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Ruling

Subject: Accommodation expenses

Question 1

Should the amount shown as an allowance on your payment summary be included as assessable income?

Answer

No.

Question 2

Are you entitled to a deduction for accommodation expenses?

Answer

No.

This ruling applies for the following period

Year ended 30 June 2011

Year ending 30 June 2012

The scheme commenced on

1 July 2010

Relevant facts

You are employed as a truck driver and you are required to sleep away from home.

You have not incurred any accommodation expenses.

Your employer arranged for all your accommodation and has paid for your accommodation direct to the accommodation providers.

You have provided a payment summary showing an allowance.

You advise that this amount was withheld by your employer and paid directly to the accommodation providers.

You have also provided a pay slip that shows the allowance added to your gross pay and then deducted in arriving at your net pay.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 6-5

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 outgoings to the extent to which they are incurred in gaining or producing assessable income, or are necessarily incurred in carrying on a business for that purpose. However, a deduction is not allowable for outgoings that are of a capital, private or domestic nature.

Accommodation expenses are living expenses and as such are intrinsically private or domestic in nature. However, these expenses may be considered to be work related where they are incurred while an employee is travelling on work.

Where no expense has been incurred you cannot claim a deduction.

You are truck driver and you are required to sleep away from home. Your employer has shown an amount as an allowance on your payment summary which they state is to cover your accommodation expenses. However your employer organises accommodation for when you are required to sleep away from home and pays these accommodation providers direct.

Taxation Ruling TR 92/15 discusses the difference between an allowance and a reimbursement.

A payment is an allowance when a person is paid a definite predetermined amount to cover an estimated expense.

A payment is a reimbursement when the recipient is compensated exactly, for an expense already incurred although not necessarily disbursed.

In your case, you do not incur the accommodation expenses as they are paid for by your employer. Therefore you are not entitled to claim a deduction for accommodation expenses. The amount shown on your payment summary as an allowance is not in fact an allowance as it was not paid to you but paid directly to the accommodation providers. As you have not received this amount it does not form part of your assessable income.

Additional Information

You should ask your employer for a corrected payment summary with the 'allowance' removed. You may wish to provide them with a copy of this private ruling as evidence of the Tax Office's view of this matter.