Edited version of your private ruling

Authorisation Number: 1011963937494

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. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.

Ruling

Subject: Allowances - expenses - substantiation

1. Are you entitled to claim overtime meal allowance expenses for expenses you have actually incurred up to the reasonable amount without substantiation for the 2010-011 financial year?

Answer: Yes

2. Are you entitled to claim overnight absence meal allowance expenses up to the reasonable amount without substantiation for the 2010-2011 financial year?

Answer: No

3. Are you entitled to claim part day absence meal allowance expenses without substantiation for the 2010-11 financial year?

Answer: No

This ruling applies for the following period:

Year ended 30 June 2011

The scheme commences on:

1 July 2010

Relevant facts and circumstances

The arrangement that is the subject of this ruling is described below. The following documents have been relied upon to reach a decision and form part of this ruling:

· 2011 PAYG payment summary

· Excerpts from Enterprise Agreement 2010 (provided with Private Ruling application)

· Email from tax agent to case officer 14 September 2011

· Email from tax agent to case officer dated 6 October 2011.

You received 3 different types of meal allowances in the 2010-11 year: overtime meal allowance (untaxed), overnight absence meal allowance (taxed), part day absence meal allowance (taxed).

Your overtime meal allowance totalled $XXX. This allowance was paid when you worked overtime.

Your overnight absence meal allowance and part day absence meal allowance totalled $XXXX. This appeared on your 2011 PAYG payment summary.

You received the overnight absence meal allowance on 10 occasions when you provided relief at other work locations and stayed overnight.

You received the part day absence meal allowance on 16 occasions when you provided relief at other work locations but did not stay overnight.

You are employed under an Enterprise Agreement.

When you provided relief at other work locations and stayed overnight, it was to attend the location on a work shift to ensure a minimum of 3 staff were on a shift.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Income Tax Assessment Act 1997 Section 900

Reasons for 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 gaining or producing assessable income, except where the outgoings are of a capital, private or domestic nature.

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.

Overtime meal allowance

The cost of meals is generally considered to be a private expense and not deductible under section 8-1 of the ITAA 1997. However, a deduction may be allowable for the cost of meals to do with overtime worked by a taxpayer if the taxpayer receives an overtime meal allowance under an industrial instrument. To be entitled to claim a deduction for overtime meal expenses, in addition to including the allowance as assessable income, the following requirements must be met:

· the expense must be actually incurred

· the meal allowance must be paid to cover the cost of food or drink in connection with the overtime worked

· the overtime meal allowance must be paid or be payable under a law of the Commonwealth or of a State or Territory, or under an award, order, determination or industrial agreement in force under such a law.

In your case the overtime meal allowance you received was paid to cover meals when you worked overtime and was paid under an industrial agreement, so fits the criteria stated above. Therefore, you are entitled to claim a deduction up to the reasonable amounts in TD 2010/19 for meal expenses that you have incurred.

Overnight absence meal allowance

A deduction may also be allowable where you are undertaking work-related travel, for instance you attend a work-related seminar in another town and are required to stay overnight. The allowance must be paid to cover work-related travel expenses incurred for travel away from your ordinary residence, undertaken in the course of performing duties as an employee and which involves sleep away from home. The work-related travel expenses must be for accommodation, or food or drink, or expenses incidental to the travel.

Paragraph 89 of Taxation Ruling TR 2004/6 states that travel away from the employee's ordinary residence means, for most employees, that the travel involves an overnight stay. However, some employees may work at night and sleep during the day. Therefore the term 'sleep away from home' is used to demonstrate that just completing work duties at night will not be considered travel away from an employee's ordinary residence.

In your case, your employment requires you to work both day shift and night shift. Your working a night shift involves carrying out your work duties at night and sleeping overnight at the work location. We do not consider that you are travelling away from your ordinary residence overnight when you work a night shift at a different location to your home work location.

Therefore, you are not entitled to a deduction up to the reasonable amounts in TD 2010/19 for meal expenses. The expenses you have incurred are considered private in nature and you are not entitled to a deduction under section 8-1 of the ITAA 1997.

Part day absence meal allowance

The part day absence meal allowance you have received was paid when you provided relief at other stations. It cannot be considered a travel allowance because you did not sleep away from home when you received this allowance, nor can it be considered an overtime meal allowance because it was not paid when you worked overtime.

Therefore, you are not entitled to a deduction up to the reasonable amounts in TD 2010/19 for meal expense. The expenses you have incurred are considered private in nature and you are not entitled to a deduction under section 8-1 of the ITAA 1997.

Substantiation

As a general rule, written evidence is required to substantiate any expense you wish to claim as a deduction. 

Taxation Determination TD 2010/19 provides the reasonable travel and overtime meal allowance expense amounts for the 2010-11 financial year.

Taxation Ruling TR 2004/6 discusses the conditions when the substantiation exception applies in relation to travel and overtime meal allowances. The ruling provides that the substantiation requirement to obtain written evidence does not apply to claims by employee taxpayers for expenses covered by:

· an overtime meal allowance paid under an industrial instrument

· a domestic travel allowance or overseas travel allowance, whether or not the allowance is paid under an industrial instrument,

if the amount of the claim for losses or outgoings incurred does not exceed the reasonable amounts.

Where these circumstances are met, the total expense is deductible without the need for written evidence. However, you are still required to be able to show you calculated your expenses using a reasonable basis. For example, you usually purchase A food and B drink at a cost of $C.