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Ruling

Subject: Deduction for meals

Question

Are you entitled to a deduction for meals in either the year the allowance was paid or the year to which the allowance relates?

Answer

No.

This ruling applies for the following period

Year ended 30 June 2012

The scheme commenced on

1 July 2004

Relevant facts

You are an employee.

You live in or near City A.

In 200X, you were advised that your employer approved the transfer of your position to City A.

In 200Y, you were directed to work in either City B or City C offices. You elected to work at the City B office.

You were directed to record your time from the time of arrival and departure at the City B office as the hours within which you performed your duties.

In 200Z, you were directed to work from the City C office on a temporary basis.

You continued to work from the City C office but your official job classification was City A.

Your employment agreement provides for a payment for meal expenses on one-day journeys.

You submitted a claim for unpaid meal allowances, travelling time and travel expenses.

Your official position was transferred from City A to City C in 2011.

As the result of a Consent Order, you received an amount in compensation for meal allowance. You also received an amount in compensation for travel time.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Income Tax Assessment Act 1997 Section 900-60

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 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.

Allowances received by an employee from an employer are generally assessable income to the employee. However, an employee is not automatically entitled to a deduction for expenses incurred in relation to an allowance. The expenses must meet the criteria for deductibility under section 8-1 of the ITAA 1997 and the substantiation requirements.

Meal expenses are normally private or domestic in character. However, there are two situations where meal expenses are deductible. That is, 1. where a taxpayer is away from home overnight in connection with an income producing activity or 2. where a taxpayer is paid an allowance in connection with overtime worked.

An overtime meal allowance is an allowance paid or payable under an Australian law or industrial award for the purpose of enabling an employee to buy food or drink in connection with overtime.

Travel to and from work is considered to be private travel. The fact that you have been compensated for the time in travelling to and from work because your job classification was in one city and the actual job was in another does not mean that the travel time is overtime. The allowance you received was compensation is for travel outside the hours of 6.00 am and 6.30 pm. As per your employer's direction, your duties commenced from the time of arrival at the office and ceased upon departure. Consequently, the travel time cannot be considered to be overtime.

In your situation, you received an amount in compensation for meals. The amount you received for meals was not paid for instances where you were required to sleep away from home overnight. Furthermore, it was not paid for instances of overtime worked. Therefore, while the allowance you received is assessable to you, you are not entitled to a deduction for meals in either the year the allowance was received or the years that the allowance relates to.

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