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Ruling

Subject: Travel expenses

Question

Are you entitled to a deduction for meals, accommodation, travel and incidental expenses?

Answer

No

This ruling applies for the following period

Year ending 30 June 2013

The scheme commenced on

1 July 2012

Relevant facts

You are employed in Australia.

You have been appointed for a short period overseas by another employer.

You will be paid by this employer for your services during the course of this period.

You have taken leave from your current employment to undertake this position.

This arrangement is supported by your supervisor in Australia.

You will incur accommodation, travel, meal and incidental expenses while overseas.

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.

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).

However, no deduction is allowable for these expenses where a taxpayer works at a different location to where they normally live. The place where a taxpayer stays whilst away from home is considered to be their usual place of residence for that period. 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 determinative of deductibility.

In your case you have been appointed to a position overseas for a short period. You will incur travel, accommodation, meals and incidental expenses over the course of this period.

Your place of work for the duration of this period is considered to be overseas and you travelled overseas to commence your employment duties. The travel, accommodation, meal and incidental expenses incurred by you, enable you to stay in close proximity to your work place overseas and the accommodation constitutes a second home.

These expenses are a prerequisite to the earning of your assessable income and are not expenses incurred in the course of gaining or producing that income. They are living expenses and have been incurred for private and domestic purposes.

Therefore, you are not entitled to a deduction for the expenses incurred in relation to your travel, accommodation, meals and incidentals.