Taxation Determination

TD 2014/9

Fringe benefits tax: reasonable amounts under section 31G of the Fringe Benefits Tax Assessment Act 1986 for food and drink expenses incurred by employees receiving a living-away-from-home allowance fringe benefit for the fringe benefits tax year commencing on 1 April 2014

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Preamble

Exclamation This publication provides you with the following level of protection:

This publication (excluding appendixes) is a public ruling for the purposes of the Taxation Administration Act 1953.

A public ruling is an expression of the Commissioner's opinion about the way in which a relevant provision applies, or would apply, to entities generally or to a class of entities in relation to a particular scheme or a class of schemes.

If you rely on this ruling, the Commissioner must apply the law to you in the way set out in the ruling (unless the Commissioner is satisfied that the ruling is incorrect and disadvantages you, in which case the law may be applied to you in a way that is more favourable for you - provided the Commissioner is not prevented from doing so by a time limit imposed by the law). You will be protected from having to pay any underpaid tax, penalty or interest in respect of the matters covered by this ruling if it turns out that it does not correctly state how the relevant provision applies to you.

Ruling

1. This Determination sets out the amounts that the Commissioner considers reasonable under section 31G of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) for food and drink expenses incurred by employees receiving a living-away-from-home allowance (LAFHA) fringe benefit for the fringe benefits tax (FBT) year commencing on 1 April 2014.

2. Where the total of food and drink expenses for an employee (including eligible family members) does not exceed the amount the Commissioner considers reasonable, those expenses do not have to be substantiated under section 31G of the FBTAA. Where an employee receives a LAFHA fringe benefit, for the employer to reduce the taxable value of the fringe benefit by the exempt food component, the expenses must be either:

·
equal to or less than the amount the Commissioner considers reasonable under paragraph 31G(1)(b), or
·
substantiated in accordance with the requirements in subsection 31G(2).

3. If the total of an employee's food or drink expenses exceeds the amount the Commissioner considers reasonable, the substantiation provisions under section 31G of the FBTAA will apply.

Reasonable amount for food and drink - within Australia

4. Table 1 below sets out the weekly amounts the Commissioner considers to be reasonable food and drink amounts for a LAFHA paid to employees living away from home within Australia for the FBT year commencing on 1 April 2014. These amounts are for the total of food or drink expenses and include any amounts that may have been allowed for home consumption.

Table 1: Amounts of reasonable food and drink - within Australia

Per week

$

One adult 236
Two adults 354
Three adults 472
One adult and one child 295
Two adults and one child 413
Two adults and two children 472
Two adults and three children 531
Three adults and one child 531
Three adults and two children 590
Four adults 590

('Adults' for this purpose are persons who had attained the age of 12 years before the beginning of the FBT year.)

5. In relation to larger family groupings, the Commissioner accepts the reasonable food and drink amount based on the above figures plus:

·
$118 for each additional adult, and
·
$59 for each additional child.

Reasonable amounts for food and drink - overseas

6. The tables below set out the weekly amounts the Commissioner considers to be reasonable food and drink amounts for a LAFHA paid to employees living away from home outside Australia for the FBT year commencing on 1 April 2014. Table 2 sets out the cost group to which a county has been allocated. Table 3 sets out the reasonable amount for food and drink expenses for each cost group.

7. If the employee lives away from home in a country that is not shown in Table 2 the employee can use the amount for Cost Group 1 in Table 3.

Table 2: List of Countries

If a country is not listed in this table use the amount in Table 3 for Cost Group 1.

For the amounts that apply to each cost group see Table 3.

Country Cost Group Country Cost Group
Albania 2 Estonia 3
Algeria 4 Ethiopia 1
Angola 6 Fiji 2
Antigua and Barbuda 4 Finland 5
Argentina 2 France 5
Austria 4 Gabon 5
Azerbaijan 4 Gambia 2
Bahamas 5 Georgia 3
Bahrain 4 Germany 4
Bangladesh 3 Ghana 3
Barbados 5 Gibraltar 3
Belgium 5 Greece 4
Bermuda 5 Guatemala 3
Bolivia 1 Guyana 3
Bosnia 2 Hungary 3
Brazil 5 Iceland 5
Brunei 2 India 3
Bulgaria 2 Indonesia 3
Burkina Faso 3 Iran 3
Cambodia 2 Ireland 4
Cameroon 4 Israel 5
Canada 5 Italy 5
Chile 3 Jamaica 3
China
(includes Macau & Hong Kong)
5 Japan 5
Colombia 4 Jordan 5
Congo Democratic Republic 4 Kazakhstan 3
Cook Islands 4 Kenya 3
Costa Rica 2 Korea Republic 5
Cote D'Ivoire 4 Kuwait 4
Croatia 3 Laos 2
Cuba 3 Latvia 3
Cyprus 4 Lebanon 4
Czech Republic 3 Libya 3
Denmark 6 Lithuania 3
Dominican Republic 3 Luxembourg 5
East Timor 2 Macedonia 2
Ecuador 3 Malawi 1
Egypt 3 Malaysia 3
El Salvador 2 Mali 4
Eritrea 2 Malta 3
Mauritius 3 Senegal 4
Mexico 3 Serbia 2
Monaco 5 Sierra Leone 3
Morocco 3 Singapore 5
Mozambique 2 Slovakia 3
Myanmar 3 Slovenia 3
Namibia 2 Solomon Islands 3
Nepal 2 South Africa 2
Netherlands 5 Spain 4
New Caledonia 5 Sri Lanka 2
New Zealand 4 Sudan 2
Nicaragua 2 Surinam 3
Nigeria 5 Sweden 5
Norway 6 Switzerland 6
Oman 5 Syria 3
Pakistan 1 Taiwan 3
Panama 2 Tanzania 3
Papua New Guinea 5 Thailand 3
Paraguay 1 Tonga 3
Peru 3 Trinidad and Tobago 5
Philippines 3 Tunisia 2
Poland 3 Turkey 4
Portugal 3 Uganda 2
Puerto Rico 4 Ukraine 3
Qatar 5 United Arab Emirates 5
Romania 3 United Kingdom 5
Russia 6 United States of America 4
Rwanda 3 Uruguay 3
Saint Lucia 3 Vanuatu 4
Saint Vincent 3 Venezuela 5
Samoa 4 Vietnam 2
Saudi Arabia 3 Zambia 3

Table 3: Amounts by cost group

Cost Group Food and drink for one adult
1 $137
2 $201
3 $246
4 $310
5 $419
6 $492

8. Where the employee is accompanied by other family members while overseas, the reasonable food and drink amount per week for the family is worked out by multiplying the amount shown in Table 3 by the relevant factor in Table 4 below.

Table 4: Factors to apply for family groups - overseas

Family group Factor
Two adults 1.5
Three adults 2.0
One adult and one child 1.25
Two adults and one child 1.75
Two adults and two children 2
Two adults and three children 2.25
Three adults and one child 2.25
Three adults and two children 2.5
Four adults 2.5

9. In relation to larger family groups, the Commissioner accepts the reasonable food and drink amounts can be increased:

i.
for each additional adult by a further 50% of the relevant single adult rate in Table 3; and
ii.
for each additional child by a further 25% of the relevant single adult rate in Table 3.

Example 1: calculation of reasonable amounts for food and drink - within Australia

10. Jasper, his wife and their two children (both under 12 years of age) temporarily move to Brisbane from Sydney for a period of 5 months (from 1 May 2014 to 30 September 2014; 21 weeks and 6 days) for Jasper to work on a project for his employer. Jasper receives a LAFHA from his employer.

11. Jasper does not need to substantiate his family's food and drink expenses during the 5 month period if his total expenses do not exceed $10,317 ($472 per week multiplied by 21 6/7 weeks).

12. If Jasper's family's total food and drink expenses for the period exceed $10,317, Jasper will have to substantiate all of the expenses incurred, or his employer will be liable to FBT on the amount of LAFHA paid to Jasper that is in excess of $10,317.

Example 2: calculation of reasonable amounts for food and drink - overseas

13. Maria is seconded from Australia to Canada by her employer for 25 weeks, starting work there on 1 April 2014. Maria agrees to temporarily move with her husband and child. Maria receives a LAFHA from her employer for the period of the secondment.

14. Maria does not need to substantiate her food and drink expenses if the total expenses do not exceed $18,325 [$733 per week multiplied by 25 weeks (Table 2 lists Canada as being in Cost Group 5, and using Table 3, the reasonable amount for food and drink is $419 per week. A factor of 1.75 for 2 adults and 1 child is applied to this rate as per Table 4)].

15. If Maria's total food and drink expenses for the period exceed $18,325, Maria will have to substantiate all of the expenses incurred, or her employer will be liable to FBT on the amount of LAFHA paid to Maria that is in excess of $18,325.

Date of effect

16. This Determination applies to the FBT year commencing on 1 April 2014.

Commissioner of Taxation
16 April 2014

Appendix 1 - Explanation

Exclamation This Appendix is provided as information to help you understand how the Commissioner's view has been reached. It does not form part of the binding public ruling.

Background

17. This determination is intended to be read in conjunction with Taxation Determination TD 2013/4. TD 2013/4 sets out the amounts that the Commissioner considers reasonable under section 31G of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) for food and drink expenses incurred by employees receiving a living-away-from-home allowance (LAFHA) fringe benefit for the fringe benefits tax year commencing on 1 April 2013. Reasonable amounts were determined for employees within Australia based on the 2009-10 Household Expenditure Survey (HES) conducted by the Australian Bureau of Statistics and indexed to take into account movements in the Consumer Price Index (CPI) since the survey was completed. Reasonable amounts for employees overseas were determined by reference to the annual Taxation Determination which sets out reasonable travel and overtime meal allowance expense amounts. For the FBT year commencing on 1 April 2014 reference is made to Taxation Determination TD 2013/16.

Reasonable amounts for food and drink - within Australia

18. In determining the reasonable amounts for food and drink for substantiation purposes for employees living away from home in Australia, reference was made to the publicly available 2009-10 HES. The HES food and drink expenditure (including alcoholic beverages) for households in the highest income quintile has been adopted. The HES amounts have been indexed to take into account movements in the food sub-group of the CPI since the survey was completed, to determine the reasonable amounts for food and drink for FBT substantiation purposes.

Reasonable amounts for food and drink - overseas

19. As explained more fully in TD 2013/4 the reasonable amounts for food and drink for a LAFHA paid to employees living away from home outside Australia are based on the annual Taxation Determination which sets out reasonable travel allowance amounts. The most recent Determination, which sets amounts for the 2013-14 income year is Taxation Determination TD 2013/16.

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Not previously issued as a draft

References

ATO references:
NO 1-593QD4B

ISSN: 1038-8982

Related Rulings/Determinations:

TR 2006/10
TD 2013/4
TD 2013/16

Subject References:
fringe benefits tax
FBT food component
food & drink
living-away-from-home allowance fringe benefits
living-away-from-home food fringe benefits
substantiation

Legislative References:
TAA 1953
FBTAA 1986 Pt III Div 7
FBTAA 1986 31G
FBTAA 1986 31G(1)(b)
FBTAA 1986 31G(2)