Edited version of private advice

Authorisation Number: 1051582396953

Date of advice: 26 September 2019

Ruling

Subject: Work related expenses

Question 1

Are you entitled to a deduction for the costs you incurred for rental expenses?

Answer

No

Question 2

Are you entitled to claim a deduction for meal expenses incurred as a result of overtime?

Answer

Yes

Question 3

Are you entitled to a deduction for the costs you incurred for other meal expenses?

Answer

No

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You were employed by company located in a city.

The company closed one of its facilities, to retain full time employment you took an offer to work for the company located in another city.

You have a main residence not in your city of employment.

Return travel from your main residence to your city of employment is extended.

You travel from your main residence on Monday and return back on Saturday afternoon. You have chosen not to commute to your main residence on a daily basis as you see it to be dangerous, hazardous and an unsafe practice.

You rented properties closer to your city of employment.

You are not accompanied away from your main residence.

You are not required to perform overnight work, you work is solely in the city metro and surrounding suburbs to the company.

Your duties require you to have material at the relevant work zones before workers arrive at 7 am, you can be required to wait an extended period of time.

You can be required to work from 5am to 5pm with overtime extending your day until 8pm.

You advised are in receipt of EBA Allowances - meal allowance, site allowance, and site allowance OT at yard.

You incur meal expenses and have kept receipts for all your meals purchased during the week.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Income Tax Assessment Act 1997 Section 32-50

Income Tax Assessment Act 1997 Subsection 900-30(4)

Reasons for decision

Summary

An employee's ordinary costs of travelling between home and work, and maintaining a home and consuming food and drink to go about their daily activities, are of a private or domestic nature and are not deductible. Similarly, employee costs of relocating for work and living away from home to work are 'preliminary to the work' and are not deductible.

A deduction is allowable for the cost of meals bought while working overtime if an award overtime meal allowance is received with the claim being supported through substantiation.

Question 1

Generally, accommodation expenses are private in nature and are not deductible.

The issue of expenses incurred in relation to accommodation near the work place while maintaining a family residence in another location was considered in FC of T v. Toms 89 ATC 4373; (1989) 20 ATR 466 (Toms' Case).

In Toms' Case, the taxpayer was a forest worker who during the working week lived in a caravan in a bush camp 108 kilometres from his family home in Grafton. He claimed it was too far to travel each day to his work in the forest, so that it was necessary to establish a caravan at the camp. He would return home on weekends. He claimed the costs of maintaining his caravan and other living expenses such as the cost of heating and lighting. The Federal Court considered that the caravan was rendered necessary as much by the taxpayer's choice of the place of his residence in Grafton as by his choice of employment in the forest, and its purpose was to enable him to retain his residence at Grafton although employed in the forest. It was held that the expenses incurred in relation to the temporary accommodation near the workplace while maintaining a family residence in another location were dictated not by his work but by private considerations, and therefore were not deductible.

It is acknowledged that you would be required to travel a great distance if you commuted daily between your main residence and the workplace. However, as in Toms' Case, your rental expenses are a prerequisite to the earning of assessable income. Your choice to rent a property to reduce your commute is not an expense incurred in gaining or producing assessable income it is preliminary to your work to put you in a position to perform your duties and are not incurred in performing your work activities. A deduction is therefore not allowable for your rental expenses.

Question 2

The cost of meals is generally considered to be a private or domestic expense and not deductible under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997). However, section 32-50 of the ITAA 1997 provides that expenses incurred for meals in connection with overtime worked are deductible if you receive an allowance under an industrial instrument to buy those meals.

Subsection 900-30(4) of the ITAA 1997 states that overtime meal allowance expenses are work expenses if they are incurred for food or drink and are covered by a meal allowance. A meal allowance is an amount that the employer pays to an employee to enable the employee to purchase food or drink.

Taxation Ruling TR 2004/6 Income tax: substantiation exception for reasonable travel and overtime meal allowance expenses states that an expense must actually be incurred before a claim can be made. A taxpayer cannot automatically claim a deduction just because they receive a meal allowance.

To be entitled to claim a deduction for overtime meal expenses the following requirements must be met:

·         the expense relating to the purchase of food or drink must actually be incurred;

·         the meal allowance must be paid to cover the cost of food or drink in connection with the overtime worked;

·         the overtime meal allowance must be paid or be payable under a law of the Commonwealth or of a State or Territory, or under an award, order, determination or industrial agreement in force under such a law;

·         the meal allowance received must be included as assessable income on the taxpayer's income tax return; and

·         the substantiation conditions must be met.

In your case you are entitled to claim a deduction for the overtime meal expenses if you actually incurred the expenses, the overtime meal allowance payments you received from your employer are included in your assessable income and you meet the substantiation requirements.

Question 3

Your meals during the normal course of your day including breakfast and lunch are considered to be a private expenses for which you cannot claim a deduction. This position does not change if you are required to purchase food or drink whilst you are away from your usual workplace, or on a jobsite. Therefore in your case the cost of meals is considered to be a private expense and not deductible under section 8-1 of the ITAA 1997.