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Edited version of your written advice
Authorisation Number: 1051321850852
Date of advice: 19 December 2017
Ruling
Subject: Work related expenses
Question and answer
Are you entitled to a deduction for the expense incurred living in rental accommodation in #?
No.
This ruling applies for the following period:
Year ended 30 June 2017
The scheme commenced on:
1 July 2016
Relevant facts:
You lived in location A.
You worked for an employer based in location B.
You were required to work on a project for your employer in location B for an extended period.
You rented a unit in location B for an extended period.
You were not reimbursed or paid an allowance for your accommodation.
Your spouse changed jobs, ended the lease where you lived in location A and moved your belongings to location C.
You went home to location A initially and then location C every second weekend.
You and your spouse paid the rent on the location C unit.
Your rent in # totalled $ and utilities $.
Legislation
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.
Generally accommodation expenses incurred by a person who lives away from home in order to carry out his or her own employment duties, at the place of employment, will not be deductible. Expenses of this nature are private, or incurred before or after the activity of earning assessable income.
Draft Taxation Ruling TR2017/D6 discusses employee costs of relocating for work and living away from home to work. These expenses are considered preliminary to the work and are not deductible.
Example 16 of TR 2017/D6 looks at working at a different location for an extended period (4 months). In this example the taxpayer is living away from home for a four month period due to a work assignment. The Commissioner has concluded that in this case the living away from home accommodation is non-deductible.
Your case is comparable to the example in TR2017/D6. The distance between your home and location B is what necessitates you having to stay away from home. You are not living in location B in the course of your work. Rather, you are living there so that you can work. The expenses are preliminary to the work and not deductible.
Accordingly, your accommodation expenses are considered to be of a private or domestic nature. The expenses do not have the character of an outgoing incurred in gaining assessable income and are not deductible under section 8-1 of the ITAA 1997.