ATO Interpretative Decision

ATO ID 2010/187

Income Tax

Deductions and expenses: contributions to meals - shearing Industry
FOI status: may be released
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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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Are contributions by a shearing industry employee towards the cost of meals provided by their employer deductible if the employee is paid at the 'not found' rate?

Decision

Yes. Provided the taxpayer is travelling away from home overnight in the course of their duties as a shearing industry employee and meets the substantiation requirements in Division 900 of the Income Tax Assessment Act 1997 (ITAA 1997) in relation to the expense, an amount paid as a contribution towards the cost of meals provided by the employer is deductible under section 8-1 of the ITAA 1997.

Facts

The taxpayer is a shearing industry employee and is engaged as part of a shearing team. The taxpayer's employment requires travel away from home and staying overnight at properties where shearing is carried out.

The employer provides the taxpayer with accommodation and meals when the taxpayer is travelling away from home.

The taxpayer is paid at the 'not found' (meals not included) rate of pay as set out in the relevant industrial agreement and makes a contribution at a prescribed rate towards the cost of meals provided by the employer.

Reasons for Decision

The deductibility of meal expenses where an employee is required by the circumstances of their employment to live temporarily away from home was considered by the Federal Court in Roads and Traffic Authority of New South Wales v. Federal Commissioner of Taxation (1993) 43 FCR 223; [1993] FCA 314; 93 ATC 4508; (1993) 26 ATR 76. Hill J stated (at FCR 240; FCA paragraph 72; ATC 4521; ATR 92):    


Where a taxpayer is required by his employer, and for the purposes of his employer, to reside, for periods at a time, away from home and at the work site, and that employee incurs expenditure for the cost of sustenance, or indeed other necessary expenditure which, if the taxpayer had been living at home, would clearly be private expenditure, the circumstance in which the expenditure is incurred, that is to say, the occasion of the outgoing operates to stamp that outgoing as having a business or employment related character.

As the taxpayer is travelling away from home overnight and incurring the meal expense in the course of carrying out their duties as an employee, the contribution paid by the taxpayer is an outgoing incurred in producing the taxpayer's wages as a shearing industry employee and is deductible under section 8-1 of the ITAA 1997.

As the contribution is a 'work expense' under subsection 900-30(1) of the ITAA 1997, deductibility is conditional on satisfying the substantiation requirements in Division 900. This means the taxpayer must retain written evidence of the amount claimed unless the total amount of work expenses (excluding meal allowance or travel allowance expenses) is less than the threshold set out in section 900-35 of the ITAA 1997.

Note : the difference between the 'found' (meals included) and 'not found' (meals not included) rates of pay, as set out in the industrial agreement, does not represent the payment of an allowance for income tax purposes.

Amendment History

Date of Amendment Part Comment
8 December 2016 Reason for Decision Adjusted to improve clarity

Inserted medium neutral case citation

Case References Inserted medium neutral case citations

Date of decision:  12 October 2010

Year of income:  Year ended 30 June 2011

Legislative References:
Income Tax Assessment Act 1997
   section 8-1
   Division 900
   subsection 900-30(1)
   section 900-35

Case References:
Roads and Traffic Authority of NSW v Federal Commissioner of Taxation
   (1993) 43 FCR 223
   [1993] FCA 314
   93 ATC 4508
   (1993) 26 ATR 76

Keywords
Domestic travel expenses
Employee allowances
Meal & food allowances
Travel allowances

Siebel/TDMS Reference Number:  1-28753K4; 1-7T326YG

Business Line:  Small Business/Individual Taxpayers

Date of publication:  15 October 2010

ISSN: 1445-2782

history
  Date: Version:
  12 October 2010 Original statement
You are here 8 December 2016 Updated statement

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