Edited version of private ruling

Authorisation Number: 1011675259089

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Ruling

Subject: Work related expenses - meals

Are you entitled to a deduction for the cost of food and drink you incurred while working overseas?

No.

This ruling applies for the following period

Year ended 30 June 2010

The scheme commenced on

1 July 2009

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

You are an Australian resident for taxation purposes.

You were contracted to work overseas and under the terms of the contract, meals were provided at the work camp site facilities.

You felt that the meals being supplied were of an unhygienic nature and you purchased your own meals, incurring a substantial out of pocket expense.

You did not receive a meal allowance.

You are a fly in fly out contractor with varying rostered times of three weeks on and one week off.

You live in one place while working overseas.

You stayed in employer provided accommodation while working away.

You rent a home in Australia and fly home on your rostered days off.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1.

Reasons for decision

While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.

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 the course of gaining or producing assessable income, but are not allowable to the extent that they are of a capital, private or domestic nature.

Meal expenses are normally private or domestic in character. However, where a taxpayer is away from home overnight in connection with an income producing activity, meal expenses are deductible under section 8-1 of the ITAA 1997. The expenditure is not considered private because its occasion is the taxpayer's travel away from home on income producing activities.

In Roads and Traffic Authority of New South Wales v. Federal Commissioner of Taxation (1993) 43 FCR 223; 93 ATC 4508; (1993) 26 ATR 76 workers required to camp at the work site were paid a camping allowance. It was necessary to consider whether expenditure on meals in the circumstances would have been deductible under section 8-1 of the ITAA 1997. Hill J stated that:

An employee who had no private home and was employed indefinitely to work at a particular site and did in fact work for the whole of his employment at that site, might be said to have chosen to live at the site so that the cost of his accommodation there would be private.

The same principle applies when a taxpayer establishes a new home. In these circumstances, expenditure on meals and incidentals is private or domestic in nature.

Paragraph 93 of Taxation Ruling TR 98/9 discusses the key factors to be taken into account in determining whether a new home has been established for self education purposes. The factors include:

· the total duration of the travel

· whether the taxpayer stays in one place or moves frequently from place to place

· the nature of the accommodation, for example, hotel, motel, long term accommodation

· whether the taxpayer is accompanied by his or her family

· whether the taxpayer is maintaining a home at the previous location while away. The fact that the taxpayer did not maintain a home while away for an extended period was the decisive factor in characterising expenditure on accommodation and meals as private 'living expenses' in a number of cases, and

· the frequency and duration of return trips to the previous location.

In your case, you were provided with accommodation while working overseas. You stayed in the one location, you travelled to your home town on your rostered days off and you did not maintain a home at the previous location. It is clear that when applying your circumstances to the key factors that you had established a new home for the duration of the job.

Therefore, you are not entitled to a deduction for the cost of meals and incidentals as these are considered to be private in nature. Additionally, as the expense is not deductible, and you have not received a meal allowance, the reasonable allowance amounts are not relevant to your circumstances.