Edited version of private advice

Authorisation Number: 1051640826589

Date of advice: 27 February 2020

Ruling

Subject: Work related accommodation expense

Question

Are you entitled to a deduction for hotel accommodation expenses?

Answer

No.

This ruling applies for the following period

Year ended 30 June 20XX

The scheme commences on

1 July 20XX

Relevant facts and circumstances

You currently reside in a major capital city.

You plan to move to a smaller town approximately two hours away from the major capital city.

Soon you will have permanent accommodation in the smaller town.

You have a current Certificate A in your business activity.

You have a Certificate B in another activity which you also do some work in.

You have an ABN.

You have previous work experience in the other activity.

Your main activity is connected to your Certificate A.

You are employed by an employment agency - which is certified in providing staff for activities associated with your Certificate B.

For the past couple of years you have worked for the agency.

You currently work for the agency working with a client for X days per week, and have been doing so for the past X years.

The client's child wants you to continue working with them after you move to the smaller town.

You are prepared to travel from the smaller town to the major capital city and stay X nights in hotel accommodation to continue working with the client through the agency.

While in the major capital city you expect to see other clients in relation to your Certificate A.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

Reasons for decision

Detailed reasoning

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.

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 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 will incur expenses for accommodation to enable you to work in a different city to where your principal residence will be. However, as in Toms' Case, the expenses are a prerequisite to the earning of assessable income. They are incurred in order to enable you to earn income but are not incurred in the course of gaining or producing that income.

A deduction is therefore not allowable for your accommodation expenses.