Deductions and expenses: Relocation Expenses (Travel)

Whether travel expenses incurred in finding and purchasing a new home are allowable deductions to a taxpayer who has transferred employment with the same employer from one city to another?

No. The taxpayer is not allowed a deduction under subsection 51(1) (ITAA 1936) for the expenditure incurred in finding and purchasing a new home.

Upon being granted a transfer to another city, the taxpayer made several trips to find and purchase a new home in that other city.

The taxpayer is not allowed a deduction under subsection 51(1) (ITAA 1936) for the travel expenses incurred in finding and purchasing a new home as those expenses are not incurred in gaining or producing assessable income and are of a private or domestic nature. This is consistent with such cases as Fullerton v FC of T 91 ATC 4983; 22 ATR 757 and Case U91 87 ATC 525.

Taxation Ruling IT 2481 provides that where a taxpayer voluntarily transfers employment and incurs expenditure in moving from one place of residence to another, that expenditure is not deductible under subsection 51(1) ( Income Tax Assessment Act 1936 (ITAA 1936)).