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Ruling
Subject: Meal expenses
Question:
Are you entitled to a deduction for meals?
Answer
No.
This ruling applies for the following period
Year ended 30 June 2010
The scheme commenced on
1 July 2009
Relevant facts
You were employed in City A as a fly in/fly out employee.
You were advised that your accommodation, meals and flights would be provided. However, when you arrived you were advised that accommodation was very limited so your employer provided you with a company house and you were given an allowance per week for food.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1
Income Tax Assessment Act 1997 Section 900-50
Reasons for decision
Section 8-1 of the 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 payment of an allowance does not automatically entitle the taxpayer to a deduction. The expense must be incurred in the course of producing assessable income (Amalgamated Zinc (De Bavay's) Ltd v. FCT (1935) 54 CLR 295; (1935) 3 ATD 288; [1936] ALR 67).
As a general rule, expenditure on meals and accommodation while working away from home is not allowed as a deduction. These costs are essentially 'living expenses' of a private or domestic nature. The fact that income cannot be earned unless certain expenses are necessarily incurred is not determinative of deductibility. The costs of maintaining a second home in a place the taxpayer regularly visits on business are unlikely to be deductible.
In FC of T v. Toms 89 ATC 4373; (1989) 20 ATR 466 the Federal Court disallowed a forest worker's deduction for the cost of maintaining a caravan and other living expenses. The taxpayer incurred the expenses in providing temporary accommodation at the base camp because the taxpayer had chosen to reside at a place far from the worksite. These expenses were dictated not by work but by private considerations.
In your case, your meal expenses do not have a sufficient connection with your income producing activities. The extra expenses of food and accommodation are considered to be of a private and domestic nature.
Accordingly, a deduction for the cost of meals is not allowable.