Edited version of private ruling

Authorisation Number: 1011838409787

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Ruling

Subject: Relocation expenses

Question

Are you entitled to a deduction for the expenses of transporting your vehicles to your new work location?

Answer

No.

This ruling applies for the following period

Year ending 30 June 2011

The scheme commenced on

1 July 2010

Relevant facts

Your employment was based in City A.

You have recently been transferred to City B from City A, as mandated by your employer due to a restructuring of your department.

The department placed a cap on removal costs for furniture and personal belongings and you were forced to sell many household items at a substantial loss to keep the removal costs under this cap.

You were advised that the department would not pay for the costs of transporting your vehicles from City A to City B.

You have incurred expenses in transporting your vehicles.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1.

Reasons for decision

Summary

You are not entitled to a deduction for the expense of transporting your vehicles, as you are travelling to work, rather than on work and the expenses are therefore private in nature.

Detailed reasoning

Section 8-1 of the Income Tax Assessment Act 1997 allows a deduction for all losses and outgoings to the extent to which they are 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.

Taxation Ruling IT 2614 examines the deductibility of relocation expenses. The ruling states that expenses incurred in relocating to take up an appointment with a new or existing employer are not allowable deductions as they are private or domestic in nature. This is so, regardless of whether an allowance has been paid, or if the relocation was involuntary.

Taxation Ruling IT 2481 also discusses this expense. At paragraph 9 the ruling states the expenditure is not incurred in gaining or producing income and is not deductible as the taxpayer is not travelling on work, but to work. This is consistent with the view in the Federal Court case Fullerton v. FC of T 91 ATC 4983; 22 ATR 757 (Fullerton's case).

In Fullerton's case, it was held that the shortfall between the costs of relocation and the employer's partial reimbursement was not a loss or outgoing incurred in the gaining or producing of income, notwithstanding that the relocation was in response to the changing necessities of work.  

In your case, you incurred relocation expenditure due to the restructuring of your department and having to move from your current location. We understand that the move was not voluntary and has been mandated by your employer. However the expenses are not incurred in gaining or producing your assessable income. They are a prerequisite to earning that income and consequently are of a private nature.

Therefore, you are not entitled to a deduction for the expense of transporting your vehicles.