Edited version of private ruling

Authorisation Number: 1011573356512

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Ruling

Subject: Travel expenses

Are you entitled to a deduction for accommodation and meal expenses incurred whilst travelling between your regular places of employment?

No.

Relevant facts and circumstances

You own a unit in Town A and are employed by a company that is based in Town B. Your employer also has an office in Town C and added an office in Town D during the income year.

Your employment duties include responsibility for all aspects of production and sales revenue. This role involves directly managing staff and meeting clients in each of the three locations. You find it necessary to move between the three offices in order to achieve satisfactory sales and business outcomes through meetings with clients and staff training.

You spent the first weeks of your employment in Town B with the owner and from month two you were spending most of your time at the Town C office in order to bring about an increase in revenue and provide a clear direction to staff. Over the next period of months you moved between the Town B and Town C offices, returning to your residence at Town A at weekends. With the opening of the Town D office you initially spent more time there but with the office gaining momentum you are now visiting Town B and Town C again on a more regular basis. Typically, all offices are now visited at least once in a two week cycle.

You do not perform any work at home other than to check your emails.

You are not paid a travel allowance or a living away from home allowance by your employer. Your car is provided by your employer who pays all expenses.

You have incurred accommodation and meal expenses whilst travelling in connection with your employment.

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 except where the outgoings are of a capital, private or domestic nature.

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. The time of travel, distance of travel or the necessity of travel do not alter the essential character of the expenses.

This is supported by the decision in FC of T 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 situation, you work on a regular basis in three cities where your employer has offices. In effect, you can be said to have three places of work and while the costs of travelling between each of these sites may be deductible, if the cost was met by you, the same cannot be said about the cost of meals and accommodation incurred in doing so. In having three separate places of work you are considered to reside at each place whilst you are in that particular city.

Accordingly, your accommodation and meal expenses whilst working in Towns B, C and D are of a private or domestic nature, which are incurred to enable you to work in the various sites. 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 the ITAA 1997.

Additionally, a deduction would be denied for the cost of accommodation and meals where the claim is based upon the Commissioner's determination of the reasonable amounts because you do not receive a travel allowance from your employer.

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