ATO Interpretative Decision
ATO ID 2002/427 (Withdrawn)
Rental expenses for house-parent at boarding school
FOI status: may be released
||This ATO ID is withdrawn. Tax Determination TD 93/230 provides the ATO view covering deductibility for these types of expenses.
||This document has changed over time. View its history.
Status of this decision: Decision withdrawn 28 July 2017.
|CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.|
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Can the taxpayer claim a deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for their rental expenses incurred while boarding at work?
Yes. The taxpayer can claim a deduction under section 8-1 of the ITAA 1997 for their rental expenses incurred while boarding at work as the taxpayer's employer requires the taxpayer to reside away from home for periods of time and thus the expense is employment related.
The taxpayer is employed as a boarding school house-parent.
The taxpayer is required by their employer to reside at the school in accommodation provided by the school during the school week. This is to ensure the overnight security, safety and well-being of students who board at the school.
The school provides the taxpayer with accommodation for which the taxpayer is charged rent.
The taxpayer returns to their own home on their days off and occasionally visits their home during the school week.
Reasons for Decision
Section 8-1 of the ITAA 1997 allows a deduction for all losses or 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.
As a general rule, the cost of accommodation is not tax deductible, as it is essentially a living expense which is considered to be a private or domestic outgoing ( FC of T v. Green (1950) 81 CLR 313).
However, where a taxpayer is required by his or her employer to reside for periods of time, away from home and at the work site, and that employee incurs expenditure for the cost of sustenance, the expense takes on the character of being business or employment related ( Roads and Traffic Authority of NSW v. FC of T 93 ATC 4508; (1993) 26 ATR 76).
In FC of T v. Charlton 84 ATC 4415; 15 ATR 711, Crockett J expressed the opinion that in order for accommodation expenses to be deductible, there must be something in the nature of the work that demands the taxpayer stay in the accommodation.
The taxpayer's duties and terms of employment require the taxpayer to remain at the school during school weeknights. The nature of the taxpayer's employment demands the taxpayer stay in the accommodation. The taxpayer maintains their own home and spends their time away from work at their private home.
The taxpayer is required by their employer to reside away from home for periods of time. The taxpayer incurs rental expenses as a result of this requirement. As the nature of the taxpayer's employment demands the taxpayer stay in the particular accommodation, the rental expense is employment related in character.
Accordingly, the taxpayer can claim a deduction under section 8-1 of the ITAA 1997 for rental expenses incurred while staying at the boarding school.
|Date of Amendment
|27 March 2015
||Reasons for Decision
||Update reference to FC of T v Charlton 84 ATC 4415
(Replaced 88 with 84).
Date of decision: 13 March 2002
Income Tax Assessment Act 1997
Taxation, Federal Commissioner of v. Green
81 CLR 313
57 ALR 531
24 ALJR 303
4 AITR 471
Roads & Traffic Authority of New South Wales v. Federal Commissioner of Taxation
116 ALR 482
26 ATR 76
43 FCR 223
93 ATC 4508
Taxation, Federal Commissioner of v. Charlton
15 ATR 711
71 FLR 107
84 ATC 4415
Deductions & expenses
Siebel/TDMS reference number: DW295761, 1-AJYBUZG
Business line: Small Business/Individual Taxpayers
Date of publication: 12 April 2002
|ATO ID 2002/427 (Withdrawn) history