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Edited version of private advice
Authorisation Number: 1051687266005
Date of advice: 27 May 2020
Ruling
Subject: Work related expenses (accommodation)
Are accommodation expenses incurred for overnight stays deductible expenses under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
No, accommodation expenses incurred are not deductible under this section.
This ruling applies for the following periods:
Year ended 30 June 2019
Year ending 30 June 2020
The scheme commences on:
2 February 2019
Relevant facts and circumstances
You are a professional and worked for Employer Z in suburb B.
You own a property located in suburb A with your spouse.
The property in suburb A is your main residence.
You are required at times to be on call.
You rent premises in suburb B for the days you are required to be on call.
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 a loss or an 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.
In general, accommodation expenses are considered private expenses and consequently are not deductible. Court decisions and decisions of the Administrative Appeals Tribunal/Board of Review provide an independent view and confirm this.
The Federal Court decision in FC of Taxation v. Toms 89 ATC 4373; (1989) 20 ATR 466, held that expenses incurred in relation to accommodation near the workplace while maintaining a family residence in another location, were not an allowable deduction as they are considered to be private expenses. Although the expenditure must be incurred in order to put one in a position to be able to derive assessable income, it does not necessarily mean that the expenditure is incurred in the course of gaining or producing that income.
Likewise in your case, the accommodation expenses you incurred to enable you to stay in the proximity of your work location at suburb B are a prerequisite to the earning of assessable income, they are not expenses incurred in the course of gaining or producing your assessable income. Consequently you are not entitled to a deduction for accommodation expenses under section 8-1 of the ITAA 1997.