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Edited version of private ruling
Authorisation Number: 1011478839792
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Ruling
Subject: Travel and accommodation expenses
Question 1
Are you entitled to a deduction for expenses incurred in home to work travel?
Answer
No.
Question 2
Are you entitled to a deduction for accommodation and meal expenses?
Answer
No.
This ruling applies for the following period:
Year ended 30 June 2006
Year ended 30 June 2007
Year ended 30 June 2008
Year ended 30 June 2009
Year ended 30 June 2010
Year ending 30 June 2011
The scheme commenced on:
1 July 2006
Relevant facts and circumstances
As part of your employment you work in a regional location for a few days a week.
You travel by train, taxi or car from your home in the city to the regional location, and stay in accommodation overnight in the regional location.
You incur meal expenses whilst in the regional location.
Your employer pays you an amount in recompense for the travel involved, equivalent to X hours of your hourly rate of pay. This amount is included as part of your normal salary on your PAYG payment summary.
You begin your employment duties in the regional location.
Your employer does not require you to be 'on call'.
Your employer does not require you to work at your home.
You do not carry bulky equipment as part of your employment.
You have kept the relevant documents to substantiate your expenses.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 8-1
Reasons for decision
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, or relate to the earning of exempt income.
Home to work travel
A deduction is generally not allowable for the cost of travel by an employee 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 of employment, rather than in the performance of those duties (Taxation Ruling TR 95/34 paragraph 77).
However, there are situations where it has been accepted that travel by employees from home to work is deductible. Taxation Ruling IT 2543 summarises these situations as follows:
- the taxpayer's home constitutes a place of employment and travel is between two places of employment or business
- the taxpayer's employment can be construed as having commenced before or at the time of leaving home
- the taxpayer has to transport by vehicle bulky equipment necessary for employment
- the taxpayer's employment is inherently of an itinerant nature
- the taxpayer is required to break his or her normal journey to perform employment duties (other than including incidental duties such as collecting newspapers, mail, etc.) on the way from home to the usual place of employment, or from the place of employment to home.
In your case:
- your home is not a place of employment
- your employment does not commence at the time of you leaving home
- you are not required to transport bulky equipment to your employment
- your employment is not of an itinerant nature; that is, your work location is fixed in the regional location and there is no continual travel once you commence work, and
- you do not break your journey for work purposes when travelling to and from your employment.
The circumstances in your case are similar to those in Case V111 88 ATC 712, where a taxpayer worked as a labourer at a power station site located approximately 400 km from his home. Each Monday the taxpayer departed his family home and travelled by car directly to the work site, and commenced the return journey on the following Saturday. During the week the taxpayer resided in employer provided accommodation at a camp near the work site. In his judgment, P.M. Roach (Senior Member) stated at p 714:
... nothing in High Court decisions turns on the significance of the length of distance travelled (even 400 kms each way) or the frequency of such travel (once per week each way). Although the High Court accepted that incurring the expense was a necessary prerequisite to the earning of income, it none the less held that the expenses of getting to and from work were not expenses incurred -"in the course of" deriving income by working.
Therefore, the expenses that you incurred when travelling from your home in the city to your place of employment in the regional location, will not be deductible. This decision is not altered by the fact that you receive an amount in recompense for the travel involved, equivalent to X hours of your hourly rate of pay. The expenses you have incurred are as a result of living in one place and working in another.
Accommodation expenses
Generally, accommodation 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.
Accordingly, your accommodation expenses are of a private and domestic nature, which are incurred to enable you to work in the regional location. They are not incurred during the actual performance of your work, that is, during the production of assessable income, and as such are not deductible under section 8-1 of ITAA 1997.
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