Private ruling: Sleepover allowance
Date of advice: 11 January 2018
Published: June 2018
Ruling period: Financial year ended 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Question and Answer | Can a carer claim for a meal expense incurred during a sleepover where a sleepover allowance is paid? | No | Are meal expenses deductible where no meal allowance is paid? | No

Relevant facts and circumstances: You are a disability carer. As part of your job, you sleep at the cared member’s place of residence which after your normal hours of work. You typically do this x times a fortnight. You are required to provide your own meals. You receive a sleepover allowance. You are not paid an overtime meal allowance.

Relevant legislative provisions: Subsection 15-2(1) of the Income Tax Assessment Act 1997 | Reasons for decision | Subsection 15-2(1) of the ITAA 1997 provides that the assessable income of a taxpayer includes the value of allowances paid in respect of employment. | 'A living-away-from-home allowance is paid where the employee has moved and taken up temporary residence away from his or her usual place of residence so as to be able to carry out employment duties for a time at the new (but temporary) workplace.' | The sleepover allowance is paid as compensation for the inconvenience the taxpayer suffered as a result of occasionally spending the night at a client's residence. The allowance is not a living-away-from-home allowance because: | (a) it is not paid to compensate the taxpayer for additional expenses, and; | (b) the taxpayer is not required to move to a temporary residence - that is, the taxpayer is not considered to be living away from their normal place of residence. | Section 8-1 of the 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. | The payment of an allowance does not automatically entitle the taxpayer to a deduction. The expense must be incurred in the course of producing assessable income (Amalgamated Zinc (De Bavay's) Ltd v. FCT (1935) 54 CLR 295; (1935) 3 ATD 288; [1936] ALR 67). | The meaning of 'incurred in gaining or producing assessable income' was considered in Ronpibon Tin NL Tong Kah Compound NL v. Federal Commissioner of Taxation (1949) 78 CLR 47; (1949) 56 ALR 785; (1949) 8 ATD 431. The High Court stated that: | 'For expenditure to form an allowable deduction as an outgoing incurred in gaining or producing the assessable income it must be incidental and relevant to that end. The words "incurred in gaining or producing the assessable income" mean in the course of producing such income.' | Expenditure on the daily necessities of life (e.g., food and drink) are generally not deductible (unless the outgoing gives the expenditure the essential character of a working expense) as it is not incurred in gaining or producing assessable income and is also private or domestic in nature. | The expenditure you incurred on meals is not incurred in gaining or producing assessable income and is also private or domestic in nature. | The cost of the meals is therefore not deductible under section 8-1 of the ITAA 1997 against the sleepover allowance received.