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Edited version of your written advice
Authorisation Number: 1012807482240
Ruling
Subject: Work related expenses - living away from home
Question 1
Are you entitled to a deduction for living away from home expenses for any period that you have been working in your temporary role?
Answer
No
Question 2
If your employer commences to pay you a living away from home allowance, will the 12 month period have already expired under the fringe benefits regime?
Answer
Invalid - see reasons for decision
This ruling applies for the following periods:
Year ending 30 June 2014
Year ending 30 June 2015
Year ending 30 June 2016
The scheme commenced on:
1 July 2013
Relevant facts and circumstances
You have been employed for a number of years by X.
You were asked by X to take on a temporary relieving role. The temporary role was located in a different city to your normal residence.
You signed a lease for a property located within walking distance to your temporary employment location.
Your spouse remained in your normal residence.
You travelled between your normal place of residence and the location of your temporary employment position each week and returned home on the weekends.
Your temporary role has been extended a number of times.
From your initial acceptance of the temporary role you have not been paid any living away from home allowance by your employer. Your salary did increase but apart from this you have not received any other payments or benefits from your employer.
It has always been your intention to resume your substantive role at the end of your temporary role.
You have incurred expenses for rent, gas, electricity, phone and meal costs.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1
Reasons for decision
Question 1
ATO Interpretive Decision ATO ID 2002/616 provides guidance on the deductibility of accommodation expenses for a person living a long distance from their workplace.
Generally, travel and accommodation expenses incurred by an employee who lives away from home to carry out the duties of their 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. Meal expenses are also inherently private in nature and generally not deductible.
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.
In your case, you accepted a temporary position located in a different city to your usual residence. The accommodation, gas, electricity and phone expenses you incurred enabled you to stay in proximity to your work place and arrive at work on time. They were a prerequisite to the earning of assessable income and were not expenses incurred in the course of gaining or producing that income.
Further, the essential character of the accommodation and food expenses was of a private or domestic nature as they arose due to your choices of where to work and where to live. The fact that the position was only ever intended to be temporary does not alter the nature of the expenses.
Accordingly your accommodation and food expenses are not deductible under section 8-1 of the ITAA 1997.
Question 2
Your question in relation to the 12 month rule under the fringe benefits regime is invalid. A private ruling can only be provided to a taxpayer if the relevant provision is capable of applying to them personally. The fringe benefits regime has tax consequences for employers not employees.
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