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Ruling
Subject: Overtime meal expenses
Question
Are you entitled to claim a deduction up to the Commissioner's reasonable overtime meal amount for meals covered by an overtime meal allowance, providing the amount of the expense claimed was actually incurred and the allowance is included in your assessable income?
Answer
Yes.
This ruling applies for the following period
Year ended 30 June 2010
Year ended 30 June 2011
The scheme commenced on
1 July 2009
Relevant facts
From time to time you work overtime and are paid an overtime meal allowance, inline with your award.
This amount is shown separately on your payslip, but not shown on your PAYG payment summary and not included in your gross wage.
You have incurred expenses in purchasing meals whilst working overtime.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1
Reasons for decision
Summary
You are entitled to claim a deduction for overtime meals without substantiation up to the Commissioner's reasonable overtime meal amount, providing the amount of the expense claimed was actually incurred and the allowance is included in your assessable income. If you incurred less than the reasonable amount, you are only entitled to a deduction of the amount you actually incurred.
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.
A deduction is allowable for the cost of meals bought while working overtime if an award overtime meal allowance is received. An overtime meal allowance is paid under a law or industrial award for the purpose of enabling an employee to buy food and drink at meal or rest breaks while working overtime.
The general rule is that no deduction is allowed for work-related expenses unless written evidence, such as a receipt, is obtained. However, special substantiation rules apply to overtime meal expenses if an employee receives an overtime meal allowance paid under an industrial award. These rules are discussed in Taxation Ruling TR 2004/6.
TR 2004/6 states that, where a bona fide overtime meal allowance is received, a deduction is allowable without substantiation provided the expenses are actually incurred, and the claim does not exceed the amount considered reasonable by the Commissioner of Taxation. If the deduction claimed is more than the reasonable amount the whole claim must be substantiated, not just the excess over the reasonable amount. When claiming a deduction for the expenses incurred, the allowance must be included in your assessable income, that is, the allowance must be declared as income in your tax return.
In your case, you received an overtime meal allowance. This allowance is shown on your payslip, but not shown on your payment summary. As you are in receipt of a bona fide overtime meal allowance, you are entitled to a deduction for the costs incurred in purchasing these meals.
You are entitled to claim a deduction, without substantiation, up to the Commissioner's reasonable overtime meal amount, providing the amount of the expense claimed was actually incurred and the allowance is included in your assessable income. If you incurred less than the reasonable amount, you are only entitled to a deduction of the amount you actually incurred.
Please note
Even where you rely on the above exception from substantiation, you may still be required to show the basis for determining the amount of your claim and that the expense was actually incurred. That is, you must have a reasonable basis for determining the amount you incurred.