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Edited version of your private ruling
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Ruling
Subject: Deduction for meal and accommodation expenses
Question:
Are you entitled to a deduction for your accommodation and meal expenses?
Answer:
No
This ruling applies for the following periods:
Year ended 30 June 2012
The scheme commences on:
1 July 2011
Relevant facts and circumstances
You live in a rural area and you are undertaking a work contract in the metropolitan region. You are paid an hourly rate and you work at different locations in the metropolitan region and you stay for a month at a time at these different locations.
Due to the distance from your home to your workplaces you are living away from home in your caravan at caravan parks near your workplace, which you relocate when you need to.
You stay in your caravan during the week and generally every second week-end you travel home or attend a sport event.
You incur expenses for food and accommodation. You are not paid an allowance and are not reimbursed for your meals and accommodation expenses by your employer.
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, 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. The fact that income cannot be earned unless certain expenses are necessarily incurred is not an indication of deductibility.
Expenditure on the daily necessities of life (e.g., accommodation, food and drink) is generally not deductible as it is not incurred in gaining or producing assessable income and is also considered to be private or domestic in nature.
Exceptions to this are where you are undertaking work related travel and are required to stay away overnight. However, no deduction is allowable if a taxpayer is merely maintaining accommodation close to their usual work location for convenience.
Additionally, a deduction is not allowed for the cost of travel between home and your normal workplace as it is generally considered to be a private expense. The distance of travel does not change the private nature of the expense.
In FC of T v. Toms 89 ATC 4373; (1989) 20 ATR 466 the Federal Court disallowed a forest worker's deduction for the cost of maintaining a caravan and other living expenses. The taxpayer incurred the expenses in providing temporary accommodation at the base camp because the taxpayer had chosen to reside at a place far from the worksite. These expenses were dictated not by work but by private considerations.
While it is acknowledged that your usual home is in a rural area, it is not considered that your travel to the metropolitan region is work related travel. The distance between your home and your work is what necessitates your having to stay away from home. Your trips between your home and your accommodation in the metropolitan region are not travelling on work; rather, you are travelling to work.
It follows that expenses for accommodation and meals are private expenses to enable you to be close to your work and commence your employment duties. These expenses are not regarded as work related expenses and are not incurred in earning your assessable income.
In your case, you currently work and live in the metropolitan region where you are staying in your caravan. Accordingly, your accommodation and meal expenses are considered to be of a private or domestic nature. The expenses do not have the character of an outgoing incurred in gaining assessable income.
Therefore, you are not entitled to a deduction for your accommodation or meal expenses under section 8-1 of the ITAA 1997, as these expenses are not incurred in gaining or producing assessable income, but rather the expenses are a prerequisite to your employment.
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