Edited version of private advice

Authorisation Number: 1012685727819

Ruling

Subject: Overtime meal allowance

Question 1

Are you entitled to claim a deduction up to the Commissioner's reasonable overtime meal amount for meals covered by an overtime meal allowance, providing the amount of the expense claimed was actually incurred and the allowance is included in your assessable income?

Answer

Yes

This ruling applies for the following period:

Year ended 30 June 2014

The scheme commences on:

1 July 2013

Relevant facts and circumstances

During the financial year you worked overtime.

You received an overtime meal allowance for each instance of overtime worked.

The amount is shown separately on your payslip, but not shown on your PAYG payment summary and not included in your gross wage.

The payment of an overtime meal allowance is part of an industrial award or agreement.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Income Tax Assessment Act 1997 Subdivision 900-B

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.

The cost of meals is generally considered to be a private expense and not deductible under section 8-1 of the ITAA 1997.

Under Subdivision 900-B of the ITAA 1997, a deduction is not allowable for a work expense unless the expense qualifies as a deduction and written evidence of the expense has been obtained and retained by the employee taxpayer.

An overtime meal allowance is an allowance paid or payable under an Australian law or industrial award for the purpose of enabling an employee to buy food or drink in connection with overtime. Generally, the Commissioner releases a Taxation Ruling setting out the amounts the Commissioner considers reasonable in respect of claims made for overtime meal expenses for each financial year. Where a taxpayer receives an overtime meal allowance and the expenses claimed by the taxpayer are less than the reasonable amount as set out in the Ruling for the financial year in which the meal expense was incurred, the cost of the taxpayer's overtime meals may be deductible without the requirement for written evidence (section 900-60 of the ITAA 1997).

TR 2004/6 states that, where a bona fide overtime meal allowance is received, a deduction is allowable without substantiation provided the expenses are actually incurred, and the claim does not exceed the amount considered reasonable by the Commissioner of Taxation. If the deduction claimed is more than the reasonable amount the whole claim must be substantiated, not just the excess over the reasonable amount. When claiming a deduction for the expenses incurred, the allowance must be included in your assessable income, that is, the allowance must be declared as income in your tax return.

In your case, you received an overtime meal allowance. You are entitled to claim a deduction, without substantiation, up to the Commissioner's reasonable overtime meal amount, providing the amount of the expense claimed was actually incurred and the allowance is included in your assessable income. If you incurred less than the reasonable amount, you are only entitled to a deduction of the amount you actually incurred.

Please note

Even where you rely on the above exception from substantiation, you may still be required to show the basis for determining the amount of your claim and that the expense was actually incurred. That is, you must have a reasonable basis for determining the amount you incurred.