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Edited version of private ruling
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Ruling
Subject: Relocation and motor vehicle costs
Question:
Are you eligible to claim work related vehicle, travel and accommodation expenses?
Answer:
No
This ruling applies for the following period
Year ending 30 June 2010
The scheme commenced on
1 July 2009
Relevant facts
You own a motorhome. You lived in the motorhome while working at a caravan park. During the period of employment you travelled once for the same employer to another caravan park in a different locality, again living in your motorhome at the new place of employment. While travelling from one caravan park to the other you incurred fuel, meal and accommodation expenses.
During your time at the caravan parks you lived in your motorhome as accommodation was not provided to you as an employee.
Reasons for decision
Section 8-1 of the Income Tax Assessment Act 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.
The courts have considered the meaning of 'incurred in gaining or producing assessable income'. In Ronpibon Tin NL Tong Kah Compound NL v. Federal Commissioner of Taxation (1949) 78 CLR 47; 56 ALR 785; 8 ATD 431 the High Court stated that:
'For expenditure to form an allowable deduction as an outgoing incurred in gaining or producing assessable it must be incidental and relevant to that end. The words "incurred in gaining or producing the assessable income" mean in the course of gaining or producing such income.'
This is best illustrated by the well settled issue of home to work travel. You incur expenses such as fuel, maintenance or fares in travelling to work and you need to get to work to be able to earn your income. However the costs associated with this travel are incurred in putting you in a position to perform your work duties, rather than in the performance of those duties.
Taxation Ruling IT 2614 examines the deductibility of relocation expenses. The ruling states that expenses incurred in relocating to take up an appointment with a new or existing employer are not allowable deductions as they are private or domestic in nature. This is so, regardless of whether the relocation was involuntary. Taxation Ruling IT 2481 also discusses this expense. At paragraph 9 this ruling states the expenditure is not incurred in gaining or producing income and is not deductible as the taxpayer is not travelling on work, but to work.
As a general rule, expenditure on meals and accommodation while working away from home is not allowed as a deduction. These costs are essentially 'living expenses' of a private or domestic nature. Accommodation expenses are generally incurred to enable you to stay in proximity to your work place and arrive at work on time. They are a prerequisite to the earning of assessable income and are not expenses incurred in the course of gaining or producing that income.
In your case, you incurred costs relating to relocating yourself and your motorhome from one work locality to another to commence your employment there.
These expenses are not incurred to produce your assessable income or in the performance of your employment duties and are considered personal or private in nature. Consequently you are not entitled to a deduction for these expenses.
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