ATO Interpretative Decision
ATO ID 2002/616 (Withdrawn)
Deductibility of accommodation expenses for a person who lives a long distance from their work place
FOI status: may be released
||This ATO ID is withdrawn because it is no longer necessary. The issue addressed in the ATO ID is covered by TR 2017/D6 Income tax and fringe benefits tax: when are deductions allowed for employees' travel? .
||This document has changed over time. View its history.
Status of this decision: Decision withdrawn 7 July 2017.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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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.
Is the taxpayer entitled to a deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for accommodation expenses incurred because they live a long distance from their work place?
No. The taxpayer is not entitled to a deduction under section 8-1 of the ITAA 1997 for accommodation expenses incurred because they live a long distance from their work place.
The taxpayer lives a long distance from their work place.
So that they can arrive at work on time they choose to stay at employee quarters provided by their employer for a few nights each week.
The taxpayer incurs a cost for this accommodation.
Reasons for Decision
Section 8-1 of the 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.
Certain expenditure is incurred in order to be in a position to be able to derive assessable income, for example unless one arrives at work it is not possible to derive income. This does not mean that the expenditure is incurred in the course of gaining or producing assessable income. Rather, the expenses are incurred to enable the taxpayer to commence income earning activities ( Lunney & Hayley v. Federal Commissioner of Taxation (1958) 100 CLR 478;  HCA 5; (1958) 11 ATD 404; (1958) 7 AITR 166).
The accommodation expenses incurred by the taxpayer enable them to stay in proximity to their work place and arrive at work on time. They are a prerequisite to the earning of assessable income and are not expenses incurred in the course of gaining or producing that income.
Further, the essential character of the expenditure is of a private or domestic nature as it arises due to the taxpayer's choice of where to live and at what distance from work.
The taxpayer will therefore not be entitled to a deduction for their accommodation expenses under section 8-1 of the ITAA 1997.
|Date of Amendment
|11 December 2015
||Reasons for Decision
||Insert medium neutral citation.
||Insert medium neutral citation.
Date of decision: 15 February 2002
|Year of income:||Year ended 30 June 2001|
Income Tax Assessment Act 1997
Lunney & Hayley v. Federal Commissioner of Taxation
(1958) 100 CLR 478
 HCA 5
(1958) 11 ATD 404
(1958) 7 AITR 166
Work related expenses
Siebel/TDMS reference number: 1-6ATS3YZ / DW356028-6; 1-892O3E8
Business line: Small Business/Individual Taxpayers
Date of publication: 31 May 2002
|ATO ID 2002/616 (Withdrawn) history