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Ruling
Subject: Deductibility for expenses where a missed crib allowance is paid
Question
Can you claim a deduction for an amount expended on your lunch if you are paid a missed crib allowance?
Answer
No.
This ruling applies for the following period
Year ended 30 June 2011
The scheme commenced on
1 July 2010
Relevant facts
You are employed by a health service.
You are paid a missed crib allowance. A missed crib allowance is paid when you are out on work at lunch time and cannot return to base to have your lunch. It is not an overtime meal allowance. You can be paid an overtime meal allowance if the occasion arises. Currently missed crib penalties are part of the grossed up amount and taxed as such. They are not separated from other payments.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1
Reasons for decision
Summary
A deduction is not allowed for the expenses incurred in purchasing your lunch even though a missed crib allowance is paid. The expense is considered to be private in nature and there is not sufficient nexus with the nature of your work or the earning of your income that would override the fact that it is private in nature, to make it deductible.
Detailed reasoning
Missed crib allowance
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 deriving your assessable income or in carrying on a business. However, no deduction is allowed for expenses to the extent to which they are of a capital, private or domestic nature.
Generally, meal expenses are not allowable as a deduction under section 8-1 of the ITAA 1997 on the basis there isn't a sufficient connection between the expenditure and the income earning activities. However, there is, no general proposition that meal expenses can never be deductible: FC of T v Cooper 91 ATC 4396; (1991) ATR 1616, Roads and Traffic Authority of NSW v. FC of T 93 ATC 4508; (1993) 26 ATR, Re Carlaw and FC of T 95 ATC 2166; (195) 31 ATR 1190, AAT decision in Case 9/96 ATC 186.
We should not confuse the deductibility of an expense and the need for substantiation of a deductible expense. Under Subdivision 900-B of the ITAA 1997, a deduction is not allowable for a work expense, including a meal allowance expense or travel allowance expense, unless the expense qualifies as a deduction under a provision of the Act and written evidence of the expense has been obtained and retained by the employee taxpayer.
An expense must be actually incurred before a claim can be made. A taxpayer cannot automatically claim a deduction just because they receive an allowance.
The deductibility of the expenditure on meals will depend on the essential character of the expenditure on the basis of the facts in each case. In this case, the relevant expenses are considered to be private in nature. For this lunchtime meal expense to which the missed crib meal allowance relates, to be considered deductible it would have to be incurred while travelling on work or paid as a bona fide overtime meal allowance. You are not considered to be travelling on work during your normal daily work hours as there is no overnight stay involved and it does not fit the definition of a bona fide overtime meal allowance. A 'bona fide overtime meal allowance' is defined at paragraph 87 in Taxation Ruling TR 2004/6. It has to be paid in relation to working overtime. The missed crib allowance is not paid in relation to working overtime.
No deduction is allowable for expenses incurred in purchasing your lunch, even though a missed crib allowance is paid. It is considered to be private in nature.