Edited version of private advice

Authorisation Number:1051553608913

Date of advice: 30 July 2019

Ruling

Subject: Work related travel expenses

Question

Can your travel expenses be claimed in accordance with Taxation Determination TD 2017/19?

Answer

No

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You have a family home with your spouse and belongings in Town A.

You were employed on a contract, full time basis.

You have provided relevant details including a copy of your employment contract including:

·         The Employee's principal place of work will be at the location specified (Town B). The Employee may be required to work at other locations as directed.

·         The Employee may be required, to the extent reasonably required and without further remuneration other than as set out in this Agreement, to undertake travel for the purpose of carrying out the Employee's duties under this Agreement.

·         The Employee will be reimbursed for all approved travel and out of pocket expenses actually and properly incurred by the Employee in the discharge of The Employee's duties, subject to the provision of receipts or other documentary evidence.

No allowance was received from the employer for your travel expenses.

You have incurred accommodation expenses Town B to facilitate accommodation in close proximity to your place of employment.

During your time of engagement, you are seeking to claim travel expenses in accordance with TD 2017/19 and TD 2018/11 including rental accommodation, food, drink, incidentals, fuel and tolls.

Whilst travelling to regional locations or interstate you would return to your family home.

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 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.

Travel between home and work/business is not ordinarily deductible. It is not incidental and relevant to earning a taxpayer's income and is private or domestic in nature. Duties of a salary and wage earner will not commence until the arrival at a place of work and will cease upon departure from work.

In contrast, a transport expense is deductible where the travel is undertaken in performing the employee's work activities.

To satisfy the first limb of section 8-1 of the ITAA 1997, the loss or outgoing must be relevant and incidental to the operations or activities from which the assessable income is produced: Ronpibon Tin NL v. Federal Commissioner of Taxation (1949) 78 CLR 47; 8 ATD 431; (1949) 4 AITR 326. This principle is also expressed in terms of there having to be a sufficient nexus or connection between the outgoing and the production of assessable income.

Taxation Ruling TR 2017/D6 sets out the Commissioner's view on "when are deductions allowed for employees' travel expenses?"

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, for example to a conference interstate or specific training course at the request of their employer.

Where accommodation, meal and incidental expenses are incurred by an employee in relocating to a place of work or in living away from home to work, they are preliminary to the work and not deductible.

Accommodation, meal and incidental expenses when incurred by an employee in performing an employee's work activities are deductible, only where:

·         the employee's work activities require them to undertake the travel

·         the work requires the employee to sleep away from home overnight

·         the employee has a permanent home elsewhere, and

·         the employee does not incur the expenses in the course of relocating or living away from home.

In FC of T v. Toms 89 ATC 4373; (1989) 20 ATR 466 (Toms case), the Federal Court disallowed a forest worker's deduction for the cost of maintaining a caravan and other living expenses. The taxpayer incurred the expenses in providing temporary accommodation at the base camp because the taxpayer had chosen to reside at a place far from the worksite. It was determined that the expenses were dictated not by work but by private considerations.

Whilst you do have a permanent family home in another location to your chosen employment location, your employer has not required you to undertake travel, or to sleep away from home whilst gaining or producing your assessable income.

In your case the accommodation expenses incurred are private or domestic in nature as you have chosen to accept your contract for full time employment away from your normal place of residence. The costs of your accommodation are not incurred in performing an employees work activities. Similar to Toms case, your expenses reflected your choice about where to live. As you were not travelling in the course of carrying out employment duties, no deduction is available for accommodation, meals and travel expenses you incurred when working away from your usual place of residence.

In these circumstances, your accommodation, travel to and from XXXX, meal and incidentals are private in nature and you cannot claim a deduction for your travel expenses under section 8-1 of the ITAA 1997.

Additionally, Taxation Determination TD 2017/19 and TD 2018/11 sets out the amounts that the Commissioner considers are reasonable (reasonable amounts) for the substantiation exception in Subdivision 900-B of the ITAA 1997 for the 2017-18 income year in relation to some work related expenses.

The approach outlined in TD 2017/19 and TD 2018/11 can only be used where you receive an allowance to cover the particular expenses you are claiming - for example, you received an accommodation allowance and are claiming accommodation expenses. This Determination is not relevant to you where you do not receive an allowance to cover your expense