1051312593653 | Legal database

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This edited version has been archived due to the length of time since original publication.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 your written advice

Authorisation Number: 1051312593653

Date of advice: 24 November 2017

Ruling

Subject: Rent Expenses

Question

Can you claim a deduction for your rental expenses incurred where your employer requires you to stay onsite?

Answer

This ruling applies for the following period:

Year ended 30 June 2018

The scheme commences on:

19 July 2017

Relevant facts and circumstances

You are employed by, xxxx University as a residential college leader at their student accommodation.

You are required to reside onsite to provide leadership and pastoral supervision of students.

Your employer charges you rent for single-occupation furnished ensuite apartment.

Your employer does not subsidise or reimburse your rent expenses.

You don’t maintain another residence.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

Summary

You are not entitled to a deduction for the rental expenses incurred in staying in the University’s accommodation as these expenses are considered to be private in nature.

Reasons for decision

Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for a loss or an outgoing to the extent to which it is incurred in gaining or producing assessable income, except where the loss or outgoing is of a capital, private or domestic nature.

As a general rule, the cost of accommodation is not tax deductible, as it is essentially a living expense which is considered to be a private or domestic outgoing.

However, where a taxpayer is required by his or her employer to reside for periods of time, away from home and at the work site, and that employee incurs expenditure for the cost of sustenance, the expense takes on the character of being business or employment-related (Roads and Traffic Authority of NSW v. FC of T 93 ATC 4508; (1993) 26 ATR 76 (Roads and Traffic Authority Case).

In FC of Taxation v Charlton 84 ATC 4415; 15 ATR 711, Crockett J expressed the opinion that in order for accommodation expenses to be deductible, there must be something in the nature of the work that demands the taxpayer stay in the accommodation for short periods of time.

Your situation can be distinguished from above cases as you do not maintain another residence and as such you are not living away from home.

Taxation Ruling 98/9 explains that expenditure on accommodation will not be allowable as an employment-related deduction where a taxpayer has travelled to another location and has established a new home. Hill J in the Roads and Traffic Authority Case supports this view and states that:

'An employee who had no private home and was employed indefinitely to work at a particular site and did in fact work for the whole of his employment at that site, might be said to have chosen to live at the site so that the cost of his accommodation there would be private.'

Although, TR 98/9 deals with deductibility of self-education expenses, it outlines key factors to be taken into account in determining whether a new home has been established. Two important factors that are relevant in your case are:

● whether the taxpayer is accompanied by his or her family, and

● whether the taxpayer is maintaining a home at the previous location while away.

It is acknowledged that you are required to reside in the campus due to the nature of your employment and you incur rental expenses as a result of this requirement. However, the accommodation provided to you by your employer is considered your new home and as such any expenses associated with living in this accommodation is considered to be a private or domestic in nature. Accordingly, you are not entitled to a deduction for the rental expenses incurred while staying at student accommodation at the University of xxxxxx” under section 8-1 of the ITAA 1997.

ATO view documents

TR 98/9

Copyright notice

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).