ATO Interpretative Decision
ATO ID 2002/829
Income Tax
Deduction - Meals, accommodation and incidental expenses for plant operatorFOI status: may be released
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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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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.
Issue
Is the taxpayer entitled to a deduction under subsection 8-1 of the Income Tax Assessment Act 1997 ('ITAA 1997') for meals, accommodation and incidental expenses whilst working away from the taxpayer's normal place of residence?
Decision
No. The taxpayer is not entitled to a deduction under subsection 8-1 of the ITAA 1997 for meals, accommodation and incidental expenses whilst working away from home.
Facts
The taxpayer is a self-employed earthmoving plant operator whose work is carried out at various rural properties. These properties are usually hundreds of kilometres away from the taxpayer's normal place of residence, each individual job can take a week or two to complete and the taxpayer travels home approximately every three weeks. The taxpayer owns a caravan, which is transported to each property and in which the taxpayer resides whilst away from the normal place of residence. No allowance is received from the taxpayer's employers/contractors for meals, accommodation or incidental expenses.
Reasons for Decision
As a general rule, expenditure on meals and accommodation while working away from home is not allowed as a deduction. These costs are essentially 'living expenses' of a private or domestic nature. The fact that income cannot be earned unless certain expenses are necessarily incurred is not determinative of deductibility. The costs of maintaining a second home in a place the taxpayer regularly visits on business are unlikely to be deductible.
In FC of T v. Toms 89 ATC 4373; (1989) 20 ATR 466 the Federal Court disallowed a forest worker's deduction for the cost of maintaining a caravan and other living expenses. The taxpayer incurred the expenses in providing temporary accommodation at the base camp because the taxpayer had chosen to reside at a place far from the worksite. These expenses were dictated not by work but by private considerations.
In this case, the taxpayer's meals, accommodation (running and depreciation expenses associated with the caravan, plus interest paid on the loan used to acquire the caravan) and incidental expenses do not have a sufficient connection with his income producing activities. The extra expenses of food and accommodation are considered to be of a private and domestic nature as the taxpayer chooses the location of their normal place of residence.
Accordingly, a deduction for the cost of meals, accommodation and incidental expenses is not allowable.
Date of decision: 24 December 2001Year of income: Year ended 30 June 2001
Legislative References:
Income Tax Assessment Act 1997
section 8-1
Case References:
FC of T v. Toms
(1989) 20 ATR 466
89 ATC 4373
Keywords
Accommodation expenses
Meal & food expenses
Depreciation expenses
ISSN: 1445-2782
| Date: | Version: | |
| You are here | 24 December 2001 | Original statement |
| 3 August 2017 | Archived |