Taxation Determination

TD 92/151

Income tax: does subsection 51AE(4) operate to deny a deduction for the cost of a taxpayer's own meal if the taxpayer, while travelling away from home, also buys a meal for a client?

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FOI status:

may be releasedFOI number: I 1213218

This Determination, to the extent that it is capable of being a 'public ruling' in terms of Part IVAAA of the Taxation Administration Act 1953, is a public ruling for the purposes of that Part. Taxation Ruling TR 92/1 explains when a Determination is a public ruling and how it is binding on the Commissioner. Unless otherwise stated, the Determination applies to transactions entered into both before and after its date of issue.

1. Yes. Subsection 51AE(4) of the Income Tax Assessment Act 1936 provides that a deduction is not allowable under section 51 for a loss or outgoing incurred after 19 September 1985 in respect of the provision of entertainment ('entertainment expenses'). The cost of a person's own meals while travelling away from home is not normally regarded as 'entertainment expenses'. However, expenses incurred by a taxpayer in entertaining a client , including the cost of the taxpayer's own meal, are regarded as 'entertainment expenses' and are not deductible.

2. Subsection 51AE(4) operates to deny a deduction for the cost of a taxpayer's meal while travelling away from home if the taxpayer also buys a meal for a client. Expenses incidental to the taxpayer's attendance at the meal are also not deductible.

Example Joe is currently in America on an overseas business trip. Joe has dinner with his business client Fred. Joe pays for Fred's meal. Joe is not entitled to a deduction for any of the costs associated with his dinner with Fred, including the cost of his own meal.

Commissioner of Taxation
27 August 1992

References

ATO references:
NO 92/2719-9

ISSN 1038 - 3158

Subject References:
entertainment
meals
travel

Legislative References:
ITAA 51
ITAA 51AE

TD 92/151 history
  Date: Version: Change:
You are here 27 August 1992 Original ruling  
  14 August 1996 Withdrawn