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Edited version of your written advice
Authorisation Number: 1051320143078
Date of advice: 14 December 2017
Ruling
Subject: Travel - Accommodation Expense Deductions
Question
Am I entitled to claim a deduction for work-related accommodation expenses?
Answer
Yes
This ruling applies for the following period:
Year ending 30 June 2017
The scheme commences on:
1 July 2016
Relevant facts and circumstances
You reside in State B.
Your employment contract requires you to work between the company’s State A head office and the State B branch office on an alternate weekly basis, effective from DDMMYY.
You spouse and children remain in State B and do not travel with you.
You wish to deduct $X accommodation costs as a deduction you incurred while in State A.
You have a permanent ongoing lease for a furnished apartment.
You take your clothes and personal effects as you would for any business trip.
You will be including your allowance as assessable income in your tax return.
Reasons for decision
Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for a loss or outgoing to the extent to which it is incurred in gaining or producing assessable income, except where the loss or outgoing is of a capital, private or domestic nature, or relates to the earning of exempt income.
Taxation Ruling 2017/D6 states that accommodation, meal and incidental expenses are incurred by an employee in performing an employee's work activities, and are therefore deductible, only where:
(a) the employee's work activities require them to undertake the travel
(b) the work requires the employee to sleep away from home overnight
(c) the employee has a permanent home elsewhere, and
(d) the employee does not incur the expenses in the course of relocating or living
away from home.
Expenses must be apportioned to the extent that they are of a private nature or are not incurred in producing assessable income.
Additional property expenses are expenses an employee incurs to finance, hold and maintain residential property they have purchased or leased where the employee travels away from home for work and stays at the property.
Additional property expenses that can be claimed include: lease payments, rent, interest on borrowings used to acquire the property, rates, land tax, property insurance and general maintenance of the building and grounds.
Required to work away from home
Expenses an employee incurs on accommodation, meals and incidentals are not deductible under section 8-1 unless the work requires the employee to be away from home. In many situations, it can be concluded from the nature of the work and scope of the employee's duties that the travel is required without referring to the specific terms of employment.
This is the case where it is reasonably necessary to incur the expense because of travel undertaken in the performance of the employee's work.
Required to sleep away from home
The accommodation, meal and incidental expenses are only deductible to the extent that the work requires the employee to sleep away from home.
Where an employee is required to stay away from home overnight for work, such expenses that would otherwise be private, have an employment-related character.
The requirement to sleep away from home overnight is a practical test that considers the circumstances of the work and the need for employees to have sufficient rest to perform their duties effectively. An employee's choice to return home and avoid staying away overnight does not affect the character of their expenditure if an overnight stay is reasonably required from a practical point of view.
Expenditure on accommodation, meals and incidentals is only deductible where the employee is travelling in performing their work activities and not living away from home.
Conclusion
As your accommodation costs are solely required as part of your employment duties to travel away from home, and you are only working away from home for relatively short periods of time and not living away from home, you are eligible to claim this as a deduction on your tax return.