Private ruling: Work Related Expenses - Travel and meal expenses
Date of advice: 28 July 2017
Published: November 2017
Ruling period: Year ending 30 June 2016
Date scheme commenced: 1 July 2015

Ruling: Q1: Are the expenses of travelling to and from the airport in Location 1 and expenses for accommodation and food in Location 2 deductable. | A1: No

Relevant facts and circumstances: You are an Airline Pilot and you live in Location 1. The airline you work for flies out of Location 2. You drive from your home to Location 1 airport either the morning of the flight out of Location 2 or the night before, if you cannot get a morning flight. The flights between Location 1 and Location 2 and return are provided by the airline. You incur traveling costs and tolls travelling to and from Location 1 airport and your home. You incur accommodation costs in Location 2 when you are required to fly to Location 2 the night before. You incur food costs for breakfast on the morning before the flight and you incur costs for dinner when required to fly to Location 2 the night before the morning flight out of Location 2.

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. A deduction is generally not allowable for the cost of travel between home and work as it is considered to be a private expense. Expenditure incurred in travelling to work is a prerequisite to the earning of assessable income rather than being incurred in the course of producing that income. That is, the duties of an employee do not commence until the arrival at a place of work and will cease upon departure from work. The essential character of the expenditure is of a private or domestic nature, relating to personal and living expenses and therefore not an allowable deduction. ( Lunney v FCT (1958) 100 CLR 478). Taxation Ruling 95/19 Income tax: airline industry employees - allowances, reimbursements and work-related deductions also covers travel expenses in paragraphs 159 to 165. Paragraph 160 states, 'Accommodation expenses incurred in maintaining a residence in the city of the airline employee's base while also maintaining a family residence in another city, i.e., a domicile port, are not an allowable deduction. We consider that the airline employee's duties commence when he or she 'signs on' at their base, not when he or she departs from his or her domicile port.’ In FC of T v. Toms 89 ATC 4373; 20 ATR 466 , the Federal Court held that the expenses related 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. Consequently any accommodation, travel and meals occurring before and after work would be considered private expense and not be deductable for tax purposes. Even the receipt of an allowance as per TR 95/19 does not automatically entitle an airline employee to a deduction for travel expenses. In your case, there is no nexus between the expenses listed and being a pilot flying from Location 2. While it is clear travel from Location 1 to Location 2 would be necessary to start work in Location 2, the location of your home residence remains a private choice. Therefore any expenses resulting purely from this choice could not be a private expense and not deductable