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Monday Ramblings – More on Travel and accomodation deductions

Travel and accommodation costs #5 – Can I claim a deduction for my food while traveling

Draft Taxation Ruling TR 2021/D1 Income tax and fringe benefits tax: employees: accommodation and food and drink expenses, travel allowances, and living-away-from-home allowances

To be able to claim a deduction for food while travelling, you first need stays away from your usual residence overnight.

Second, you need to be required by your employer, as an incident of their employment (that is, the duties of employment), to stay away from your usual residence overnight for relatively short periods of time (generally less than 21 days in a row and less than 90 days in a year).

Third, you cannot deduct accommodation and food and drink expenses incurred where, due to their personal circumstances, you live far away from where you gain or produce their assessable income. Here is the Commissioner’s example…

Michelle lives in Brisbane with her family. Michelle accepts a job in Canberra. Early on a Monday morning, Michelle catches a flight to Canberra and on Friday afternoon she returns by plane to Brisbane. On Monday to Thursday nights, Michelle stays in a serviced apartment. Sometimes she buys groceries and cooks for herself and sometimes she eats out.

The occasion of the outgoings is not explained by Michelle’s employment. Rather, it is explained by her personal circumstances of living in Brisbane while working in Canberra. The expenses Michelle incurs are private and domestic in nature.

Accordingly, Michelle is not entitled to a deduction for the amount she spends on renting the serviced apartment, the groceries she buys or the food and drink she purchases when she eats out.

And finally, where an employee is living at a location away from their usual residence, their accommodation and food and drink expenses are living expenses and will not be deductible even if the employee is living at that location due to their employment. This is when they generally breach the 21 day rule in PCG 2021/D1. 

One last example…

Yumi works as a senior executive for an employer based in Brisbane. Her employer is setting up a new office in Townsville and assigns her to the new office for a period of four months in order to assist in setting it up. After spending four months working at the Townsville office, Yumi will return to her usual employment in the Brisbane office.

During the period she is in Townsville, Yumi will occasionally travel to other locations around Australia (including Brisbane) for one or two days to attend work meetings or meet with clients. Yumi will live in a two-bedroom apartment close to the office in Townsville and her family will remain in the family home in Brisbane. However, the apartment in Townsville is big enough to accommodate Yumi’s family.

Yumi will be living in Townsville away from her usual residence for the four-month period due to:

  • There being a change in Yumi’s regular place of work from the Brisbane office to the Townsville office
  • The extended period of time she is going to be in Townsville (an overall period of four months)
  • The longer-term nature of the accommodation that she stays in while she is Townsville, and
  • The fact that her family could have accompanied her if they had wanted to.

The expenses that Yumi incurs on accommodation and food and drink while she is in Townsville are living expenses and will not be deductible. This would not change even if Yumi returned to Brisbane each weekend to be with her family. However, when Yumi travels from Townsville to other locations around Australia for work meetings or to meet with clients, she will be travelling on work and the amount she incurs on accommodation and food and drink will be deductible.

By Ken Mansell

As a stay at home Dad most of the week this is my way of pretending I am still the tax counsel of ASX and SEC listed companies, working at big 4 firms, working at the Federal Treasury, on the Henry Review and at Parliament House for the previous government.

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