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Ruling

Subject: The deductibility of travel, accommodation and meal expenses.

Question 1

Can you claim a deduction for travel expenses incurred between your home and place of work?

Answer

Yes.

Question 2

Can you claim a deduction for accommodation and meal expenses incurred when working in another state?

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 are employed as a tradesman.

Due to a work shortage near your home, you were forced to travel to another state for employment.

You transported your tools of trade in your vehicle between your home and your place of employment.

You did not return to your home in your vehicle until your employment ceased.

The tools of your trade take up the entire vehicle and are collectively very heavy in weight.

You transport the tools from site to site in your vehicle.

Your employer does not provide you with a secure place for storage of your tools of trade.

In between jobs you returned to your home via plane, while storing your tools in your lockable accommodation near your place of employment.

You incurred accommodation and meal costs while working in the other state.

Your employer did not pay an allowance or reimburse you for expenses incurred for travel, accommodation or food.

You have kept receipts for all expenses, except food which you approximated. However the expenses could be evidenced on your credit card statements.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1.

Reasons for decision

Summary

Travel - bulky equipment

The equipment that is used to derive your assessable income is considered to be bulky, and you have not used your vehicle to transport the equipment as a matter of convenience or personal choice. Therefore you are entitled to a deduction for expenses incurred while travelling between your home and your place of employment.

Accommodation and meal expense

You accepted work in another state whilst maintaining your home. The accommodation and meal expenses were incurred to enable you to stay closer to your place of employment, and not during the actual performance of your work. As such the expenses are considered to be private and domestic in nature, and not deductible.

Detailed reasoning

Section 8-1 of the Income Tax Assessment Act 1997 provides that for an expense to be deductible it must be incurred in the course of gaining assessable income. However, you cannot deduct an expense of a capital or private nature.

Travel between your home and place of employment - Bulky equipment

Expenses of travelling between home and a place of work are generally not deductible, as this expenditure is of a private nature. 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 (Lunney v. FC of T (1958) 100 CLR 478; Taxation Ruling IT 112).

However Taxation Ruling TR 95/22 states that a deduction is allowable if the transport costs can be attributed to the transportation of bulky equipment, rather than to private travel between home and work (see FC of T v. Vogt 75 ATC 4073; 5 ATR 274).

The deduction can only be claimed where it is essential to transport the equipment to and from work, and it is not done as a matter of convenience or personal choice, and there is no secure storage available at the workplace. Further, in order to establish that the deduction is allowable, the taxpayer must be able to first demonstrate that the equipment is bulky.

In your case, the equipment that is used to derive your assessable income is considered to be bulky, and you have not used your vehicle to transport the equipment as a matter of convenience or personal choice. Therefore you are entitled to a deduction for expenses incurred while travelling between your home and place of employment.

Accommodation and meal expense

As a general rule, expenditure on meals and accommodation while away from home cannot be deducted. Such outgoings are essentially "living expenses" of a private or domestic nature.

In Ricketts v. Colquhoun (1926) 10 TC 118, Viscount Cave LC observed at 134:

"A man must eat and sleep somewhere, whether he has or has not been engaged in the administration of justice. Normally he performs those operations in his own house, and if he elects to live away from home so that he must find board and lodging away from home, that is by his own choice, and not by reason of any necessity arising out of his employment; nor does he, as a rule, eat or sleep in the course of performing his duties, but either before or after their performance."

In FC of T v. Toms 89 ATC 4373 (Toms' Case), the taxpayer was a logging contractor who during the working week lived in a caravan in a bush camp 108 kms from his family home in Grafton. On working days he would proceed by four wheel drive vehicle from the base camp to predetermined logging areas. He would return home every weekend. The Federal Court held that the expenses travelling to the base camp from his home and in providing temporary accommodation at the base camp were not deductible, but of a private nature (Lunney v. FC of T (1958) 100 CLR 478; FC of T v. Charlton 84 ATC 4415 applied).

Your case is similar to the situation in Toms' Case. You accepted work in another state whilst continuing to maintain your home. The accommodation and meal expenses were incurred to enable you to work in the other state, and not during the actual performance of your work. As such the expenses are considered to be private and domestic in nature, and not deductible.

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