ATO Interpretative Decision

ATO ID 2002/466 (Withdrawn)

Income Tax

• This ATO ID is withdrawn from the database as it is superseded by Taxation Ruling TR 97/24.
  This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Is the taxpayer entitled to a deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for the cost of meals incurred while attending a work related course of eduction if they are not able to substantiate the cost of those meals?

Decision

No. The taxpayer would be entitled to a deduction under section 8-1 of the ITAA 1997 for the cost of meals incurred while attending a work related course of education, however as they are not able to substantiate the cost incurred, no deduction is allowable.

Facts

The taxpayer attended a two week work related course of education at a University.

The subject matter of the course was directly relevant to the taxpayer's current employment duties and would allow the taxpayer to improve their skills in performing those duties.

Their employer sponsored the course and paid for the taxpayer's travel expenses, accommodation and the course fees. They did not however pay for the taxpayer's meals.

The taxpayer paid for their own meals. They did not keep receipts or other documentation (e.g., a diary) to substantiate the expenses incurred.

The taxpayer made an estimate of the cost of the meals incurred.

Reasons for Decision

Section 8-1 of the ITAA 1997 allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income except where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income.

Taxation Ruling TR 98/9 provides the Commissioner's view with regard to self education expenses. The Ruling provides that self education expenses incurred by a taxpayer will qualify for deduction under section 8-1 of the ITAA 1997 where there is a sufficient nexus to the production of assessable income.

The course attended by the taxpayer was directly relevant to their employment duties. Their employer supported their attendance and paid for the majority of their costs of attendance. There was a sufficient nexus to the production of the taxpayer's assessable income.

The cost of meals is generally a private expense. However, if the taxpayer is participating in work related self education which requires them to be temporarily absent for one or more nights from their home they may claim the cost of meals during that absence.

As the taxpayer was required to be absent from their home for one or more nights their meal expenses incurred while at the course would be allowable under section 8-1 of the ITAA 1997.

However a deduction will be denied unless the taxpayer complies with the substantiation provisions.

The documentary evidence required by the substantiation provisions under section 900-115 of the ITAA 1997 for expenses other than depreciation (for example, a work expense or a business travel expense) comprises a receipt, invoice or similar document from the supplier that sets out the:

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name or business name of the supplier;

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amount of the expense (expressed in the currency in which incurred);

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nature of the goods or services;

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date the expense was incurred; and

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date of the document.

Where the Commissioner considers that it would be unreasonable to expect the taxpayer to have obtained documentary evidence of the expense, for example because the nature of the expense means it would be too hard (section 900-130 of the ITAA 1997), he requires that the taxpayer make a record or create a document in English of the expense as soon as possible after incurring it, providing all the relevant details.

An estimate of an expense supported by an assertion that it is reasonable does not constitute evidence of a nature and quality to satisfy the Commissioner to exercise the discretion (Taxation Ruling TR 97/24).

As the taxpayer has no documentation to support their claim for the meal expenses, a deduction is not allowable under section 8-1 of the ITAA 1997.

Year of income:  Year ended 30 June 2001

Legislative References:
Income Tax Assessment Act 1997
   section 8-1
   section 900-115
   section 900-130

Related Public Rulings (including Determinations)
TR 97/24
TR 98/9

Keywords
Self education expenses
Meal & food expenses

Business Line:  Small Business/Individual Taxpayers

Date of publication:  17 April 2002

ISSN: 1445-2782