Edited version of your written advice

Authorisation Number: 1012716433922

Ruling

Subject: Accommodation and travel

Question

Are you entitled to a deduction for accommodation in City B and travel between your rented accommodation and your family home?

Answer

No.

This ruling applies for the following period

Year ended 30 June 2007 to year ended 30 June 2014

The scheme commenced on

1 July 2006

Relevant facts

Your family home is in City A.

You work on City B and have rented accommodation in City B because it is too far to travel daily.

You travel home to see your family on the weekends.

You incur expenses for travel and accommodation.

Relevant legislative provisions

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.

Travel

It is settled law that expenses of travelling to work are not deductible as they are not incurred in gaining the assessable income, but as a pre-requisite to gaining assessable income (Lunney v FC of T; Hayley v FC of T (1958) 100 CLR 478).

In considering the deductibility of travel expenses a distinction is made between travel to work and travel on work. It is only if the duties of the job require a taxpayer to travel that the taxpayer's expenses can be deducted (Taylor v Provan 1975 AC 194).

In your case, you are travelling to work and the expenditure incurred is not an allowable deduction.

Accommodation

Generally, accommodation expenses are private in nature and are not deductible.

Where a taxpayer is away for an extended period of time, the associated costs including accommodation and meals remain private in nature and are not deductible. Even though the expenditure had a causal connection with the earning of income, the expenditure is inherently of a private or domestic nature and therefore no deduction is allowable.

The issue of expenses incurred in relation to accommodation near the work place while maintaining a family residence in another location was considered in FC of T v. Toms 89 ATC 4373; (1989) 20 ATR 466 (Toms' Case).

In Toms' Case, the taxpayer was a forest worker who during the working week lived in a caravan in a bush camp 108 kilometres from his family home in Grafton. He claimed it was too far to travel each day to his work in the forest, so that it was necessary to establish a caravan at the camp. He would return home on weekends. He claimed the costs of maintaining his caravan and other living expenses such as the cost of heating and lighting. The Federal Court considered that the caravan was rendered necessary as much by the taxpayer's choice of the place of his residence in Grafton as by his choice of employment in the forest, and its purpose was to enable him to retain his residence at Grafton although employed in the forest. It was held that the expenses incurred in relation to the temporary accommodation near the workplace while maintaining a family residence in another location were dictated not by his work but by private considerations, and therefore were not deductible.

You incur expenses for accommodation in City B. As in Toms' Case, 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. A deduction is therefore not allowable for your accommodation expenses.