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Edited version of your written advice
Authorisation Number: 1012776261573
Ruling
Subject: Accommodation expenses
Question
Are you entitled to a deduction for your accommodation expenses?
Answer
No.
This ruling applies for the following periods:
Year ended 30 June 2014
The scheme commences on:
1 July 2013
Relevant facts and circumstances
You are an Australian resident.
Your employment position is based in Country A.
You are contractually obliged to be on call in Country A.
You maintain accommodation in Country A.
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.
Expenditure on the daily necessities of life (for example, accommodation, food and drink) is generally not deductible as it is not incurred in gaining or producing assessable income and is also considered to be private or domestic in nature.
Exceptions to this are where you are undertaking work related travel and are required to stay away overnight. However, no deduction is allowable if a taxpayer is merely maintaining accommodation close to their usual work location for convenience.
Certain expenditure is incurred in order to be in a position to be able to derive assessable income, for example unless a person 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 v. FC of T; (1958) 100 CLR 478).
A deduction is generally not allowable for the cost of accommodation close to your normal work place because the expenses are not considered to be incurred in producing assessable income. These expenses are incurred to enable a taxpayer to commence their income earning activities and are therefore considered private in nature. The distance from a previous home does not alter the essential character of any accommodation expenses incurred as they remain private in nature. The cost of accommodation close to work is generally incurred to put a person in a position to perform duties, rather than in the performance of those duties (FC of T v. Toms 89 ATC 4373; (1989) 20 ATR 466).
In your case, you are an Australian resident however you are required to be based in Country A as part of your employment. While we acknowledge that you are contractually obliged to be on call in Country A, it is considered that the accommodation expenses are private expenses to enable you to be close to your work and are incurred to put yourself in a position to perform your duties and not in the actual performance of those duties.
Therefore, you are not entitled to a deduction for your accommodation expenses under section 8-1 of the ITAA 1997.