Edited version of your private ruling

Authorisation Number: 1012562900894

Ruling

Subject: Meals

Question

Are you entitled to a deduction for meals and incidentals using the reasonable allowance amounts or if you keep evidence to support your claims?

Answer

No.

This ruling applies for the following period

Year ended 30 June 2013

The scheme commenced on

1 July 2012

Relevant facts

You are employed to work in City A.

Your employer transferred you to City B for 95 days and paid you an allowance for meals.

Your employer also provided your accommodation.

The allowance was included on your PAYG summary.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 15-2

Income Tax Assessment Act 1997 Section 8-1

Income Tax Assessment Act 1997 Section 15-2

Income Tax Assessment Act 1997 Section 32-50

Reasons for decision

Section 8-1 of the Income Tax Assessment Act 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 and the substantiation requirements.

Where a taxpayer is away for an extended period of time, the associated costs including accommodation and meals remain private in nature and are not deductible. Even though the expenditure had a causal connection with the earning of income, the expenditure is inherently of a private or domestic nature and therefore no deduction is allowable.

Taxation Ruling IT 2566 states that an employee who is travelling to commence employment duties at a new work location is not travelling on duty. The employment duties do not commence until the employee reports to work at the new location. This is so whether the transfer is voluntary or at the employer's request. When relocating to a new work site, a taxpayer is not travelling on their work, but is travelling to their work. Therefore any associated, travel, accommodation or meal expenses incurred is not regarded as deductible work related expenses.

In Federal Commissioner of Taxation v. Toms 20 ATR 466; 89 ATC 4373, the Federal Court held that expenses incurred in relation to accommodation near the work place, while maintaining a family residence in another location, were not an allowable deduction as they were considered to be private expenses. The Federal Court disallowed the forest workers deduction for the cost of maintaining a caravan and other living expenses. The taxpayer's family home in Grafton was some 108 kilometres from the base camp so he lived in the caravan during the week and returned to the family home on weekends. The caravan was rendered necessary as much by the taxpayer's choice of the place of his residence in Grafton as by his employment in the State forest, and its purpose was to enable him to retain his residence in Grafton although he was employed in the State forest. Had he lived at a town closer to the forest, there is no question the caravan would have been unnecessary.

Although the above case relates more to accommodation expenses, the principles are relevant to your circumstances. Where a person moves to a new place for work, the new place is regarded as their normal place of work. The associated meal expenses incurred are not related to the actual performance of their duties. They are a prerequisite to the earning of assessable income and are not expenses incurred in the course of gaining or producing that income. Furthermore, the essential character of the expense is of a private or domestic nature. Accordingly, no deduction is allowed for the meal expenses.

It is considered that City B was your normal place of work for the 95 day period. While it is acknowledged that your main residence was in City A, it is not considered that your travel between the two cities was work related travel. Rather it was private travel carried out to enable you to commence your employment duties. The distance of the travel does not alter the private nature of the travel. That is, you were not away from home overnight for work purposes, as City B was your new work base for the 95 day period.

As City B was your normal place of work, your meal expenses were not associated with any work related travel.

The meals and incidental expenses incurred while living and working in City B are not incurred in gaining or producing your assessable income. Rather they are a private expense and no deduction is allowable.

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