Edited version of private ruling

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Ruling

Subject: Meals and incidentals

1. Are you entitled to a deduction for meal and incidental expenses using the reasonable allowance amounts?

No.

2. Are you entitled to a deduction for meal and incidental expenses if you are able to substantiate the expense?

No.

This ruling applies for the following period

Year ended 30 June 2010

The scheme commenced on

1 July 2009

Relevant facts

Your usual residential home is in City A.

Your employer requested that you work in City B. The job lasted for over six months months.

During your stay in City B, your employer rented a house in which you and other employees lived. The employer paid the rent but not meals or incidentals.

Your employer did not pay an allowance for meals or incidentals.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Income Tax Assessment Act 1997 Section 900-50

Reasons for decision

Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for all losses and outgoings to the extent to which they are incurred in the course of gaining or producing assessable income, but are not allowable to the extent that they are of a capital, private or domestic nature.

As a general rule, written evidence is required to substantiate any expense you wish to claim as a deduction.

Section 900-50 of the ITAA 1997 provides that the substantiation requirement to obtain written evidence does not apply to claims by employee taxpayers for expenses covered by a travel allowance if the amount of the claim for expenses incurred does not exceed the amount the Commissioner considers reasonable.

Meal and incidental expenses are normally private or domestic in character. However, where a taxpayer is away from home overnight in connection with an income producing activity, meal and incidental expenses are deductible under section 8-1 of the ITAA 1997. The expenditure is not considered private because its occasion is the taxpayer's travel away from home on income producing activities.

There may be exceptions to the general rule.

In Roads and Traffic Authority of New South Wales v. FC of T (1993) 43 FCR 223; 93 ATC 4508 at 4521; (1993) 26 ATR 76 at 92, workers required to camp at the work site were paid a camping allowance. It was necessary to consider whether expenditure on meals in the circumstances would have been deductible under section 8-1 of the ITAA 1997. Hill J stated that:

An employee who had no private home and was employed indefinitely to work at a particular site and did in fact work for the whole of his employment at that site, might be said to have chosen to live at the site so that the cost of his accommodation there would be private.

The same principle applies when a taxpayer establishes a new home. In these circumstances, expenditure on meals and incidentals is private or domestic in nature.

When is a new home established?

Taxation Ruling TR 98/9 discusses the key factors to be taken into account in determining whether a new home has been established for self education purposes. The factors have equal application to your circumstances. The factors include:

· the total duration of the travel

· whether the taxpayer stays in one place or moves frequently from place to place

· the nature of the accommodation, for example hotel, motel, long term accommodation

· whether the taxpayer is accompanied by their family

· whether the taxpayer is maintaining a home at the previous location while away. The fact that the taxpayer did not maintain a home while away for an extended period was the decisive factor in characterising expenditure on accommodation and meals as private living expenses in a number of cases, and

· the frequency and duration of return trips to the previous location.

In your case, your employer has rented a house for you and two other employees. You stayed in the one location for the period of the work at that location. You only travelled to your home town a couple of times to check on your belongings. Even though you always intended returning to your home town, you did not maintain a home at the previous location. It is clear that when applying your circumstances to the key factors, you had established a new home for the duration of the job.

Therefore, you are not entitled to a deduction for the cost of meals and incidentals as these are considered to be private in nature. Additionally, as the expense is not deductible, and you have not received a travel allowance, the reasonable allowance amounts are not relevant to your circumstances.

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