Edited version of your written advice

Authorisation Number: 1012906688911

Date of advice: 10 November 2015

Ruling

Subject: WRE - meal expenses

Question

Are you entitled to a deduction for your food expenses?

Answer

No.

This ruling applies for the following period

Year ended 30 June 2015

The scheme commenced on

1 July 2014

Relevant facts

You are an employee.

You were given a compulsory order to go on a restrictive meal plan. Specific restrictions apply including dietary control.

You did not receive reimbursement or a meal allowance to purchase the ingredients.

You are on restrictive duty and unable to complete your required role while you are on such restrictions.

You have receipts to substantiate your expenses. None of the ingredients highlighted are shared with your family at home and are only eaten by yourself as per your work required restrictive diet.

You were advised that your diet is compulsory if you want to remain in your employment.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1.

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, or a provision of the ITAA 1997 prevents it.

A number of significant court decisions have determined that for an expense to be an allowable deduction:

• it must have the essential character of an outgoing incurred in gaining assessable income or, in other words, of an income-producing expense (Lunney v. FC of T; (1958) 100 CLR 478,

• there must be a nexus between the outgoing and the assessable income so that the outgoing is incidental and relevant to the gaining of assessable income (Ronpibon Tin NL v. FC of T, (1949) 78 CLR 47), and

• it is necessary to determine the connection between the particular outgoing and the operations or activities by which the taxpayer most directly gains or produces his or her assessable income (Charles Moore Co (WA) Pty Ltd v. FC of T, (1956) 95 CLR 344; FC of T v. Hatchett, 71 ATC 4184).

Food expenses

Expenditure on the daily necessities of life (for example, accommodation, food and drink) is generally not deductible as it is not incurred in gaining or producing assessable income and is also considered to be private or domestic in nature.

A deduction for meal expenses is allowed when a person is undertaking work related travel and is required to stay away overnight or they work overtime and receive an overtime meal allowance. However, these situations do not apply in your case.

Taxation Ruling TR 95/17 provides information on allowable deductions. Paragraphs 275 to 278 of TR 95/17 discusses weight loss expenses and states that expenses incurred in losing weight are private in nature and not allowable even though ADF members are required to meet specified fitness levels as a condition of employment. Weight loss expenses do not have the essential character of an income producing expense.

Taxation Determination TD 93/112 states that no deduction is allowed for a weight reduction program as it does not have the essential character of expenditure incurred in the course of gaining or producing assessable income.

An employer's requirement that an employee incur expenditure which is not related to income producing activities does not convert that expenditure into a deductible outgoing (per Hill J in FC of T v Cooper 91 ATC 4396 at 4414; (1991) 21 ATR 1616 at 1636).

In your case, the cost of your food is not directly related to your employment duties.

It is acknowledged that you did not receive a meal allowance or reimbursement. However the receipt of an allowance or the fact that you do not receive an allowance or reimbursement does not determine the deductibility of expenses. They must still meet the requirements of section 8-1 of the ITAA 1997.

Expenditure on your meals is not deductible, even though the expenditure had a causal connection with the earning of income. The expenditure is inherently of a private or domestic nature and not incurred in gaining or producing your assessable income. Therefore no deduction is allowable under section 8-1 of the ITAA 1997 for your meals.