Edited version of private advice

Authorisation Number: 1051843194102

Date of advice: 27 May 2021

Ruling

Subject: Deductions - work related travel expenses

Question

is a deduction allowed for the cost of meals and Travel expenses whilst working at an alternative workplace?

Answer

No

This ruling applies for the following period:

Year ended 30 June 2020

The scheme commences on:

1 July 2018

Relevant facts and circumstances

•   You are an employee.

•   You work as medical practitioner.

•   You're undergoing specialist training.

•   As part of the requirements of your training, your required to work away from home on lengthy rotations.

•   Your primary workplace is close to your home.

•   For a period of approximately 12 months you had to work away from your principal place of work due to work rotations.

•   Whilst away on the lengthy work rotations, you were a significant distance from your principal place of residence.

•   As you had to work away from your principal place of residence, you incurred travel expenses, accommodation expenses, food and incidentals expenses.

•   When you were not on duty whilst working away, you would return to principal place of residence.

•   No compensation was paid to you for the travel expenses you incurred whilst being away from your principal residence.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

Income Tax Assessment Act 1997 paragraph 8-1(2)(b)

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.

TR2021/D1 ( a consolidation of various other previous applicable rulings) explains when an employee can deduct accommodation, food and drink expenses under section 8-1 of the ITAA 1997, when they are travelling on work, including where it is necessary to apportion the fringe benefits tax (FBT) implications.

An employee cannot deduct accommodation, food and drink expenses they have incurred where, due to their personal circumstances, they live far away from where they gain or produce their assessable income. These expenses are living expenses and are not deductible.

Living expenses are a prerequisite to gaining or producing an employee's assessable income and are not incurred in performing an employee's income-producing activities. Living expenses are also private or domestic in nature, this means that even if these expenses were incurred in gaining or producing assessable income, they still would not be deductible due to the application of paragraph 8-1(2)(b) of the ITAA 1997.

While living expenses must be incurred before any assessable income can be derived, a loss or outgoing is not incurred in gaining or producing an employee's assessable income merely because it is necessary. This is particularly relevant to living expenses. A person must eat and sleep somewhere, whether or not they engage in employment.

In these circumstances, the expenses incurred because your personal circumstances where you choose to keep your usual residence, rather than relocate. The occasion of the outgoing for accommodation, food and drink is not found in your income-producing activities, meaning that these expenses are not incurred in the course of gaining or producing assessable income. They are private and domestic in nature.