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Ruling
Subject: Overtime meals
Question
Are you entitled to a deduction for overtime meals in the year the overtime was worked?
Answer
Yes.
This ruling applies for the following periods
Year ended 30 June 2002
Year ended 30 June 2003
Year ended 30 June 2004
Year ended 30 June 2005
Year ended 30 June 2006
Year ended 30 June 2007
Year ended 30 June 2008
Year ended 30 June 2009
Year ended 30 June 2010
The scheme commenced on
1 July 2001
Relevant facts
You are an employee.
You worked overtime in each year and were entitled to receive an overtime meal allowance under your employment agreement.
You did not receive the overtime meal allowances until your employer discovered that it had not been paid. They then paid the relevant amount for each occasion you worked overtime. The total amount was paid in the 2010-11 financial year.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1
Income Tax Assessment Act 1997 Section 900-60
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.
The cost of meals is generally considered to be a private expense and not deductible under section 8-1 of the ITAA 1997.
Under Subdivision 900-B of the ITAA 1997, a deduction is not allowable for a work expense unless the expense qualifies as a deduction and written evidence of the expense has been obtained and retained by the employee taxpayer.
An overtime meal allowance is an allowance paid or payable under an Australian law or industrial award for the purpose of enabling an employee to buy food or drink in connection with overtime. Generally, the Commissioner releases a Taxation Ruling setting out the amounts the Commissioner considers reasonable in respect of claims made for overtime meal expenses for each financial year. Where a taxpayer receives an overtime meal allowance and the expenses claimed by the taxpayer are less than the reasonable amount as set out in the Ruling for the financial year in which the meal expense was incurred, the cost of the taxpayer's overtime meals may be deductible without the requirement for written evidence (section 900-60 of the ITAA 1997).
Taxation Ruling TR 2004/6 provides guidance on the substantiation exception and the way in which the overtime meal expenses can be claimed. The ruling states that a taxpayer can claim a deduction where:
· the allowance received is a bona fide overtime meal allowance;
· the allowance received does not exceed the reasonable amount; and
· the allowance has been fully expended on deductible expenses.
In your situation, your employment agreement stated that an overtime meal allowance was payable. However, it was not until the 2010-11 financial year that your employer discovered that the allowance had not been paid.
Your employment agreement is considered to be an agreement under an industrial law and the meal allowance you were paid, albeit in a later year, was specifically for individual instances that you worked overtime and therefore, is considered to be an overtime meal allowance. Additionally, the amount is considered to be genuine in that the amount would reasonably cover meals in conjunction with overtime worked.
Therefore, as you have received a bona fide overtime meal allowance, you are entitled to claim a deduction for meal expenses that you incur while working overtime, up to the amount the set out in the relevant Ruling.