Edited version of private advice

Authorisation Number: 1012653430161

Ruling

Subject: Meals

Question 1

Are you entitled to a deduction for meal and incidental expenses using the reasonable allowance amounts?

Answer

No.

Question 2

Are you entitled to a deduction for meal and incidental expenses if you are able to substantiate the expense?

Answer

No.

This ruling applies for the following period

Year ended 30 June 2013

The scheme commenced on

1 July 2012

Relevant facts

Your employer requested that you work overseas for several months.

You sold your usual residential home prior to leaving Australia.

You rented furnished accommodation overseas.

Your employer paid you an allowance toward airfares, living expenses and for airfares for your partner and child.

You returned to Australia once during the several months to purchase a new home.

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 Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for all losses and outgoings to the extent to which they are incurred in the course of gaining or producing assessable income, but are not allowable to the extent that they are of a capital, private or domestic nature.

As a general rule, written evidence is required to substantiate any expense you wish to claim as a deduction.

Section 900-50 of the ITAA 1997 provides that the substantiation requirement to obtain written evidence does not apply to claims by employee taxpayers for expenses covered by a travel allowance if the amount of the claim for expenses incurred does not exceed the amount the Commissioner considers reasonable.

Meal and incidental expenses are normally private or domestic in character. However, where a taxpayer is away from home overnight in connection with an income producing activity, meal and incidental expenses are deductible. The expenditure is not considered private because its occasion is the taxpayer's travel away from home on income producing activities.

Taxation Ruling TR 98/9 Income tax: deductibility of self-education expenses incurred by an employee or a person in business states that expenditure on accommodation and meals where a taxpayer has travelled to another location for self-education purposes has established a new home are not deductible.

TR 98/9 discusses the key factors to be taken into account in determining whether a new home has been established for self-education purposes. The factors have equal application to your circumstances. The 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, long term accommodation

• whether the taxpayer is accompanied by their family

• whether the taxpayer is maintaining a home at the previous location while away. The fact that the taxpayer did not maintain a home while away for an extended period was the decisive factor in characterising expenditure on accommodation and meals as private living expenses in a number of cases, and

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

In your case, you and your family travelled overseas for several months. You stayed in the one location in furnished accommodation, you had sold your residential home prior to leaving Australia and you only returned to Australia once during the period you were overseas.

It is clear that when applying your circumstances to the key factors that you had established a new home for the duration of the job.

Therefore, you are not entitled to a deduction for the cost of meals and incidentals as you have established a new home and these expenses are considered to be private in nature. Additionally, as the expenses are not deductible, the reasonable allowance amounts are not relevant to your circumstances.