Edited version of private ruling

Authorisation Number: 1011725836023

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Ruling

Subject: Living away from home expenses

Questions

1. Are you entitled to a deduction for accommodation and meal expenses?

Answer: No.

2. Are you entitled to a deduction for travel expenses to and from work?

Answer: No.

3. Are you entitled to a deduction for work related mobile phone and broadband expenses?

Answer: Yes.

4. Are you entitled to a deduction for a portion of computer repairs?

Answer: Yes.

5. Are you entitled to a deduction for garden maintenance expenses?

Answer: 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 a contract worker.

You engage in short term government contracts interstate.

You engage in short term accommodation while interstate.

You incur accommodation and meal expenses while interstate.

You incur expenses in travelling to and from work.

You incur mobile phone and broadband fees to manage work contracts.

You incur expenses for repairing your computer.

You incur garden maintenance expenses at your principal place of residence while you are away from home.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1.

Reasons for decision

Question 1

Summary

Your expenses relating to accommodation and meals are not deductible as they are of a private or domestic nature.

Detailed reasoning

Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) generally allows a deduction for any loss or outgoing to the extent that it is incurred in gaining or producing assessable income except where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income.

As a general rule, the cost of meals, incidentals and accommodation while working away from home are not allowed as a deduction. The place where a taxpayer stays whilst away from their home is considered to be their usual place of residence for that period. These costs are essentially living expenses of a private or domestic nature. The fact that income cannot be earned unless certain expenses are necessarily incurred is not determinative of deductibility.

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 this case, the taxpayer's meals, accommodation (running and depreciation expenses associated with the caravan, plus interest paid on the loan used to acquire the caravan) and incidental expenses do not have a sufficient connection with his income producing activities. The extra expenses of food and accommodation are considered to be of a private and domestic nature as the taxpayer chooses the location of their normal place of residence. Accordingly, a deduction for the cost of meals, accommodation and incidental expenses is not allowable.

You incurred accommodation expenses as a result of your normal dwelling being in one state, and being stationed during your contract work in another state. The accommodation expenses were incurred to put you in places where you are closer to your places of employment, and are not related to the actual performance of your duties as a contract worker.

As the accommodation and food expenses were not incurred in the course of gaining or producing your employment income and are private in nature you are not entitled to a deduction.

Question 2

Summary

Your expenses for travel to and from work are not deductible as they are private or domestic in nature.

Detailed reasoning

As a general rule, the cost of relocating from the taxpayer's normal residence to accommodation near their workplace is not allowed as a deduction. Travel from home to work is also generally private in nature and not deductible.

Taxation Ruling IT 112 states that fares paid by taxpayers to enable them to go day by day to their regular place of employment or business and back to their home are not deductible against the assessable income earned by them from their employment or business.

Taxation Ruling IT 2543 states that the mode of transport, the availability of transport, the lack of suitable public transport, the erratic hours and times of employment, the on-call nature of the employment, the time of travel, the distance of travel, the unavailability of residential accommodation near the place of work, the frequency of travel and the necessity of travel are not factors which will alter the essential character of travel between home and work.

You have incurred expenses related to travelling to a place of accommodation closer to your place of work. You have also incurred expenses in travelling between home and work. These expenses are considered to be of a private or domestic nature and are therefore not deductible.

Question 3

Summary

Your work related mobile phone and broadband costs are deductible as they are a work-related expense.

Detailed reasoning

Telecommunication expenses related to gaining or producing your assessable income are deductible under section 8-1 of the ITAA 1997.

Please note that if the telecommunications are also used for private purposes you will need to apportion the amount that you claim.

Question 4

Summary

The work related portion of your expenses relating to repairing your computer are deductible as they are a work-related expense.

Detailed reasoning

Repairs to computers that are used in relation to gaining or producing your assessable income are deductible under section 8-1 of the ITAA 1997.

Please note that if the computer is also used for private or domestic purposes the expense will need to be apportioned.

Question 5

Summary

Your expenses relating to garden maintenance are not deductible as they are of a private or domestic nature.

Detailed reasoning

You have incurred expenses to maintain the garden at your principal place of residence. These expenses are considered to be of a private or domestic nature and are therefore not deductible.