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Edited version of your private ruling
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Ruling
Subject: Meal and incidental expenses
Question
Are you entitled to a deduction for meal and incidental expenses incurred while you are working overseas?
Answer
No.
This ruling applies for the following period
Year ended 30 June 2011
Year ending 30 June 2012
The scheme commenced on
1 July 2010
Relevant facts
Your employment involves working at an overseas location on a roster basis of a number of weeks on and then a number of weeks off.
Your employer directly pays for the airfares and accommodation and in addition pays you a per diem amount per day.
The per diem amount is lower than the reasonable travel amounts published by the Tax Office.
The allowance did not appear on your PAYG summary for 2011.
The allowance you received was not sufficient to cover your expenses.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1
Reasons for decision
Summary
The costs you incur for meals and incidentals while working overseas are of a private nature. Also, they are not considered to be incurred in gaining or producing your assessable income. Therefore, these costs are not deductible.
Detailed reasoning
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 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 2004/6 explains that a taxpayer cannot automatically claim a deduction just because they receive an allowance. The expense must meet the requirements of section 8-1 of the ITAA 1997.
Accommodation, meal and incidental expenses are ordinarily not deductible as they are private and domestic in nature.
An exception is where a taxpayer is travelling in the course of performing their work duties, for example, an interstate truck driver who travels away from home overnight. In these types of cases, the accommodation, meal and incidental expenses incurred while the taxpayer is travelling are incidental to the proper carrying out of their employment function and cease to be of a private and domestic nature.
In considering the deductibility of travel expenses a distinction is made between travel to work and travel on work. It is only if the duties of the job require a taxpayer to travel in the course of undertaking their work duties that the taxpayer's expenses can be deducted (Taylor v. Provan 1975 AC 194).
A deduction is generally not allowable for the cost of travel by an employee between home and their normal workplace as it is considered to be a private expense. The cost of this travel is incurred to put you in a position to perform your duties of employment, rather than in the performance of those duties. (Taxation Ruling TR 95/34)
In your case, you are working and living overseas on a roster basis of a number of weeks on and then a number of weeks off. Your employer pays for your airfares and accommodation and in addition pays you an allowance to cover your meals and incidentals. It is considered you are not travelling on work rather you are travelling to work and stay at your work location for the period of your roster.
Therefore, your meal and incidental expenses are considered to retain their character as living expenses. As these expenses are private in nature, a deduction is not allowable. This conclusion is not altered by the fact that your employer paid you an allowance.
Additional information
The reasonable amounts are only relevant where a taxpayer is travelling on work. As you are not travelling on work as your regular place of work is at the overseas location, the reasonable amounts are not applicable in your situation.
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