Edited version of your written advice

Authorisation Number: 1012962488524

Date of advice: 5 February 2016

Ruling

Subject: Meal and incidental expenses

Question

Are you entitled to a deduction for meal and incidental expenses?

Answer

No.

This ruling applies for the following period

Year ended 30 June 2015

The scheme commenced on

1 July 2014

Relevant facts

Your employer's main base is in city A.

For the relevant financial year you were working in city B for approximately three months. You left city A for work on a Monday morning and returned home on a Thursday or Friday evening.

During this time your accommodation and utilities in city B was fully paid for by your employer.

You paid for your meals and incidentals during the time you were working in city B.

You do not receive a living away from home allowance from your employer or any other allowance for working away from home.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1.

Reasons for decision

Summary

Travel to and from a regular place of work is not an allowable deduction. City B was a regular place of work for you during the three month period you worked there. The travel expenses were incurred to enable you to commence your employment duties and not in the performance of your duties. Your associated meal and incidental expenses are regarded as private in nature and not sufficiently related to your income earning activities; therefore no deduction is allowed.

Detailed reasoning

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.

Certain expenditure is incurred in order to be in a position to be able to derive assessable income, for example, unless a person arrives at work it is not possible to derive income. This does not mean that the expenditure on travel, accommodation or meals is incurred in the course of gaining or producing assessable income (Case V111 88 ATC 712).

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. However, these expenses may be considered to be work related where they are incurred while an employee is travelling on work.

Miscellaneous Taxation Ruling MT 2030 discusses the difference between travelling on work and living away from home for work. It states that travelling on work occurs where the employee is travelling in the course of carrying out their duties of employment (such as an interstate truck driver or a travelling salesperson) whereas a person is living away from home for work where they are living away from their usual place of residence so as to be able to carry out employment duties for a time at the new (but temporary) workplace.

Where an employee is living away from home for work, their accommodation and meal expenses retain their character as private living expenses.

It is considered that during the three month period you worked in city B, your normal place of work was in city B and that you were living away from home for work. While it is acknowledged that your main residence was in city A, it is not considered that your travel between city A and city B was work related travel. Rather it was private travel carried out to enable you to commence your employment duties. The distance of the travel does not alter the private nature of the travel.

As city B was your normal place of work during the three month period you worked there, your meal expenses were not associated with any work related travel. Similarly, any incidental expenses incurred in relation to your travel to and from city B and/or living in city B, are not incurred during the actual performance of your work, that is, during the production of assessable income.

The meals and incidental expenses incurred while living and working in city B are not incurred in gaining or producing your assessable income. Rather they are a private expense and no deduction is allowable under section 8-1 of the ITAA 1997.

As your meal and incidental expenses in city B are considered to be private in nature, it follows that the reasonable rates published by the Commissioner have no application in your situation.

Please note: the reasonable travel amounts are only relevant where an employee receives a bona fide travel allowance from their employer and have incurred deductible work related travel expenses. As you did not receive a travel allowance from your employer and your expenses are not deductible, the rates are not relevant in your circumstances.