Edited version of your written advice

Authorisation Number: 1012675687188

Ruling

Subject: Travel accommodation and meals

Question 1

Are you entitled to a deduction for travel between City A and City B?

Answer

No.

Question 2

Are you entitled to a deduction for accommodation and meals while in City B?

Answer

No.

This ruling applies for the following period

Year ended 30 June 2014

The scheme commenced on

1 July 2013

Relevant facts

Your residential home is in City A.

You were contracted to work in City B for one year.

You initially worked in City B for five days per week but after a time, your employer allowed you to work part of your time in City B and part of the time in City A so that you could be close to your family.

You incurred expenses for travel between the two cities and accommodation and meals in City B.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Reasons for decision

Travel costs

According to section 8-1 of the Income Tax Assessment Act 1997, you can deduct a loss or outgoing if it is incurred in producing your assessable income except where the outgoing is of a capital, private or domestic nature.

A deduction is generally not allowable for the cost of travel between home and work because the expenses are not considered to be incurred in producing assessable income. These expenses are incurred as a consequence of living in one place and working in another and any expenses incurred to enable a taxpayer to commence their income earning activities are therefore considered private in nature.

The case of Lunney v. Commissioner of Taxation [1958] ALR 225;1958 - 0311H - HCA;100 CLR 478;(1958) 11 ATD 404;(1958) 32 ALJR 139 settled the principle that travel to and from work is ordinarily not deductible under section 8-1 of the ITAA 1997. This travel is considered to be of an essentially private or domestic nature.

In your case, your travel is not a fundamental part of your work; you do not have a 'web' of work places as you work at one location for several days and you do not travel to different work locations on a daily or weekly basis and; you do not travel from one work site to another.  Your workplaces in your home city and the second city are regular places of employment.

Taxation Ruling TR 95/34 Income tax: employees carrying out itinerant work - deductions, allowances and reimbursements for transport expenses provides an example which is relevant to your situation:

Leo works for an accountancy firm and attends head office three days a week. He works the remaining two days at a suburban office. Leo's work does not display a 'web' of work places because:

(a) upon commencement he is not required to travel in the course of his duties; and

(b) Leo has two regular places of work.

Therefore, your travel to work, both in your home city and the second city is considered to be home to work travel, and as such, a deduction is not allowable. Furthermore, your travel between City A and City B is considered to be undertaken for private reasons of being with your family.

Accommodation and meals

In FC of T v. Toms 89 ATC 4373; (1989) 20 ATR 466 (Toms Case) 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.

We acknowledge that your contract in City B meant that you were a long way from your family home. However, as in Toms Case, the expenses that you incur for accommodation and meals in City B are as a result of living in one place and working in another. The expenses for accommodation and food are likewise not deductible.