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Edited version of private ruling
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Ruling
Subject: Deductions - accommodation, meals and incidentals
Are you entitled to a deduction for accommodation, meals and incidentals when you stay away from home overnight so that you are close to your employment?
No.
This ruling applies for the following period:
Year ended 30 June 2010
The scheme commences on:
1 July 2009
Relevant facts and circumstances
You are employed as a flight simulator instructor.
Your working hours depend upon a schedule for the flight simulator set in advance involving six hour sessions.
Due to your flight simulator schedule, your employer requires that you be fit and alert to meet professional and legal standards and you must be on time to begin work.
You live some distance from where you work and since accepting this job, the road traffic from your home to where you work has become congested due to extensive road works creating lengthy delays.
The only way to meet the conditions of your employment was to obtain motel accommodation close to your work for three to four nights per week.
You incur costs for accommodation, meals and incidentals when you stay in the motel accommodation.
Summary
You are not entitled to a deduction for accommodation, meals and incidental expenses when you stay in a motel to be close to your place of employment as the expenses are private in nature
Detailed reasoning
Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for all losses and outgoings to the extent that they are incurred in gaining or producing assessable income, except where the outgoings are capital, private or domestic in nature.
Meals and accommodation expenses are normally private or domestic in character.
Some expenses are incurred in order to put you in a position to be able to earn your assessable income. For example, unless you get yourself to work, it is not possible to earn your income. Such expenses are incurred before you have commenced your duties and thus before your income is being earned (Lunney v. Federal Commissioner of Taxation (1958) 100 CLR 478; (1958) 11 ATD 404; (1958) 7 ATR 166).
Similarly, meal and accommodation expenses incurred by an individual who lives away from home to carry out the duties of his 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. The time of travel, distance of travel or the necessity of travel do not alter the essential character of the expenses.
This is supported by the decision in FC of T v. Toms 89 ATC 4373; (1989) 20 ATR 466 (Toms). The taxpayer was a forest worker who during the working week lived in a caravan in a bush camp 108 kilometres from his family home. On working days, he would proceed by four-wheel drive vehicle from the base camp to predetermined logging areas within a radius of 20 kilometres. He would return home every weekend. The Federal Court ruled the only reason why the taxpayer had to incur expenses in providing temporary accommodation at the base camp was because he had chosen to reside at a place so far from where he was required to be to earn his income. As those expenses were dictated not by his work but by private considerations, they were not deductible.
Your case is comparable with Toms case as your family home is some distance from where you work, and because of your work requirements, you have chosen to stay away from home three to four days per week in motel accommodation close to your place of employment.
You incur expenses to enable you to live near your place of employment which is a personal choice. Any accommodation expenses you incur to stay in the motel accommodation near your place of employment are incurred to put yourself in a position to perform your duties and not in the actual performance.
You are therefore not entitled to a deduction under section 8-1 of the ITAA 1997 for accommodation, meals and incidental expenses during the period you stay in motel accommodation close to where you work as they are private in nature.