Edited version of your private ruling

Authorisation Number: 1012542518201

Ruling

Subject: Meals and travel

Question 1

Is your travel from your family home to your accommodation and return after the period away is complete considered to be business travel?

Answer

Yes.

Question 2

Is your travel between your accommodation and the work site considered to be business travel?

Answer

Yes.

Question 3

Is your travel between your accommodation and your family home on weekends considered to be business travel?

Answer

No.

Question 4

Are you entitled to a deduction for meals while you are away from your family home?

Answer

No.

Question 5

Are you entitled to a deduction for overtime meals when you receive a bona fide meal allowance and declare that allowance?

Answer

Yes.

This ruling applies for the following period

Year ended 30 June 2013

The scheme commenced on

1 July 2012

Relevant facts

You live in City A and work in City B which is over 150 km away.

Your employer provides you with accommodation.

You receive a weekly amount for meals.

You are entitled to an overtime meal allowance for occasions when you work more than 1.5 hours overtime.

You are in City B for approximately 150 nights.

You travel home on the weekends and days off to see your family.

You carry equipment which is well over 30kg and consists of a compressor, hammer drills, planks and nail gun among other things.

There is no secure place to store your equipment at work.

You are required by your employer to use your own equipment as none is provided.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Income Tax Assessment Act 1997 Section 32-50

Reasons for decision

Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for all outgoings to the extent to which they are incurred in gaining or producing assessable income, or are necessarily incurred in carrying on a business for that purpose. However, a deduction is not allowable for outgoings that are of a capital, private or domestic nature.

Travel

Generally the expenses of travel to and from work are not deductible. This is either because such expenditure is private in nature, or because it is not an expense incurred in gaining or producing assessable income.

The case of Lunney & Hayley v. Federal Commissioner of Taxation (1958) 100 CLR 478; (1958) 7 AITR 166; (1958) 11 ATD 404 settled the principle that travel to and from work is ordinarily not deductible. The Full High Court held that costs incurred by a taxpayer in travelling to the place where they work are expenses incurred in order to enable them to earn income but are not expenses incurred in the course of earning that income. The travel is considered to be of an essentially private or domestic nature.

However, the Commissioner accepts that expenses incurred by employees in travelling to and from work are deductible in certain circumstances. One of the exceptions to the general view is where the employee is required to transport bulky equipment necessary for employment. Paragraphs 63 and 64 of Taxation Ruling TR 95/34 explain that a deduction may be allowed in circumstances where:

· the cost can be attributed to the transportation of bulky equipment rather than to private travel between home and work

· it is essential to transport the equipment to and from work and it is not done as a matter of convenience or personal choice, and

· there are no secure facilities available for storage of the bulky equipment at the work place.

The question of what constitutes bulky equipment must be considered according to the individual circumstances in each case. To establish if the equipment you carry is bulky, consideration must be given to its size and weight. 

It is considered that your equipment is bulky. Therefore, you are entitled to a deduction for travel expenses between home and work.

In your case, your first and last trip between your family home and your accommodation is considered to be travelling from home to work carrying bulky equipment and this travel is deductible. Furthermore, your trips from your accommodation to the work site and returning to that accommodation are also considered to be home to work travel that is deductible. However, your trips between your accommodation and your family home on the weekends or your days off are considered to be private travel and as such, are not deductible. This is so even though you may still be carrying the bulky equipment.

Meals

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).

Expenditure on accommodation and meals ordinarily has the character of a private or domestic expense. However, the occasion of the outgoing may operate to give the expenditure the essential character of an income-producing expense. Taxation Ruling TR 98/9 discusses self education expenses. However, the principles are also relevant to your situation. Paragraph 89 of TR 98/9 elaborates:

Where a taxpayer is away from home overnight in connection with a self education activity, accommodation and meals expenses incurred are deductible under section 8-1. (Examples include an overseas study tour or sabbatical, a work-related conference or seminar or attending an educational institution.) They are part of the necessary cost of participating in the tour or attending the conference, the seminar or the educational institution. We do not consider such expenditure to be of a private nature because its occasion is the taxpayer's travel away from home on income-producing activities.

However, paragraph 24 (c) of TR 98/9 explains that expenditure on meals will not be an allowable deduction where a taxpayer has travelled to another location and has established a new home. Paragraph 93 of TR 98/9 lists the key factors to be taken into account in determining whether a new home has been established. These factors include:

· the total duration of the travel

· whether the taxpayer stays in one place or moves frequently from place to place

· the nature of the accommodation, for example, hotel, motel, or long term accommodation

· whether the taxpayer is accompanied by his or her family

· whether the taxpayer is maintaining a home at the previous location while away; and

· the frequency and duration of return trips to the previous location.

The question of whether a new home has been established depends on all the facts. There is no one test to satisfy all the circumstances. 

In your case, your employer has provided you with accommodation for the days you work. It is considered that this is your home for the period you work. Therefore, you are not entitled to a deduction for meals as you are not away from home overnight and the expenses are considered to be private in nature.

Overtime meals

Under section 32-50 of the ITAA 1997, a deduction may be allowable for the cost of meals to do with overtime worked by a taxpayer if the taxpayer receives a genuine overtime meal allowance under an industrial instrument to buy the food or drink. That is, to be a genuine overtime meal allowance, the allowance needs to be paid for specific individual instances that you work overtime and the amount of the allowance must enable you to buy food and drink in connection with the overtime worked.

In your case, you are entitled to a meal allowance of $18 for each occasion you work overtime of more than 1.50 hours. This amount is considered to be a bona fide meal allowance.

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.

Therefore, as you receive a bona fide overtime meal allowance, you are entitled to claim a deduction without the need for substantiation up to the reasonable allowance amount for meal expenses that you incur while working overtime as long as the allowance is included in your return.