Edited version of private ruling

Authorisation Number: 1011604109549

This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.

Ruling

Subject: Meal allowance

Question

Are you entitled to a deduction for meal expenses based on a certain amount a week?

Answer

No.

This ruling applies for the following period

Year ended 30 June 2009

Year ended 30 June 2010

The scheme commenced on

1 October 2008

Relevant facts and circumstances

You are a truck driver.

You drive on average four to six days a week.

You completed a number of long haul trips during the period from late 2008 to mid 2010.

You have provided a number of National Driver Work Diary Daily Sheets. You are required to sleep away from home on a regular basis.

You have used a tax agent in prior years. Your tax agent did not claim meals on your returns.

You were not aware that you could claim meal expenses until you prepared your own tax return this year.

Your employer has stated that your meal allowance is rolled into your normal salary. It is not separately identifiable on your payment summary.

You spend a certain amount more on meals that if you had meals at home every week.

You did not keep any receipts for your meals.

You have applied for a ruling to claim a deduction for meals, based on the certain weekly amount for a number of weeks in the 2008-09 income year and a number of weeks in the 2009-10 income year.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Income Tax Assessment Act 1997 Division 900

Income Tax Assessment Act 1997 Subdivision 900-B

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.

For a deduction to be allowable, an expense must be actually incurred, meet the deductibility tests and satisfy the substantiation rules.

The cost of meals is generally considered a non-deductible private expense. This view is supported by the decision of the Full Federal Court in FC of T v. Cooper (1991) 21 ATR 1616, (1991) 99 ALR 703, (1991) 29 FCR 177, 91 ATC 4396. However, an exception is made to this general rule if the circumstances of the expenditure give it the essential character of a working expense, such as the costs of meals while engaged in work-related travel, or overtime meal expenses.

Taxation Ruling TR 95/18 considers deductions available to an employee truck driver and states that a deduction may be allowable if meal costs are incurred by a truck driver who sleeps away from home while travelling for income-earning purposes. However, a deduction is not allowable for the cost of meals eaten during a normal working day.

Claims for work-related travel expenses by employee truck drivers who are required to sleep away from home and who do not receive a travel allowance, must be substantiated. Written evidence is required to substantiate accommodation, meal and other work-related travel expenses. Travel records must be kept for work-related travel of six or more nights in a row.

Division 900 of the ITAA 1997 sets out the substantiation requirements for claiming expenses. Substantiation means that although a taxpayer may have fulfilled the technical requirements for deductibility, a deduction will be denied unless the taxpayer can provide evidence that the relevant expenditure was actually incurred by obtaining and keeping written evidence for expenses as required under the substantiation provisions.

The written evidence that must be maintained in respect of work-related travel expenses can be a receipt, invoice or similar document obtained at the time the expense was incurred or as soon as reasonably practicable thereafter. If the required written evidence is not available, generally the expenses cannot be claimed as a deduction.

Subdivision 900-B of the ITAA 1997 sets out the substantiation rules for work-related deductions, and provides for exceptions in the case of some types of expenses. One such expense is travel allowance expenses.

Taxation Ruling TR 2004/6 applies to individuals who incur work-related deductions for travel expenses where these expenses are covered by an allowance paid by the person's employer. This ruling explains the substantiation exception for reasonable travel allowance expenses.

For domestic travel allowance expenses to be considered for exception from substantiation, the relevant allowance must qualify as a bona fide travel allowance. (A 'bona fide travel allowance' is an amount that could reasonably be expected to cover accommodation or meals or expenses incidental to travel) be paid to cover work-related travel expenses incurred for travel away from the employee's ordinary residence. (The Commissioner takes the view that the term 'travel away from the employee's ordinary residence' means that the employee must sleep away from home) the allowance must be paid for specific journeys undertaken for work-related travel. A travel allowance that is not paid to cover relevant expenses for specific journeys undertaken for work-related travel, is not a travel allowance for the purposes of the exception from substantiation.

We consider the term 'travel away from the employee's ordinary residence' means, for most employees, that the travel involves an overnight stay; that is, the occupation of accommodation or the occasion of an outgoing on accommodation, for example sleeps in a motel/hotel or, for a truck driver, sleeps in their truck. Some employees may work at night and sleep during the day; therefore, the term 'sleep away from home' is used in this ruling.

If a taxpayer relies on the exception from substantiation, they may still be required to show the basis for determining the amount of their claim, that the expense was actually incurred, and that it was for work-related purposes. Further, regardless of how much allowance is paid, you can only claim a deduction for the expenses you paid. That is, if you paid $80 in work-related expenses and you received a $100 allowance for those expenses, you can only claim $80.

TR 2004/6 also states that where an amount for travel expenses that has been folded-in as part of normal salary/wages, for example under a workplace agreement, it is not considered to be an allowance and the exception from substantiation does not apply. The necessary written evidence must be kept to support claims for deductible expenses incurred.

Your circumstances

You are employed as a truck driver and at times are required to undertake work-related travel where you are required to 'sleep away from home'.

You do not receive a bona fide meal allowance from your employer but an amount that is folded-in to your salary and wages.

As you sleep away from home while travelling for income-earning purposes, it is accepted that you would incur expenses for meals.

In your case, as you do not receive a bona fide travel allowance, you cannot claim a deduction using the reasonable meal allowance amounts as set down by the Commissioner. You would need to obtain written evidence of your meal expenses in order to claim a deduction for your meal expenses. As you have not kept receipts for your meal expenses, you cannot claim a deduction.

Further, there is no provision under income tax law that allows for a deduction based on an amount over and above what a taxpayer would spend on meals each week if the taxpayer had those meals at home.

Therefore, as you have no documentation to substantiate your claim for meal expenses, you cannot claim a deduction under section 8-1 of the ITAA 1997.