Edited version of your private ruling

Authorisation Number: 1012503513964

Ruling

Subject: Meal and incidental expenses

Question

Are you entitled to a deduction for meal and incidental expenses incurred while working away from home?

Answer

No

This ruling applies for the following period

Year ending 30 June 2014

The scheme commenced on

1 July 2013

Relevant facts

You will be required to work away from your usual place of residence.

You will work and live at different locations for x to x months at a time.

Your employer will pay for your accommodation.

You will be required to share accommodation with other workers.

Your employer will pay you a travel allowance of $xx per day to cover the costs of all your meals and incidentals.

You estimate that it will cost you approximately $xx per day for your meals and incidentals.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

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.

Taxation Ruling TR 2004/6 explains that a taxpayer cannot automatically claim a deduction just because they receive an allowance. The expense must meet the requirements of section 8-1 of the ITAA 1997.

Accommodation, meal and incidental expenses are ordinarily not deductible as they are private and domestic in nature.

An exception is where a taxpayer is travelling in the course of performing their work duties, for example, an interstate truck driver who travels away from home overnight. In these types of cases, the accommodation, meal and incidental expenses incurred while the taxpayer is travelling are incidental to the proper carrying out of their employment function and cease to be of a private and domestic nature.

However, it is important to distinguish taxpayers who travel in the course of carrying out their employment duties from taxpayers who are living away from home. In the latter case, the taxpayer moves and takes up temporary residence away from their usual place of residence so as to be able to carry out employment duties for a time at the new (but temporary) workplace.

For taxpayers who are living away from home, there is a change of job location and a temporary change of residence to a place at or near that location. For example, an employee who is transferred for three months to an office in another city and takes up temporary accommodation in that city whilst maintaining their own usual place of residence would be in this category. In this type of situation, the accommodation, meal and incidental expenses incurred while the person is living away from their usual home do not cease to be private and domestic in nature. That is, they are considered to retain their character as living expenses rather than becoming work related expenses.

In your case, you will be working and living at different locations for x to x months at a time. It is considered that during these periods you are living away from home for work rather than travelling on work. That is, during these periods you are living in these locations and you travelled because your work had been moved to these locations for those periods. Travel is not part of your actual work duties.

Therefore, your meal and incidental expenses are considered to retain their character as living expenses. As these expenses are private in nature, a deduction is not allowable. This conclusion is not altered by the fact that your employer pays you an allowance.