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Ruling

Subject: Deduction for travel expenses

Question

Are you entitled to a deduction for your travel and meal expenses?

Answer

No.

This ruling applies for the following period:

Year ended 30 June 2012

The scheme commences on:

1 July 2011

Relevant facts and circumstances

You commenced a new work contract in early 2012 and are expected to be there for several months. The new work place is more than 200km from your family home. You did not transport bulky goods when travelling to work.

Due to the distance from your home your employer provided you with accommodation and a food allowance.

You stayed in the accommodation during the week and on the week-ends you travelled home to visit your family.

You incurred food costs in excess of your allowance.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

Reasons for decision

Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 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.

The receipt of an allowance does not automatically entitle you to a deduction. The expenses must meet the deductibility test.

As a general rule, expenditure on meals while working away from home is not allowed as a deduction. 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 an indication of deductibility.

A deduction for meals may be allowed when you are undertaking work related travel and are required to stay away overnight or you work overtime.

A deduction is not allowed for the cost of travel between home and your normal workplace as it is generally considered to be a private expense. The distance of travel does not change the private nature of the expense.

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 your case, the distance between your home and your work is what necessitates your having to stay away from home. Your trips between your home and your accommodation near your work place are not travelling on work; rather, you are travelling to work. The place of the new work contract is your normal place of work for that period.

Your meal expense does not relate to work related travel or overtime.

Accordingly, your travel and meal expenses are considered to be of a private or domestic nature. The expenses do not have the character of an outgoing incurred in gaining assessable income, therefore, are not deductible.