Private ruling: Work-related expense - travel expenses
Date of advice: 7 August 2025
Published: 27 October 2025
Ruling period: 1 July 20XX to 30 June 20XX | 1 July 20XX to 30 June 20XX | 1 July 20XX to 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will you be entitled to a deduction for the accommodation expenses (lease and relocation) that you incurred while you were working away from your family home for Employer 1? | A1: No. | Q2: Will you be entitled to a deduction for the accommodation expenses (lease and relocation) that you incurred while you were working away from your family home for Employer 2? | A2: No.

Relevant facts and circumstances: You own a property in STATE A which is your main residence. You live there with your spouse and your child. Your spouse was employed in STATE A and was on parental leave when your child was born. Employer 1 On XX/XX/20XX you entered a contract of employment with Employer 1. You provided the contract detailing the terms and conditions of your employment as follows: ' Appointment and commencement 1.2 You will be engaged as a full-time employee Place of Work 8.1 Your normal place of work will be that which is set out in Item 5 of Schedule A. Schedule A Item 2 Commencement date - XX/XX/20XX. Item 5 Location of Work - STATE B. Item 7 Relocation package - Employer 1 will reimburse relocation expenses up to a combined maximum of AUD X for items outlined below. Relocation expenses that can be submitted for reimbursement are: • flight costs • fuel costs • removalist expenses • up to five weeks of accommodation expenses.' You provided a 12-month lease agreement for a rental property located STATE B. Your spouse and your child joined you in STATE B. While living and working in STATE B you leased out your property in STATE A. In XX 20XX, your spouse was made redundant from their employment in STATE A. In a letter you provided dated XX/XX/20XX, Employer 1 detailed your termination of employment as follows: 'This letter has been prepared to support the meeting held with you on XX/XX/0XX. In this meeting Employer 1 are informing you of the cessation of your position in line with the probationary clause of your employment contract. In line with clause 3 you will be paid the notice requirements and any outstanding entitlements up until your last day of work. Employer 1 will be making additional payments to top up notice of X weeks and will provide relocation assistance to the value of $0.' A letter you provided dated XX/XX/20XX was a response from Employer 1 to your correspondence on XX/XX/20XX. The response to you included the following: ' Background & Recruitment The role you applied for was clearly advertised as being based in STATE B. On or around late XX 20XX, following numerous interviews, you were offered the role, to be based at STATE B.' In relation to claims made by you, Employer 1 reiterates that: 'You made the decision to relocate yourself and your family, on the basis of the Contract provided to you and without any false or misleading representations by Employer 1.' Claims of misleading and deceptive conduct Employer 1 denies any wrongdoing in relation to you and your employment on the basis of the following: 'You participated in an ordinary recruitment process and resigned of your own volition from your previous job located in STATE A. The evidence we retain on file, indicates that during the recruitment process, from job advertisement through to engagement, it was transparent where the position was located. Any changes to your family's living arrangements were undertaken of your own volition and not based on any commitment, undertaking or representation made by Employer 1.' Employer 2 On XX/XX/20XX you entered a contract of employment with Employer 2. You provided the contract detailing the terms and conditions of your employment as follows: Commencement and term '1.1 The period of this contract is the period commencing on the XX/XX/20XX and ending on the XX/XX/20XX unless terminated earlier in accordance with the terms of the contract. Locations and hours 5.1 You will initially be based in the location set out in Schedule A but may be required to work at other locations from time to time. Location of work: STATE B.' You provided a lease document for a period of 12 months in STATE B. Your spouse and you child joined you to live in STATE B. You continued to lease out your property in STATE A. You provided a termination letter from Employer 2. The following details were included in the letter: 'As discussed in our meeting, I confirm that your employment Employer 2 has been terminated, effective today.' You provided a witness statement containing details of an interview on XX/XX/20XX regarding the reasons for your employment termination. Details included the following: 'You were employed as a manager and were working on 3 key projects that have been significantly delayed or discontinued. As a result of 3 key projects being significantly delayed or stopped the role of the manager is significantly reduced. I reviewed costs associated with these projects and commenced conversation with Human Resources. As part of the conversation, your appointment was reviewed. It was a decision of the business that there were not opportunities where you could be redeployed, and as a result the decision was made to terminate your employment due to insufficient work.'

Relevant legislative provisions: Income Tax Assessment Act 1997 section 8-1 Issue | Question 1 | Summary | A deduction for relocation and rental expenses are not deductible under section 8-1 of the ITAA 1997. The expenses you incurred to lease a property and relocate are living expenses and are prerequisites to gaining or producing your assessable income. Therefore, the expenses you incurred are private and domestic in nature. They were incurred in order to enable you to earn income and were not incurred in the course of gaining or producing that income. | Detailed reasoning | Under section 8-1 under the Income Tax Assessment Act 1997 (ITAA 1997) you can deduct from your assessable income any loss or outgoing to the extent that: (a) it is incurred in gaining or producing your assessable income; or | (b) it is necessarily incurred in carrying on a business for the purpose of gaining or producing your assessable income. | (c) However, you cannot deduct a loss or outgoing under this section to the extent that: | (d) it is a loss or outgoing of capital, or of a capital nature; or | (e) it is a loss or outgoing of a private or domestic nature; or | (f) it is incurred in relation to gaining or producing your exempt income or your non - assessable non - exempt income; or | (g) a provision of this Act prevents you from deducting it. | Taxation Ruling TR 2020/1 Income tax: employees: deductions for work expenses under section 8-1 of the Income Tax Assessment Act 1997 sets out when an employee can deduct a work expense under section 8-1 of the ITAA 1997. In gaining or producing assessable income | Paragraphs 13 and 14 explains that: | 13. The pivotal element of section 8-1 for work expenses is the requirement that expenses be incurred 'in gaining or producing assessable income'. The High Court majority in Payne said it is well established that these words are to be understood as meaning incurred 'in the course of' gaining or producing assessable income, and do not convey the meaning of outgoings incurred 'in connection with' or 'for the purpose' of deriving assessable income. | 14. The majority further stated that the meaning of 'in the course of' gaining or producing income was amplified in Ronpibon Tin NL where it was held that: | ... to come within the initial part of [section 8-1] it is both sufficient and necessary that the occasion of the loss or outgoing should be found in whatever is productive of the assessable income, or if none be produced, would be expected to produce assessable income ... | Private or domestic expenditure | Taxation Ruling TR 2021/4 Income tax and fringe benefits tax: employees: accommodation and food and drink expenses, travel allowances, and living-away-from-home allowances explains when an employee can deduct accommodation and food and drink expenses under section 8-1 of the ITAA 1997 when they are travelling on work, including where it is necessary to apportion. | Paragraphs 14 and 15 of TR 2021/4 state: | Living expenses are a prerequisite to gaining or producing an employee's assessable income and are not incurred in performing an employee's income-producing activities. Living expenses are also private or domestic in nature. This means that even if these expenses were incurred in gaining or producing assessable income, they still would not be deductible due to the application of paragraph 8-1(2)(b). | While living expenses must be incurred before any assessable income can be derived, a loss or outgoing is not incurred in gaining or producing an employee's assessable income merely because it is necessary. This is particularly relevant to living expenses. A person must eat and sleep somewhere, whether or not they engage in employment. | Furthermore, paragraphs 25 of TR 2021/4 states: | An employee cannot deduct accommodation and food and drink expenses they have incurred where, due to their personal circumstances, they live far away from where they gain or produce their assessable income. These expenses are living expenses and are not deductible. | Relevant factors - travelling on work versus living expenses | Paragraph 24 explains that: | If any of the following factors apply, the employee will not be travelling on work and the accommodation and food and drink expenses incurred will be living expenses: | • The expenses are incurred because the employee's personal circumstances are such that they live far away from where they gain or produce their assessable income (personal circumstances - see paragraphs 25 to 37 of this Ruling). | • The employee incurs the expenses because they are living at a location (living at a location - see paragraphs 38 to 78 of this Ruling). | • The employee incurs the expenses as a result of relocating from their usual residence (relocation - see paragraphs 79 to 86 of this Ruling). | Personal circumstances | Paragraphs 25 and 26 as follows, explains that an employee cannot deduct expenses when they live far away from where they gain or produce their assessable income. | These expenses are living expenses and are not deductible (see paragraphs 9, 14 and 15 of this Ruling). | In these circumstances, the expenses are incurred because the employee's personal circumstances are such that they keep their usual residence, rather than relocate. The occasion of the outgoing for accommodation and food and drink is not found in the employee's income-producing activities, meaning that these expenses are not incurred in the course of gaining or producing the employee's assessable income. They are private and domestic in nature. | Living at a location | Paragraph 38 states, whether accommodation and food and drink expenses are incurred in gaining or producing assessable income is a question of fact. | The following paragraphs 39, 40, 41 and 42 further explain whether or not expenditure you incur would constitute travelling on work or living at a location. | 39. An employee who incurs expenditure on accommodation and food and drink in the course of performing their income-producing activities is likely to be travelling on work and the expenses will be deductible (see paragraphs 10 and 16 to 23 of this Ruling). | 40. However, where an employee is living at a location away from their usual residence, their accommodation and food and drink expenses are living expenses and will not be deductible even if the employee is living at that location due to their employment (see paragraphs 9, 14 and 15 of this Ruling). | 41. This is because, where the location at which the employee works has become their new regular place of work, the accommodation and food and drink expenses are not an incident of their income-earning activity. Rather, the employee's personal circumstances are such that their usual residence is not located near their new workplace. Consequently, the employee is living at a location away from their usual residence and their accommodation and food and drink expenses will not be deductible. | 42. The following factors would support a characterisation of an employee as living at a location away from their usual residence: | • there is a change in the employee's regular place of work | • the length of the overall period the employee will be away from their usual residence is a relatively long one | • the nature of the accommodation is such that it becomes their usual residence | • whether the employee is, or can be, accompanied by family or visited by family and friends. | Application to your circumstances | You, your spouse and your child resided in a property which you owned in STATE A. | On XX/XX/20XX you entered a contract to work as a full-time employee for Employer 1. In the provided contract the commencement date was XX/XX/20XX, and the location of the position was the Employer 1 site in STATE B. | A provided document shows that you entered a contract to lease a property in STATE B for a twelve-month period. You leased out your property that you owned in STATE A. Your spouse and child moved with you to live to STATE B. | The employment contact detailed that you would be reimbursed for relocation expenses. | A letter you provided dated XX/XX/20XX detailed your termination from Employer 1. | A letter you provided dated XX/XX/20XX was a response from Employer 1 to your correspondence. | The letter detailed at item 1. You made the decision to relocate yourself and your family, on the basis of the Contract provided to you and without any false or misleading representations by Employer 1. | The letter also detailed the following under Claims of Misleading and Deceptive Conduct: | 'You participated in an ordinary recruitment process and resigned of your own volition from your previous job located in STATE A. The evidence we retain on file, indicates that during the recruitment process, from job advertisement through to engagement, it was transparent where the position was located. Any changes to your family's living arrangements were undertaken of your own volition and not based on any commitment, undertaking or representation made by Employer 1.' | In the provided employment contract and termination documents, it is evident that Employer 1 did not require you to as an incidence or condition of your employment to travel to STATE B in the course of your employment duties. The location of your regular place of work was in STATE B. You made the choice to apply and accept employment in a location that was not near your usual place of residence. Where a location has become your regular place of work, the accommodation, food and drink expenses are not an incident of your income-earning activity. Rather, your personal circumstances are such that your usual residence is not located near your new workplace. | Under section 8-1 of the ITAA 1997 a deduction is allowable if it is incurred in gaining or producing your assessable income. The expenses you incurred to lease a property and relocate to STATE B from STATE A are not allowable deductions as they were not incurred in gaining or producing your assessable income, they were private or domestic in nature. | Question 2 | Summary | A deduction for relocation and rental expenses are not deductible under section 8-1 of the ITAA 1997. The expenses you incurred to lease a property and relocate are living expenses and are prerequisites to gaining or producing your assessable income. Therefore, the expenses you incurred are private and domestic in nature. They were incurred in order to enable you to earn income and were not incurred in the course of gaining or producing that income. | Detailed reasoning | Application to your circumstances | You entered a contract of employment with Employer 2 on XX/XX/20XX. As detailed in the provided employment contract, the period of employment was from XX/XX/20XX until XX/XX/20XX. The location of work was at Employer 2 work site in STATE B. | You entered a contract to lease a property in STATE B for a twelve-month period. Your spouse and child joined you to live at this property. You continued to lease out your property that you owned in STATE A. | A provided letter dated XX/XX/20XX detailed reasons for your early termination of employment with Employer 2. Your employment termination was effective immediately. | The location of your regular place of work was in STATE B. You made the choice to apply and accept employment in a location that was not near your usual place of residence. Where a location has become your regular place of work, the accommodation, food and drink expenses are not an incident of your income-earning activity. Rather, your personal circumstances are such that your usual residence is not located near your new workplace. | Although we appreciate that the employment contract specified a period of employment and in your circumstances your employment was terminated early, the period of employment was intended to be for a period of three years. | As per details included at question 1, Under section 8-1 of the ITAA 1997 a deduction is allowable if it is incurred in gaining or producing your assessable income. The expenses you incurred to lease a property and relocate to STATE B from STATE A are not allowable deductions as they were not incurred in gaining or producing your assessable income, they were private or domestic in nature.