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Edited version of private ruling
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Ruling
Subject: Work related expenses
Are you entitled to claim a deduction for meals, accommodation and petrol which are costs associated with your work in city A?
No.
This ruling applies for the following period
Year ended 30 June 2012.
The scheme commenced on
1 July 2010.
Relevant facts
You are employed.
You have been working at work site one.
You were transferred to work site two.
You did not apply for the position at work site two.
You are continuing to live at your residence which is several hundred kilometres from work place two.
You are not able to travel each day.
You spend three nights per week at a location near work site two and then return to your home near work site one for three nights.
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 expenses incurred in gaining or producing your assessable income. A deduction is not allowable for expenses that are of a capital, private or domestic nature.
Travel expenses from home to work are generally not an allowable deduction. The leading case that decided this was the decision of the Full High Court in Lunney v. Federal Commissioner of Taxation (1958) 100 CLR 478; (1958) 11 ATD 404; (1958) 7 ATR 166 (Lunney). The reasons are twofold.
Firstly, merely because certain expenditure must be incurred in order to be able to derive assessable income, in that unless one arrives at work it is not possible to derive income, does not necessarily mean that the expenditure is incidental and relevant to the derivation of assessable income or that it was necessarily incurred in the course of gaining or producing assessable income. It is a prerequisite to the earning of assessable income rather than being incurred in the course of gaining that income. Hence, it does not fulfil the positive limbs of section 8-1 of the ITAA 1997.
The second reason is that the essential character of the expenditure is of a private or domestic nature, relating to the personal and living expenses as part of the taxpayer's choice of where to live, in choosing to live away from and at what distance from work. The negative limbs of section 8-1 of the ITAA 1997 are therefore also breached.
There are, however, some exceptions. Certain employees such as professional footballers and musicians have been held to have a base at their home and, consequently, from the moment they leave that home they are engaged in connection with their work and are entitled to a deduction in respect of the travelling costs incurred (Ballesty v. FC of T 77 ATC 4181; (1977) 7 ATR 411 (Ballesty)). This is particularly so where the transport of bulky equipment is a necessary part of the job (FC of T v. Vogt 75 ATC 4073; (1975) 5 ATR 274 (Vogt)). No deduction for home/work travel was allowed to a radiographer who, despite being on call, did not commence the income-producing duties until arrival at the hospital.
The policy of the Commissioner of Taxation is to allow a deduction where all the particular facts which give rise to a deduction in Vogt, Ballesty, FC of T v. Collings 76 ATC 4254: (1976) 6 ATR 476 or FC of T v. Wiener 78 ATC 4006; (1978) 8 ATR 335 are present. The general policy is that the expenses of travel between home and work are not deductible are contained in Taxation Ruling IT 112.
The facts of this case are comparable with Lunney in that for people pursuing a profession, expenses of travelling in habitually going from home to a regular place of employment are not deductible.
In your case the travel between your home in city B and your work place in city A along with the costs associated with working away from home are considered to be private and domestic in nature.
Therefore, you are not entitled to claim a deduction for your work related expenses.