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Ruling

Subject: Meal expenses

Question

Are you entitled to a deduction for meal expenses when you are living away from home?

Answer

No.

This ruling applies for the following period

Year ended 30 June 2011

The scheme commenced on

1 July 2010

Relevant facts

Your usual place of residence is in Town A.

You are required to work and live in Town B for long periods at a time.

You lived away from home for a total of more than 150 days during the 2010-11 financial year.

You have provided your employer with a declaration regarding your usual place of residence.

You have provided copies of your living away from home declarations.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1.

Reasons for decision

Summary

You are not entitled to a deduction for meal expenses as this expenditure is private and domestic in nature.

Detailed reasoning

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.

As a general rule, accommodation, meals and incidental expenses are not allowed as a deduction as the costs are essentially living expenses of a private or domestic nature. However, these expenses will be deductible if they are incurred while travelling in the performance of duties of employment. An example of a taxpayer who would be considered to travel in the performance of their duties is an interstate truck driver or a travelling salesperson.

The receipt of an allowance does not automatically entitle a taxpayer to deductions for expenses incurred in relation to the allowance. A claim can only be made against an allowance if:

· the allowance is included in the taxpayer's assessable income,

· expenditure is actually incurred,

· the expenditure is allowable as a deduction, and

· the requirements of the substantiation provisions are satisfied.

Miscellaneous Taxation Ruling MT 2030 discusses the differences between living away from home allowances and travelling allowances.

A living away from home allowance is paid where the employee has moved and taken up temporary residence away from his or her usual place of residence so as to be able to carry out employment duties for a time at the workplace. Employers generally require employees to fill in a living away from home declaration in order to receive a living away from home allowance.

A travelling allowance is paid where the employee is travelling in the course of performing his or her job. Here, the employee does not change job and residential locations but simply travels in order to carry out the requirements of the job.

A living away from home allowance is in the nature of compensation for additional expenses incurred together with other disadvantages suffered because the employee is required to live away from his or her usual place of residence in order to perform the duties of employment. Additional expenses do not include expenses for which the employee would be entitled to a deduction.

A living away from home allowance is a taxable fringe benefit. Any fringe benefits tax payable is a liability of the employer. Even though a fringe benefit (if reportable) may be included on an employee's payment summary and shown in an employee's tax return, it is not included in the employee's assessable income. A deduction is not allowed for any accommodation and meal expenses as the employee is not travelling in the performance of their duties

In contrast, travelling allowances form part of the employee's assessable income against which appropriate deductions may be allowed for the cost of meals, accommodation and incidental expenses incurred while the employee is travelling in the course of carrying out the duties of employment.

In your case, your usual place of residence is in Town A but your place of work is in Town B. Therefore, you spend extended periods in Town B. During these periods it is considered that you are living away from home rather than travelling in the course of undertaking your employment duties. It is not the nature of the employment duties (like with an interstate truck driver or travelling salesperson) that requires you to travel, but the fact that you live in one place and work in another.

As you were living away from home, your meal expenses remain private in nature and are therefore not deductible.

Any living away from home allowance you receive is a fringe benefit and any associated fringe benefits tax payable is a liability of your employer. A living away from home allowance is not included in your assessable income. That is, you are not subject to tax on any living away from home allowance you receive.