Edited version of private advice

Authorisation Number: 1051611558285

Date of advice: 08 May 2020

Ruling

Subject: FBT - meal allowance FIFO/DIDO employees

Issue 1

Fringe Benefits Tax

Question 1

Are the meal allowances paid by the Company to Fly-In-Fly-Out (FIFO) and Drive-In-Drive-Out (DIDO) employees a living-away-from-home allowance (LAFHA) benefit as described in subsection 30(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

Answer

No.

Issue 2

Income Tax and PAYG

Question 1

Are the meal allowances paid by the Company to FIFO and DIDO employees assessable income of the employees as a travel allowance against which meals and incidental costs are deductible under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

The Commissioner is unable to provide the Company with a Ruling on this issue because the question requires consideration of how the relevant provisions apply to other taxpayers.

This issue is partly addressed in Question 2 below in the context of considering the Company's Pay-As-You-Go (PAYG) withholding and reporting obligations in relation to the allowances.

However, the substance of this issue is addressed in Issue 1 in the context of considering whether the allowance is in the nature of compensation to the employee for additional non-deductible expenses.

Question 2

Does the Company withhold Pay-As-You-Go (PAYG) withholding tax and report the meal allowances on the employees' PAYG payment summaries?

Answer

Yes.

This Ruling applies for the following periods:

FBT year ending 31 March 2018

FBT year ending 31 March 2019

FBT year ending 31 March 2020

FBT year ending 31 March 2021

FBT year ending 31 March 2022

FBT year ending 31 March 2023

FBT year ending 31 March 2024

FBT year ending 31 March 2025

End of financial year ending 30 June 2018

End of financial year ending 30 June 2019

End of financial year ending 30 June 2020

End of financial year ending 30 June 2021

End of financial year ending 30 June 2022

End of financial year ending 30 June 2023

End of financial year ending 30 June 2024

End of financial year ending 30 June 2025

The scheme commences on:

1 April 2017

Relevant facts and circumstances

The Company is an Australian company, whose employees are required to work both on-shore and off-shore.

There is a current Enterprise Agreement ('the Agreement') in place.

Under the Agreement, all employees of the Company who are not provided with food or incidentals whilst on duty receive a meal allowance per working day.

Food and incidentals are not provided to employees whilst on duty, except under limited circumstances.

On working days when an employee is provided with food and incidentals under the limited circumstances, that employee is not entitled to the meal allowance.

The employees do not have a choice as to whether they are provided with food and incidentals or the meal allowance.

The meal allowance is paid to all employees, including those who reside in the area.

Employees on duty include a mix of individuals who are FIFO employees, DIDO employees and individuals who reside in the area (Residential employees).

The normal working arrangement for full-time employees consists of a rostered-on rostered-off cycle. During the rostered-on cycle, work shifts are 12 hours a day (6am to 6pm or 6pm to 6am).

FIFO/DIDO employees

FIFO employees fly at the Company's expense to and from their place of employment.

Where the employee does not require a flight to or from the work site, the employee can elect to have the amount equivalent to the flight paid to them as a reimbursement for making their own travel arrangements (subject to the employee providing evidence of their travel costs).

A reimbursement is provided to each FIFO employee for transport to and from the airport by car of an amount for each leg of the journey (subject to the receipt of tax invoices relating to the claimed expense).

FIFO employees are provided with accommodation whilst working away from home at the Company's expense.

FIFO employees are responsible for their own meal preparation, cleaning and laundry arrangements.

As a practical matter, given the working hours (being 12 hour shifts), it is necessary for FIFO employees to stay close to the work site.

The Company's DIDO employees usually reside a substantial distance away. Due to the distance from home and working hours, it is also necessary for DIDO employees to stay close to the work site.

FIFO and DIDO employees have no choice about the location or kind or accommodation they stay in during their rostered shifts. They are required to stay at the accommodation provided by the Company.

These rental premises are shared with other FIFO/DIDO employees and regularly used by the different personnel who are on rotating shifts.

The living arrangements allow FIFO and DIDO employees to self-cater. They have basic furnishings and limited cooking and storage facilities.

FIFO and DIDO employees spend minimal amounts of time at the accommodation due to the long work shifts.

FIFO and DIDO employees are required to leave the rental premises between their rostered-on cycles because other Company personnel who are rostered on require the accommodation.

Whilst is it not specifically prohibited that family or friends of FIFO and DIDO employees stay with them or visit them at the rental premises, this rarely occurs in practice.

All FIFO and DIDO employees have permanent homes elsewhere and they regularly return to their permanent homes between their work cycles.

Residential employees

Residential employees already reside around the work site and therefore are not required to sleep away from home overnight. They return to their usual place of residence overnight.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986

Section 30

Subsection 30(1)

Subsection 136(1)

Income Tax Assessment Act 1997

Section 6-5

Section 8-1

Section 15-2

Subdivision 900-B

Section 900-3

Taxation Administration Act 1953

Division 359 in Schedule 1

Reasons for decision

Issue 1

Fringe Benefits Tax

Question 1

Are the meal allowances paid by the Company to FIFO and DIDO employees a LAFHA benefit as described in subsection 30(1) of the FBTAA?

Summary

The meal allowances are not a LAFHA benefit as described in subsection 30(1) of the FBTAA as they are not paid to compensate employees for additional expenses incurred because the duties of their employment require them to live away from their normal residence.

Detailed reasoning

Section 30 of the FBTAA sets out the circumstance in which an allowance paid to an employee will be a LAFHA benefit.

Subsection 30(1) of the FBTAA states:

Where:

(a) at a particular time, in respect of the employment of an employee of an employer, the employer pays an allowance to the employee; and

(b) it would be concluded that the whole or a part of the allowance is in the nature of compensation to the employee for:

(i) additional expenses (not being deductible expenses) incurred by the employee during a period; or

(ii) additional expenses (not being deductible expenses) incurred by the employee, and other additional disadvantages to which the employee is subject, during a period;

by reason that the duties of that employment require the employee to live away from his or her normal residence;

the payment of the whole, or of the part, as the case may be, of the allowance constitutes a benefit provided by the employer to the employee at that time.

In summary, for a payment to an employee to be considered a LAFHA fringe benefit, there are three conditions that must be met:

1.    It is an allowance an employer pays an employee in respect of the employment of that employee.

2.    Viewed objectively, the allowance must be in the nature of compensation to the employee for additional expenses incurred because the duties of their employment require the employee to live away from his or her normal residence; and

3.    The whole or part of the allowance is in the nature of compensation for:

·         non-deductible additional expenses an employee might be expected to incur, or

·         non-deductible additional expenses an employee might be expected to incur and other disadvantages suffered, because the duties of an employee's job require them to live away from their normal residence.

The allowance in this case is paid to ALL employees, regardless of where they live or normally reside, so long as they are not provided with food or incidentals whilst on duty. The only circumstances where they are provided food whilst on duty is as follows:

(a)  When employees are assigned to move vessels between ports, either due to the client's requirements or for maintenance purposes, the Company will provide the employees with sufficient food and daily provisions for the voyage.

(b) When employees are assigned to work away from the work site, the Company will rent accommodation for use by the employees which includes meals where the location is not convenient for employees to purchase their own food.

The requirements in relation to the allowance paid by you to the employee are considered below.

1. Is the allowance paid to the employee an allowance paid by you in respect of the employee's employment?

The ATO publication, Fringe Benefits Tax: A Guide for Employers ('the Guide')provides guidance on what is meant by the term 'in respect of employment'.

Chapter 1 of the Guide states:

According to the fringe benefits tax (FBT) legislation, a fringe benefit is a benefit provided in respect of employment. This effectively means a benefit is provided to somebody because they are an employee. The 'employee' may even be a former or future employee.

The meal allowance is provided by the Company to an employee of the Company.

Accordingly, the allowance is an allowance paid by the Company to an employee in respect of their employment. Therefore, this requirement is satisfied.

2. Do the duties of employment require the employee to live away from their normal residence at the time the allowance is paid?

'Normal residence' is defined in subsection 136(1) of the FBTAA as the employee's usual place of residence, when the employee's usual place of residence is in Australia.

The FBTAA does not provide a definition of the term 'usual place of residence'.

However, subsection 136(1) of the FBTAA defines 'place of residence' to mean:

(a)  a place at which the person resides; or

(b)  a place at which the person has sleeping accommodation;

whether on a permanent or temporary basis and whether or not a shared basis.

In the absence of a legislative reference, it is relevant to refer to the ordinary meaning of the word 'usual'. The Macquarie Dictionary defines 'usual' to mean: 'habitual or customary...'.

Taxation Ruling TR 2017/D6 Income tax and fringe benefits tax: when are deductions allowed for employees' travel expenses (TR 2017/D6) provides guidance for determining an employee's usual place of residence.

Paragraphs 75 to 77 of TR 2017/D6 state:

75. Whether an employee is living away from their 'usual place of residence' usually involves a choice between two places of residence- where the employee is living at the time and the location of the work.

76. An employee is only living away from home where it is reasonable to conclude that they intend to return to their previous location after work at the new location ceases. An employee who has permanently left their previous location is not living away from home but has relocated.

77. Indicators that an employee has a usual place of residence at a previous location include the employee's ownership or possession of premises at that location and occupation of the premises by the members of the employee's family.

The Company's FIFO employees fly from their home State or Territory to the work site and return to their home State or Territory at the end of their 28 day rostered shifts. It is reasonable to say that these FIFO employees reside in a unit of accommodation in or around their home State or Territory and that is where they return at the end of their rostered shifts. It is accepted that the Company's employees' normal residence is in their home State or Territory.

The DIDO employees reside a substantial distance away from the work site. They travel to the work site to commence their shifts on a 28 day rostered basis and then they return to their home towns. It is reasonable to say that the DIDO employees' normal residence is in these employees' home towns.

For the following reasons, it cannot be concluded that the allowance is in the nature of compensation for additional expenses incurred because the duties of their employment require the employees to live away from their normal residence:

1.    The allowance is paid to all employees on duty who have not been provided with food or incidentals that day. This includes Residential employees who do not live away from their normal residence. The fact that employees who do not live away from their normal residence are entitled to the allowance means that it could not be concluded that the allowance is paid to compensate employees for additional expenses they incur by reason of living away from their normal residence.

2.    It cannot be said that the duties of their employment require the employees to live away from their normal residence. While the nature of their work means that the employees must be at the work site to be able to perform their duties, this does not mean that those duties required the employees to live away from their normal residence. It is clear from decisions such as Lunney v Federal Commissioner of Taxation (1957) 100 CLR 478 that, in these circumstances, the need to live away from their normal residence is occasioned by the employees' choice to live far away from their place of employment rather than the duties of their employment. The fact that Residential employees are able to perform their duties without living away from their normal residence reinforces this conclusion.

Therefore, this requirement is not satisfied.

3. Is the allowance paid wholly or partly to compensate the employee for additional, non-deductible expenses incurred because of their requirement to live away from their normal residence?

Subsection 136(1) of the FBTAA defines the term 'deductible expenses' as follows:

deductible expenses, in relation to an allowance paid to an employee, means expenses incurred by the employee in respect of which a deduction is allowable to the employee under section 8-1 of the Income Tax Assessment Act 1997 (ignoring Divisions 28, 32 and 900 of that Act).

Chapter 11 of the Guide explains what a LAFHA is and the distinction between a LAFHA and a travelling allowance. TR 2017/D6 sets out the general treatment for determining whether an employee can deduct travel expenses under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997).

Generally, section 8-1 of the ITAA 1997 allows a deduction for a loss or outgoing incurred in gaining or producing assessable income provided the loss or outgoing is not of capital nature, a domestic nature or incurred in relation to gaining or producing exempt income or non-assessable, non-exempt income.

Additional expenses for the purposes of subsection 30(1) of the FBTAAinclude expenses for additional food and accommodation expenses.

Various court decisions have concluded that, generally, food and accommodation expenses incurred while living away from home are essentially living expenses of a private or domestic nature and are therefore not deductible.

It is important to determine what type of allowance is being paid as the tax treatment of a travelling allowance and LAFHA is different in the hands of the employee.

A travelling allowance (which includes accommodation, meals and incidentals) is paid because an employee is travelling in the course of performing their job, does not involve a change of job location, is paid for shorter periods, and where the employee has a spouse and family they generally do not accompany them. A travelling allowance is not subject to FBT and is generally assessable income to an employee.

A LAFHA on the other hand is paid where an employee has taken up temporary residence away from their normal residence to perform their employment duties, is considered to have changed their job location, it is more common for the employees spouse and family to accompany them and the allowance is paid for longer periods.

A LAFHA is not included in the employee's assessable income because it is a fringe benefit which is non-assessable non-exempt income.

An employee's ordinary costs of maintaining a home are of a private or domestic nature and are not deductible. Such costs are preliminary to work and are not incurred in performing work activities, in the same manner as travel expenses to and from work are preliminary to work and are not incurred in performing work activities. These expenses are incurred to enable an employee to commence their income earning activities and are therefore considered private in nature.

Similarly the costs of relocating for work or living away from home to work are preliminary to work and are not deductible, regardless of whether commencing new employment or transferring permanently or temporarily within an existing employment. The costs of relocating or living away from home are not incurred in performing an employee's work activities. They are of a private or domestic nature and reflect an employee's choice about where to live. This is the case even though a taxpayer may, as a matter of practicality, need to incur the expenditure to earn assessable income.

It is also the case that an employee is not entitled to deduct an expense simply because they receive an allowance or other payment for that expense. The nature of the expense and its connection to the income producing activities determine whether the expense is deductible.

In the current circumstances, the Company submits that the meal and incidental expenses incurred by the employees are deductible under section 8-1 of the ITAA 1997. The decision in Roads and Traffic Authority of NSW v Commissioner of Taxation (1993)43 FCR 223 ('RTA case') is relied upon in support of that position. The Company relies, in particular, on the following passage from Hill J's judgment (at 240):

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.

The Company submits that, as in the RTA case, the meal and incidental costs of the employees are deductible under section 8-1 of the ITAA 1997 because:

a)    The FIFO and DIDO employees are required to live away from their normal place of residence for periods at a time while working for the Company

b)    The FIFO and DIDO employees are provided with accommodation, and

c)    The meal allowance is provided in anticipation of the FIFO and DIDO employees bearing the costs of meals and incidental costs while on their 28 day shift with the Company.

However, for the reasons given above under the heading for the second condition/requirement ('Do the duties of employment require the employee to live away from their normal residence at the time the allowance is paid?'), the FIFO and DIDO employees are not considered to be required to live away from their normal place of residence. Critical to the decision in the RTA case was the fact that the expenditure in question was occasioned, not by the employees' choice of where to live, but by the fact that the employees were required as an incident of their employment to stay at the camp sites. Hill J went on to say the following shortly after the above passage: (Emphasis added)

The facts of the present case are quite different. First, each of the persons deemed hypothetically to have incurred the expenditure are employees. They are not carrying on their own business. Secondly, they are required, as an incident of their employment, by their employer and for the purposes of the employer to live close by their work site for relatively short periods of time. No question arises of their choosing to live in these places. Each of the persons in question has a permanent house in which he lives when not in camp.None of the employees spend inordinate periods of time in the camps so that the camp becomes their home. Their house is retained and the employees in question travel home at weekends. They do not remain in the camps. The costs in question here are an incident of the employment. The costs in Toms were not.

In Hancox v FCT 2013 ATC 20-401, the Federal Court of Australia considered whether accommodation and food costs incurred by an electrician working for Downer EDI in Port Hedland were deductible. In that case, the taxpayer lived in South Australia and travelled to Port Hedland to perform his duties as an electrician. There, the taxpayer's employer paid him a weekly allowance in lieu of board and food. The taxpayer claimed deductions for the costs of temporary accommodation and food that he incurred while staying at Port Hedland. Besanko J found:

52. ...The income producing activities of the applicant were those associated with his work as an electrician. To adopt the approach of Lockhart J in Commissioner of Taxation v Cooper, the applicant was employed to perform the functions of a leading hand maintenance electrician at Downer EDI's Port Hedland site, not to consume food and drink. The decision in The Roads and Traffic Authority of New South Wales v Commissioner of Taxation is distinguishable. The food expenditure in that case was the additional cost of food by reason of living in the camp and the employees had no choice but to live away from home. In this case, the applicant could have had his usual place of residence in Port Hedland.

53. The application of the test of whether the occasion of the expenditure on accommodation and food and sustenance is to be found in the applicant's activities as a leading hand maintenance electrician leads to the same result. The occasion of the expenditure is the applicant's choice to live in South Australia rather than in Port Hedland.

54. In my opinion, the expenses of $36,124 were not incurred in gaining or producing the applicant's assessable income and were not deductible expenses within s 8-1(1)(a) of the ITAA 1997...

The decision in Hancox is relevant to the current circumstances and, given the similarity between the facts of that case and the facts in the current circumstances, it supports the conclusion that the meal and incidental expenses incurred by the employees are not deductible.

Further, paragraph 54 of TR 2017/D6 sets out the Commissioner's view on the integers of deductible accommodation, meal and incidental expenses, and states:

54. Accommodation, meal and incidental expenses are incurred by an employee in performing an employee's work activities, and are therefore deductible, only when:

(a)  the employee's work activities require them to undertake the travel

(b)  the work requires the employee to sleep away from home overnight

(c)   the employee has permanent home elsewhere, and

(d)  the employee does not incur the expense in the course of relocating or living away from home.

These criteria are cumulative and expenditure must satisfy all of the criteria to be deductible. Each of these conditions is considered below:

(a) Does the employee's work activity require them to undertake the travel?

For the reasons given above, the employees' work activities do not require them to undertake the travel in question. The travel in question is travel from their usual place of residence to their place of work. This travel is occasioned by their choice to live far away from their place of work and not because their work activities require them to travel.

(b)      Does the work require the employee to sleep away from home overnight?

Similarly, the employees' work does not require them to sleep away from home overnight. It is their choice to live far away from their place of work that necessitates the FIFO and DIDO employees sleeping away from home overnight. The fact that the Residential employees do not sleep away from home demonstrates that it is not the employees' work that necessities the FIFO and DIDO employees sleeping away from home.

(c)      Does the employee have a permanent home elsewhere?

As outlined in the facts, the FIFO and DIDO employees have permanent homes elsewhere. Therefore, it is accepted that this requirement is satisfied.

(d)      Does the employee incur the expense in the course of relocating or living away from home?

Paragraph 72 of TR 2017/D6 lists the relevant factors to be considered when determining if an employee is living away from home. It states:

72. Whether an employee is living away from home depends on the facts of each case. Relevant factors are:

(a) the time spent working away from home

(b) whether the employee has a usual place of residence at a previous location

(c) the nature of the accommodation, and

(d) whether the employee is, or can be, accompanied by family or visited by family or friends.

Having regard to the factors set out in paragraph 72 of TR 2017/D6, it is considered that the FIFO and DIDO employees do not incur the expenses in the course of relocating or living away from home. As noted in the facts:

(a)  The FIFO and DIDO employees spend, at most, 28 days working away from home during their rostered-on cycle; after which, they return home for 28 days.

(b)  The FIFO and DIDO employees have usual places of residence 'at a previous location'.

(c)   The accommodation provided by the Company appears to be temporary in nature. In particular, the employees do not have choice about where they stay, the premises are shared by employees on rotating shifts, the FIFO and DIDO employees spend minimal time at the accommodation and the employees are required to vacate those premises between rostered-on cycles.

(d)  The employees are not accompanied by family. Although family and friends are able to visit, as a matter of practice, this rarely occurs.

As the employees' meal and incidental expenses would not satisfy all of the criteria in paragraph 54 of TR 2017/D6, this Ruling does not require the Commissioner to accept that the expenses would be deductible for the purposes of applying subsection 30(1) of the FBTAA.

Conclusion

All of the conditions for a payment to an employee to be considered a LAFHA fringe benefit - as provided in subsection 30(1) of the FBTAA - are not satisfied.

In particular, the meal allowances are not a LAFHA fringe benefit pursuant to subsection 30(1) of the FBTAA as they are not paid to compensate employees for additional expenses incurred because the duties of their employment require them to live away from their normal residence.

Issue 2

Income Tax and PAYG

Question 1

Are the meal allowances paid by the Company to FIFO and DIDO employees assessable income of the employees as a travel allowance against which meals and incidental costs are deductible under section 8-1 of the ITAA 1997?

Summary

The Commissioner is unable to provide the Company with a Ruling on this issue because the question requires consideration of how the relevant provisions apply to other taxpayers.

This issue is partly addressed in Question 2 below in the context of considering the Company's Pay-As-You-Go (PAYG) withholding and reporting obligations in relation to the allowances.

However, the substance of this issue is addressed in Issue 1 in the context of considering whether the allowance is in the nature of compensation to the employee for additional non-deductible expenses.

Detailed reasoning

There are two parts to this question:

(a)   Whether the meal allowance is assessable income of the employees as a travel allowance, and

(b)   Whether the meal and incidental expenses incurred by the employees are deductible under s 8-1 of the ITAA 1997.

The Commissioner is unable to provide the Company with a Ruling on this issue because the questions require consideration of how the relevant provisions apply to other taxpayers.

Division 359 in Schedule 1 to the Taxation Administration Act 1953 (TAA) sets out the rules relating to Private Rulings. Subsection 359-5(1) of Schedule 1 to the TAA provides:

The Commissioner may, on application, make a written ruling on the way in which the Commissioner considers a relevant provision applies or would apply to you in relation to a specified * scheme. Such a ruling is called a private ruling.

Relevantly, the subsection stipulates that the Commissioner may only provide a written Ruling on the way in which he considers a provision applies or would apply "to you"; that is, the Company as the Ruling Applicant.

Accordingly, the Commissioner cannot give the Company a Ruling on how the law operates in respect of its employees. If an employee of the Company requires a Ruling on the issues identified in two parts of this question as outlined above, it will be necessary for the employee to separately seek a Private Ruling. Alternatively, the employees could seek a Class Ruling from the Commissioner on this issue.

Question 2

Does the Company withhold PAYG withholding tax and report the meal allowances on the employees' PAYG payment summaries?

Summary

The Company must withhold PAYG withholding tax and report the meal allowances on the employees' PAYG payment summaries.

Detailed reasoning

The PAYG withholding provisions are contained in Part 2-5 of Schedule 1 to the TAA.

An entity must withhold an amount from salary, wages, commissions, bonuses or allowances it pays to an individual as an employee as per section 12-35 of Schedule 1 to the TAA.

The Company seeks to rely on the PAYG withholding and reporting exception that applies to travel allowances. The exception is outlined in "ATO Fact Sheet - Travel Allowances (QC 18645)" ('Fact Sheet').

Ordinarily, an employer must withhold tax from a travel allowance paid to their employee and report the allowance in the employee's payment summary. However, the Fact Sheet identifies an exception to these requirements if the prescribed criteria are met. The Fact Sheet provides:

The exception applies if:

·         you expect your employee to spend all of the travel allowance you pay them on accommodation, food, drink or incidental expenses;

·         you show the amount and nature of the travel allowance separately in your accounting records

·         the travel allowance is not for overseas accommodation

·         the amount of travel allowance you pay your employee is less than, or equal to the reasonable travel allowance rate.

If the exception applies, you:

·         don't withhold tax from the travel allowance you pay your employee

·         don't include the amount of the travel allowance in the allowance box on your employee's payment summary

·         only include the allowance on their payslip.

The basis of the exception described in the Fact Sheet resides in the PAYG Withholding Variation issued by the Commissioner pursuant to section 15-15 of Schedule 1 to the Taxation Administration Act 1953 in the form of Legislative Instrument F2015L01047 (PAYG Withholding Variation: Allowances), which similarly provides:

There is no requirement to withhold an amount from allowances as described below, provided:

·         the payee is expected to incur expenses that may be able to be claimed as a tax deduction at least equal to the amount of the allowance

·         the amount and nature of the allowance is shown separately in the accounting records of the payer.

Allowances:

...

5.    Domestic or overseas travel allowance (excluding overseas accommodation allowance) involving an overnight absence from the payee's ordinary place of residence up to reasonable allowances amount published in the annual ATO Ruling.

To fall within the scope of the exception, the allowance paid must be a 'travel allowance'. Whether the allowance is a 'travel allowance' depends on whether the allowance meets the criteria in subsection 900-30(3) of the ITAA 1997, which provides:

A travel allowance is an allowance your employer pays or is to pay to you to cover losses or outgoings:

(a)   that you incur for travel away from your ordinary residence that you undertake in the course of your duties as an employee; and

(b)   that are losses or outgoings for accommodation or for food or drink, or are incidental to the travel.

The meal allowance paid by the Company does not meet this definition.

For the reasons discussed earlier in this Ruling, the allowance is paid equally to those employees who live away from their usual residence and those who do not. For that reason, it cannot be considered an allowance paid to cover the losses or outgoings that the employees incur for 'travel away from [their] ordinary residence'.

Accordingly, the exception is not available to the Company. The Company must withhold PAYG withholding tax and report the meal allowances in the PAYG summaries of its employees.

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