| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of private ruling
Authorisation Number: 1011644647593
This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.
Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.
Ruling
Subject: Deductions and expenses - work related travel
Question:
Are you entitled to deduct expenses incurred whilst living away from your family home?
Answer:
No.
This ruling applies for the following periods:
1 July 2009 to 30 June 2010.
1 July 2010 to 30 June 2011.
The scheme commences on:
1 July 2009.
Relevant facts and circumstances
Your normal position is in city X.
Following a process you were offered a position in city Y for a period of 12 months.
You negotiated with your employer and it was agreed that you would receive some travel allowance. You received an amount and this amount did not appear on your payment summary.
After sometime in city Y you realised that the amount would not cover your expenses and you would be out of pocket. You incurred rent, car travel, meals and incidental expenses.
You are proposing to claim an amount in the 2009-10 income year and an amount in the 2010-11 income year.
While you were in city Y you lived separately from your spouse and therefore you maintained two households.
You made several trips to city X at your own cost.
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.
As a general rule, accommodation and incidental expenses are not allowed as a deduction as the costs are essentially living expenses of a private or domestic nature. However, these expenses will be deductible if they are incurred while travelling in the performance of duties of employment.
The receipt of an allowance does not automatically entitle a taxpayer to deductions for expenses incurred in relation to the allowance. Any deduction will only be allowable if the expenditure is actually incurred, is allowable as a deduction and the requirements of the substantiation provisions are satisfied.
The reasonable amounts for travel allowances are covered in TD 2009/15 and TD 2010/19. A travel allowance is different to a living away from home allowance. A travel allowance is paid to cover costs where the employee is travelling in the course of carrying out the duties of employment.
Taxation Ruling MT 2030, which primarily deals with the definition of living-away-from-home allowance (LAFHA), explains the distinction between living away from home and engaging in work-related travel.
Paragraphs 36 and 37 are particularly relevant to your circumstances:
36. When an employee is travelling on business on behalf of an employer, expenses of travel are incidental to the proper carrying out of the employment function and do not have the character of being private or domestic expenses. As it was stated in Case No. B 84, 2 TBRD 390, " ... where the employment actually involves the duty of travelling and therefore staying away from home, the extra expenses of living at hotels, etc., together with costs of conveyance, etc., are deductible as, to that extent, they cease to be of a private or domestic nature."
37. Unlike living-away-from-home allowances, there is generally no change of employment location in relation to the payment of travelling allowances. While the expenses that they are intended to compensate for may be similar - meals and accommodation, etc., - the circumstances in which the allowances are paid are essentially different.
In other words, the character of work related travel is to have a usual place of employment from which you depart temporarily to perform your duties.
In your case, you applied for a position in another city and you were successful. You knew the position was in city Y for a period of 12 months. It is considered that, rather than travelling away from your usual place of employment, you experienced a change in your employment location. As such, you did not engage in work-related travel but rather lived away from home in order to be near your place of employment.
Your expenses for accommodation, meals and incidentals have the character of living rather than work related travel expenses. They are private or domestic in nature and therefore not deductible under section 8-1 of the ITAA 1997.
Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).
