the internet fees, phone call costs incurred under section 8-1 of the ITAA 1997. Similarly the costs for postage and fuel are an allowable deduction. | Detailed Reasoning - Substantiation: Division 900 of the ITAA 1997 states the substantiation requirements in relation to internet use. A diary record covering representative four week period must be kept to show the nature of each use (income producing purposes or private use) and the period of time used. From this, a reasonable estimate of work related internet use can be established for apportioning the deduction. | Detailed Reasoning - Visa: The purpose of you obtaining your work visa was so that you could legally remain in Australia. The costs that you incurred in making your visa applications were not related to the production of your assessable income. Accordingly, the expenses you incurred to obtain your work visa is not deductible as they were not incurred in gaining or producing assessable income and are private in nature.