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Edited version of your written advice
Authorisation Number: 1013016035652
Date of advice: 17 May 2016
Ruling
Subject: Travelling for work expense
Question
Are you entitled to a deduction for accommodation and travel expenses incurred when relocating for work purposes, where the allowance paid to cover these expenses was required to be repaid to your former employer?
Answer
No
This ruling applies for the following period
Year ended 30 June 2015
The scheme commenced on
1 July 2014
Relevant facts
Your employer required you to move interstate for a period of six months.
You incurred expenses in relation to the interstate, rental payment in advance, and then expenses relocating back to the city of origin.
You were paid a relocation allowance to cover expenses associated with the move, including accommodation and your private vehicle usage.
Shortly after the relocation, you resigned from the position.
You were required to repay the relocation allowance to your former employer, as it was a condition of the advance payment for relocation that you remain with the employer for 6 months.
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 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.
Taxation Ruling IT 2614 examines the deductibility of relocation expenses. The ruling states that expenses incurred in relocating to take up an appointment with a new or existing employer are not allowable deductions as they are private or domestic in nature. This is so, regardless of whether an allowance has been paid, or if the relocation was involuntary. Taxation Ruling IT 2481 also discusses this expense. At paragraph 9 the ruling states the expenditure is not incurred in gaining or producing income and is not deductible as the taxpayer is not travelling on work, but to work.
Therefore, you are not entitled to a deduction for your accommodation or travel expenses when relocating interstate and then returning to your city of origin, as the expenses were not incurred in gaining or producing assessable income. The expenditure is inherently of a private or domestic nature and is not allowable under section 8-1 of the ITAA 1997.