• Accommodation allowances and expenses when travelling away from home for work

    If you receive a travel allowance for accommodation

    As a general rule, you must declare any travel allowance you receive as income in your tax return.

    You do not have to declare the allowance as income in your tax return if both of the following apply:

    • the travel allowance is not shown on your payment summary
    • you spent the allowance on deductible accommodation costs (and meal and incidental expenses, if applicable).

    If you do not declare your allowance as income, you cannot deduct your accommodation costs (and meal and incidental expenses, if applicable) – even if they are more than your allowance.

    When you can claim expenses for accommodation

    You can deduct your accommodation costs (as well as meal and incidental expenses) if all of the following apply:

    • you declare any travel allowance you receive as income on your tax return
    • you are required as part of your employment duties to travel away from home
    • you are only working away from home for relatively short periods of time (you are not living away from home)
    • you did not incur the expenses because of a choice you made to maintain your residence in a different location to your place of employment
    • you have a permanent home at a location away from the work location to which you are travelling
    • you pay for the accommodation yourself and are not reimbursed for the costs you incur.

    Keeping records for accommodation

    To claim a deduction, you generally need to keep written evidence to substantiate your costs.

    Substantiation is not required if you have received a travel allowance for travel within Australia and the deduction you claim for accommodation (and meals and incidental expenses, if applicable) is equal to or less than the amount we consider reasonable.

    The amounts we consider reasonable are published each year. Taxation Determination TD 2016/13 sets out the amounts for various travel destinations for the 2016-17 income year.

    Even where you don’t need to substantiate your costs, we may still ask you to show all of the following:

    • you paid the expense yourself
    • the cost is deductible – you met the conditions required to deduct the expense
    • you received a travel allowance
    • you stayed in short-term commercial accommodation.

    See also:

    • TD 2016/13 Income tax: what are the reasonable travel and overtime meal allowance expense amounts for the 2016–17 income year?
    • TR 2004/6 Income tax: substantiation exception for reasonable travel and overtime meal allowance expenses

    When you can claim expenses for accommodation you purchase or rent

    Most people required to travel away from home temporarily for work, stay in short-term commercial accommodation, such as a hotel, motel or serviced apartment.

    A person may decide to stay in rented accommodation or in accommodation they purchased instead.

    The costs of financing, holding and maintaining accommodation you purchase or rent to stay in when you travel for work may be deductible as work related travel expenses.

    You must declare any travel allowance you receive as income in your tax return if you want to claim a deduction for your accommodation costs (as well as meal and incidental expenses).

    Types of costs

    Costs you can claim

    • rent
    • interest on loans used to purchase the accommodation
    • rates
    • taxes
    • insurance
    • general maintenance of the accommodation
    • the depreciation of certain assets, such as furniture and household equipment
     

    Costs you cannot claim

    • capital expenses such as the costs of purchasing or renovating the accommodation
    • purchase costs of furniture, household equipment and other assets for the accommodation
     

    Note: This content does not explain capital gains tax (CGT) implications.

    See also:

    Apportioning your costs

    You might have to apportion your costs of financing, holding and maintaining accommodation you purchase or rent (see Costs you can claim) if either:

    • the costs are disproportionate to what you would have spent on suitable commercial accommodation for the period of travel
    • the accommodation is used for private or domestic purposes and not wholly for work related travel.

    Note: You cannot claim a deduction for the cost of financing, holding and maintaining your home.

    Examples of accommodation expenses

    Example 1 – Short-term commercial accommodation

    Jane started a new job with a company in Brisbane. During the first year of employment, Jane is required to attend training at the company's head office in Sydney one week in every four.

    Jane stays at a hotel close to the head office in Sydney for the weeks she is required to be in Sydney for training.

    Jane receives a travel allowance from her employer to cover the costs of accommodation, meals and incidental expenses for the periods she is required to stay in Sydney. The travel allowance is not shown on her payment summary.

    Jane spends her travel allowance on accommodation, meals and incidental expenses when in Sydney for work.

    Jane chooses not to declare her travel allowance on her income tax return and does not claim her expenses.

    End of example

    Example 2 – Purchased accommodation where costs are not disproportionate

    John works for a company in Melbourne that has a regional branch in Bendigo. The company requires John to attend the Bendigo branch for one working week each fortnight.

    John purchases a two bedroom apartment in Bendigo to stay in when he is there for work. During the time he is not there for work, the apartment is vacant.

    John receives a travel allowance from his employer to cover the costs of accommodation, meals and incidental expenses for the periods he is required to stay in Bendigo. The travel allowance is shown on his payment summary.

    The costs of financing, holding and maintaining the apartment in Bendigo for the year are not disproportionate to the cost of John obtaining suitable short-term commercial accommodation for the periods he is required to stay in Bendigo. John does not use the Bendigo apartment for private or domestic use during the year.

    John must include the travel allowance as income in his tax return because it is shown on his payment summary. John can claim a deduction for the costs of financing, holding and maintaining the Bendigo apartment for the year.

    End of example

    Example 3 – Purchased accommodation with some private use

    John (from example 2) decides to spend his four weeks annual leave at his apartment in Bendigo.

    John is required to apportion the costs of financing, holding and maintaining the apartment for the year to take into account this private use, because his costs are not wholly for work-related travel.

    End of example

    Example 4 – Purchased accommodation where costs are not disproportionate

    Brianna is a Member of Federal Parliament who lives with her family in her electorate on the north coast of NSW. Brianna is required to travel to Canberra for at least 20 weeks during the year while Parliament is sitting.

    Brianna purchases a one bedroom apartment close to Parliament House where she stays while Parliament is sitting. The apartment is left vacant when Brianna is not using it for work.

    Brianna receives a travel allowance to cover the costs of accommodation, meals and incidental expenses for the periods she is required to stay in Canberra. The travel allowance is not shown on her payment summary.

    Brianna spends her travel allowance on accommodation, meals and incidental expenses when in Canberra for work.

    Brianna’s costs of financing, holding and maintaining the apartment in Canberra for the year are not disproportionate to the cost of Brianna obtaining suitable short-term commercial accommodation for the periods she is required to stay in Canberra for work. Brianna did not use the Canberra apartment for private or domestic purposes during the year.

    Brianna chooses not to declare her travel allowance on her income tax return and does not claim her expenses.

    End of example

    Example 5 – Leased apartment where costs are not disproportionate

    Geoff works and lives in Perth. Geoff's employer requires him to travel to a company branch in Karratha for two working weeks in every four.

    Geoff leases a one bedroom serviced apartment in Karratha for the year. When he is not in Karratha for work, the apartment is left vacant.

    Geoff receives a travel allowance from his employer to cover the cost of accommodation, meals and incidental expenses for the periods he is required to stay in Karratha. The travel allowance is shown on his payment summary.

    Geoff spends his travel allowance on accommodation, meals and incidental expenses when in Karratha for work.

    Geoff’s costs of leasing the apartment for the year are not disproportionate to the costs of Geoff obtaining suitable short-term commercial accommodation in Karratha for the periods he is required to stay there for work. Geoff did not use the Karratha apartment for private or domestic purposes during the year.

    Geoff must include the travel allowance as income in his tax return because it is shown on his payment summary. Geoff can claim a deduction for the costs of financing, holding and maintaining the Karratha apartment for the year.

    End of example

    Example 6 – Purchased accommodation for private travel

    Alanna works in the Melbourne CBD, but lives in Lorne.

    It takes more than two hours to travel between her home and her workplace, so Alanna purchases a one bedroom apartment in the Melbourne CBD to stay in during the working week and returns home to Lorne for the weekends.

    Alanna cannot claim the costs of financing, holding and maintaining the apartment in the Melbourne CBD because the travel to Melbourne is not part of her employment duties. She has chosen to live in Lorne.

    End of example

    Example 7 – Purchased accommodation with disproportionate costs

    James is an executive working and living in Adelaide. James is required by his employer to travel to Melbourne for two weeks seven times a year.

    James purchases a three bedroom apartment in the Melbourne CBD to stay in when he is in Melbourne for work and as an investment. The apartment remains empty when James is not using it.

    James receives a travel allowance from his employer to cover the costs of accommodation, meals and incidental expenses for the periods he is required to stay in Melbourne for work. The travel allowance is not shown on his payment summary.

    The combined amount James spends on meals and incidental expenses when in Melbourne for work and in financing, holding and maintaining the apartment in Melbourne for the year is more than the amount of his travel allowance.

    James’ costs of financing, holding and maintaining the apartment in Melbourne for the year are disproportionate to the costs of obtaining suitable short-term commercial accommodation in Melbourne for the periods he is required to travel there for work.

    James also has another purpose in incurring the accommodation expenses, being investment.

    Because the travel allowance is not on his payment summary and the amount he spends is equal to or more than his allowance, James can choose not to include the travel allowance as income on his income tax return and not claim any of his expenses for accommodation, meals and incidentals.

    If he chooses to claim a deduction for accommodation, meals or incidentals, he must include the travel allowance as income in his tax return.

    If he chooses to claim a deduction, James must apportion the costs of financing, holding and maintaining the apartment in Melbourne. The amount by which his costs exceed the costs of obtaining suitable short-term commercial accommodation in Melbourne, for the periods James is required to travel there for work, are not deductible. They relate to investment.

    End of example
    Last modified: 13 Jun 2017QC 50760