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Edited version of your written advice
Authorisation Number: 1012900152294
Date of advice: 23 October 2015
Ruling
Subject: Work related expenses - travel cost incurred between country of residence and place of work
Question 1
Is a non-resident taxpayer, employed at a mine site in Australia, entitled to claim a deduction for the cost of travel between their country of residence and Australia?
Answer
No
This ruling applies for the following period:
Year ended 30 June 2015
The scheme commenced on:
On or after 1 January 2015
Relevant facts and circumstances
You have advised that you are a resident of a foreign country. You are currently working at a mine site in Australia on a fly-in/fly-out basis of employment.
In order to reach the mine site you travel from your country of residence to Town Y and then from Town Y to the mine site. The reverse order applies when you return to your country of residence at the end of your work period.
The cost of your travel between Town Y and the mine site is initially met by you and then reimbursed. However you are solely responsible for the cost of travel between Town Y and your country of residence and receive no reimbursement for this travel.
Under the terms of your engagement you are required to perform set periods of work at the mine site. This work period is followed by a rest period which you use to return to your country of residence
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 any expense that is incurred in gaining or producing a taxpayer's assessable income provided that expense is not of a capital, private or domestic nature.
Taxpayers incur certain expenditure 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. In Lunney & Hayley v. Federal Commissioner of Taxation (1958) 100 CLR 478; (1958) 11ATD 404; (1958) 7 AITR 166, the Court held that expenses incurred in travelling to the work place were private in nature and not deductible. The expenses were a prerequisite to earning the taxpayers assessable income.
The costs incurred by you in travelling between Town Y and your country of residence are considered to be a prerequisite to the earning of your assessable income and are not expenses incurred in the course of gaining or producing your assessable income. You employment duties occur at the mine site and do not commence until you arrive there.
Therefore, you are not entitled to claim a deduction for your travel expenses incurred between your country of residence and Town Y as they are considered to be an outgoing that is private or domestic in nature