Edited version of private ruling

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Ruling

Subject: Travel expenses

Question

Are you entitled to a deduction for airfares, accommodation, meals and incidental expenses incurred while working away from home?

Answer

No.

This ruling applies for the following period

Year ended 30 June 2011

The scheme commenced on

1 July 2010

Relevant facts

Your permanent place of residence is in City A.

During the first part of the 2010-11 financial year you worked for 14 weeks for an employer in City B.

You then worked for 26 weeks for another employer in City C.

You incurred air fare costs to travel to and from City A.

You stayed in hotel accommodation while working in City B and City C.

You incurred expenses for accommodation, meals and incidentals while working away.

You were not paid a travel allowance.

Assumptions

None.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1.

Reasons for decision

Section 8-1 of the Income Tax Assessment Act 1997 allows a deduction for all losses or outgoings to the extent to which they are incurred in gaining or producing assessable income, except to the extent that they are outgoings of a private or domestic nature.

Certain expenditure is incurred in order to be in a position to be able to derive assessable income, for example unless one arrives at work it is not possible to derive income. This does not mean that the expenditure is incurred in the course of gaining or producing assessable income. Rather, the expenses are incurred to enable the taxpayer to commence income earning activities (Lunney & Hayley v. Federal Commissioner of Taxation (1958) 100 CLR 478; (1958) 11 ATD 404; (1958) 7 AITR 166).

Miscellaneous Taxation Ruling MT 2030 discusses the difference between travelling on work and living away from home for work. It states that travelling on work occurs where the employee is travelling in the course of carrying out their duties of employment whereas a person is living away from home for work where they have a new work location.

In your case, you were working and living in City B for 14 weeks and then in City C for another 26 weeks. It is considered that for these periods you were living away from home for work rather than travelling on work. That is, during these periods you were living in City B and City C and you travelled because your work location had been moved to those cities for those periods. Travel was not a part of your actual work duties.

As you were not travelling in the course of carrying out employment duties, no deduction is available for the accommodation, meals and incidental expenses you incurred when working away from your usual place of residence. Further to this the essential character of your expenditure is of a private or domestic nature as it arose due to the choice of where you live and where you work. The expenses incurred by you to stay in close proximity to your work-place were a prerequisite to the earning of assessable income and were not expenses incurred in the course of gaining or producing that income.