We have a client who employed a new worker from Queensland to work in her Outback Hotel. The client paid the costs for the flight ticket and hotel isolation. Can our client claim these costs as a tax deduction?
Answer
The employee can’t claim a deduction for removal or relocation costs incurred to transfer or relocate for work purposes.
This is the case even if relocating is a condition of employment the employee takes up in:
- A transfer in existing employment
- New employment with a different employer
Removal and relocation expenses never have a sufficient connection to earning employment income. They are expenses incurred to start earning employment income and are private or domestic expenses.
If the employee receives an allowance from the employer to cover some of the costs of relocating, they must declare the allowance as assessable income in their tax return.