Edited version of your written advice

Authorisation Number: 1012694066218

Ruling

Subject: Overtime meals

Question

Are you entitled to a deduction, without substantiation, for overtime meal expenses you incur up to the reasonable allowance amounts if you declare the overtime meal allowance you receive?

Answer

Yes.

This ruling applies for the following periods:

Year ending 30 June 2013

Year ending 30 June 2014

Year ending 30 June 2015

Year ending 30 June 2016

Year ending 30 June 2017

Year ending 30 June 2018

Year ending 30 June 2019

The scheme commences on:

1 July 2012

Relevant facts and circumstances

You are an employee.

You receive an overtime meal allowance for each occasion that you work overtime.

The allowance you receive is paid under an industrial law, award or agreement and is not included on your PAYG summary.

You incur expenses for overtime meals in excess of the reasonable allowance amounts provided by the Commissioner.

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 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.

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

Taxation Ruling TR 2004/6 Income tax: substantiation exception for reasonable travel and overtime meal allowance expenses states at paragraph 12 that:

Unless the following exception applies, all allowances must be shown as assessable income in the employee's tax return. However where:

• the allowance is not shown on the employee's payment summary;

• the allowance received is a bona fide overtime meal allowance or a bona fide travel allowance;

• the allowance received does not exceed the reasonable amount; and

• the allowance has been fully expended on deductible expenses,

the allowance received is not required to be shown as assessable income in the employee's tax return. Where the allowance is not required to be shown as assessable income in the employee's tax return, and is not shown, a deduction for the expense cannot be claimed in the tax return

As a general rule, written evidence is required to substantiate any expense you wish to claim as a deduction. However, a substantiation exception for overtime meal allowance expenses applies to relieve taxpayers covered by the exception from the requirement to substantiate claims for deductible expenses by using detailed calculations, records or receipts.

Where you receive a bona fide overtime meal allowance which is not included on your payment summary and is less than the Commissioner's reasonable amount and you incur deductible meal expenses in excess of the Commissioner's reasonable amount you may choose to include the allowance as assessable income and claim, without the need for substantiation, the amounts you actually incurred up to the reasonable amount.

It should be noted that if you rely on the exception from substantiation, you may still be required to show the basis for determining the amount of your claim, that the expense was actually incurred, and that it was for work-related purposes. What counts as evidence for a claim subject to the substantiation exception will vary according to individual circumstances and the nature of the expense.

In your case, you receive a genuine overtime meal allowance for each occasion you work overtime and incur expenses on food and drink in excess of the Commissioner's reasonable amount for each overtime occurrence. Therefore, you may include the allowance you receive as assessable income and claim a deduction for the expenses, you actually incur, up to the reasonable allowance amount set out each year by the Commissioner.