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Edited version of your written advice
Authorisation Number: 1012986294059
Date of advice: 18 March 2016
Ruling
Subject: Deductions - work related expenses - meal and accommodation expenses
Question
Are you entitled to claim a deduction for meal and accommodations expenses you incurred when travelling to the office?
Answer
No.
This ruling applies for the following periods:
Year ending 30 June 2016
The scheme commences on:
1 July 2015
Relevant facts and circumstances
You have worked for an employer for several years. The employer is situated in city A.
During this time you lived in city A, and travelled a short distance to the office each day.
Recently you moved to city B, and began working for the same employer but from your home office.
100% of your work is conducted from home via remote access.
Recently your spouse travelled to city A for a conference.
You decided to use this opportunity and travel to city A, to work from the office and meet with clients while you were there.
You incurred accommodation and meal expenses on this trip.
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.
Generally, accommodation, meal and incidental expenses are private in nature and are not deductible. In Lunney v. FC of T (1958) 100 CLR 478 the Full High Court laid down the principle that for a deduction to be allowable it is not enough for the expenditure to be an essential prerequisite to the derivation of assessable income. In that case it was held that the costs incurred by a taxpayer in travelling to the place where they work are expenses incurred in order to enable them to earn income but are not expenses incurred in the course of earning that income.
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.
In your case, you incur expenses for accommodation, meals and incidentals due to having your home in one city and your employment in another town. While we acknowledge that you work from home, city A would still be considered your normal place of work. Whilst the expenses would not be incurred but for the distance of your work place from your family home, the expenses are a prerequisite, to the earning of assessable income. That is, they are incurred in order to put you in a position to be able to earn income but are not incurred in the actual course of gaining or producing that income. Also, the expenses are considered to be private in nature as they are incurred due to your choice of where you live and where you work.
A deduction is therefore not allowable for your accommodation, meal and incidental expenses.