Edited version of private ruling

Authorisation Number: 1011891001012

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Ruling

Subject: Accommodation and electricity expenses

Question:

Are you entitled to a deduction for costs associated with personal accommodation and electricity for yourself at your temporary work location?

Answer:

No.

This ruling applies for the following periods

Year ending 30 June 2011

Year ending 30 June 2012

The scheme commenced on

1 July 2010

Relevant facts

You were requested by your employer to take a six month secondment to an interstate office over 1,000km away from your home which was very short of staff with your qualifications.

Your employer is not providing assistance with accommodation, and you have found your own accommodation at your own cost and have taken out a six month lease.

You continue to maintain your family home, where your spouse will remain for the term of your secondment, as they have small business interests there which make it impractical for them to relocate to your temporary workplace. You are the principal income earner of the family.

It is considered that the secondment is a temporary transfer and you will return to your original office at the completion of the assignment.

You did not seek secondment interstate; it was requested by your employer because of a lack of qualified staff at the interstate location, and your position is being kept for you when you return.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1.

Reasons for decision

Summary

You were temporarily relocated to an interstate location to work. The expenses you incurred for accommodation while living away from home are of a private nature.

The expenses are a prerequisite to the earning of assessable income. They are incurred in order to enable you to earn income but are not incurred in the course of gaining or producing that income; therefore, they are not deductible.

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.

Accommodation expenses are ordinarily not deductible as they are private and domestic in nature.

An exception is where a taxpayer is travelling in the course of performing their work duties, for example, an interstate truck driver who travels away from home overnight. In these types of cases, the accommodation, meal and incidental expenses incurred while the taxpayer is travelling are incidental to the proper carrying out of their employment function and cease to be of a private and domestic nature.

However, it is important to distinguish taxpayers who travel in the course of carrying out their employment duties from taxpayers who are living away from home. In the latter case, the taxpayer moves and takes up temporary residence away from their usual place of residence so as to be able to carry out employment duties for a time at the new (but temporary) workplace.

For taxpayers who are living away from home, there is a change of job location and a temporary change of residence to a place at or near that location. For example, an employee who is transferred for three months to an office in another city and takes up temporary accommodation in that city whilst maintaining their own usual place of residence would be in this category. In this type of situation, the accommodation, meal and incidental expenses incurred while the person is living away from their usual home do not cease to be private and domestic in nature. That is, they are considered to retain their character as living expenses rather than becoming work related expenses.

Miscellaneous Taxation Ruling MT 2030 discusses the difference between travelling on work and living away from home for work. It states that taxpayers who are travelling on work normally do so for comparatively short periods and as a general rule where the period does not exceed 21 days, the taxpayer will be considered to be travelling on work.

In your case, you were transferred interstate for six months. It is considered that for this period you were living away from home for work rather than travelling on work. That is, it is not considered that travel was a part of your actual work duties. Rather, your work location had changed and you were required to take up temporary residence near your new work location. Therefore, your accommodation expenses are considered to retain their character as living expenses. As these expenses are private and domestic in nature, a deduction is not allowable.