Edited version of your written advice

Authorisation Number: 1012883650044

Date of advice: 24 September 2015

Ruling

Subject: Work related expenses - overtime meals

Issue

Deduction for overtime meals

Question

Are you entitled to claim a deduction for the maximum reasonable amount set by the Commissioner for overtime meals of $28.20 where actual expenses incurred are less than this amount?

Answer

No

This ruling applies for the following period

Year ended 30 June 2015

The scheme commences on

1 July 2014

Relevant facts and circumstances

Your standard work day is ten hours, although you regularly work 12 to 13 hours a day six days a week.

You receive an assessable overtime meal allowance from your employer paid under your industrial agreement of $X per meal; this is shown on your payslips.

You have received $X in overtime meal allowances for the 2014-15 financial year, which consists of X overtime meals paid at $X per meal.

You incur a higher cost than the $X when you do purchase overtime meals, due to the location.

On occasion you bring prepared meals from home.

You have not kept any receipts or documentation for your overtime meal purchases.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Income Tax Assessment Act 1997 Subdivision 900-B

Income Tax Assessment Act 1997 Section 900-60

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.

Under Subdivision 900-B of the ITAA 1997, a deduction is not allowable for a work expense (which includes a meal allowance expense i.e. a loss or outgoing that you incur for food and drink that is covered by a meal allowance) unless the expense qualifies as a deduction under another provision of the income tax legislation and written evidence of the expense has been obtained and retained by the employee taxpayer.

However there are exceptions where written evidence is not required to substantiate the incurred expense. Section 900-60 of the ITAA 1997 provides relief from the substantiation provisions for overtime meal expenses where an overtime meal allowance has been paid under an industrial instrument to cover the expenses and the expenses claimed are within the amount considered reasonable by the Commissioner. Reasonable allowance amounts are determined by the Commissioner each year.

Taxation Determination TD 2014/19 states the reasonable amount for overtime meal allowance expenses is $28.20 for the 2014-15 income year.

If a taxpayer relies on the exception from substantiation, they may still be required to show the basis for determining the amount of their 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 incurred expenses on meals whilst working overtime and you were paid an overtime meal allowance of $X by your employer to cover these costs. As the overtime meal allowance paid by your employer was paid under an industrial instrument, the exception from the n substantiation requirements provided in section 900-60 applies in your case. You therefore can claim a deduction for the expenses actually incurred up to the reasonable amount provided in TD 2014/19, without substantiation. This may include the cost of food you yourself have prepared.

While you don't have to substantiate your expenses up to the reasonable amount of $28.20, to be deductible under section 8-1 of the ITAA 1997 the expenses must have been incurred by you. As such, you may be required to demonstrate that you have incurred the amount you are claiming and how you worked out your claim.

For example, if the location where you work only has one place to purchase meals and their meals all cost around $15 and you purchase a meal from that location every time you worked overtime, you would be able to show how you worked out a claim based on $15 per overtime meal. However, if you claimed $28.20 per overtime meal you would not be able to show that you have incurred the amount you are trying to claim and therefore a deduction for that amount would not be allowed. Also, if you only purchase meals on some occasions when you work overtime and bring food on the other occasions then you must take this into account when working out your claim.