Private ruling: Meal expenses
Published: December 2014
Ruling period: Year ended 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Q1: Are you entitled to a deduction for the cost of your meals when you take clients out for lunch? | A1: No.

Relevant facts and circumstances: You are an employee carer. Your duties require you to get your clients out of the house and out into the community. You generally bring your own lunch to work; however, on some occasions you take your clients out to lunch. You pay for your own meals on these occasions and sometimes incur considerably more than you would if you prepared your own lunch.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 8-1

Reasons for decision: Summary: You can deduct from your assessable income any loss or outgoing to the extent that it is incurred in gaining or producing your assessable income except where the loss or outgoing is capital or private in nature (section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)). Expenditure incurred on the daily necessities of life, such as food and drink, is generally a private expense and is not incurred in gaining or producing assessable income. The issue of the deductibility of meals was considered by the Full Federal Court in FC of T v. Cooper (1991) 21 ATR 1616; 91 ATC 4396 where Hill J stated: Food and drink are ordinarily private matters, and the essential character of expenditure on food and drink will ordinarily be private rather than having the character of a working or business expense. However, the occasion of the outgoing may operate to give to expenditure on food and drink the essential character of a working expense in cases such as those illustrated of work-related entertainment or expenditure incurred while away from home. The reference to 'expenditure incurred while away from home' is a reference to the situation where a taxpayer must travel away from home overnight for the purposes of their employment. Where a taxpayer is required to sleep away from home for work purposes the cost of meals may be deductible. In your case, you are not required to travel away from home overnight. As such, the cost of your meals is not incurred in gaining or producing your assessable income. The essential character of expenditure on meals is generally private in nature and your circumstances are not considered sufficient to change that character. Consequently, the expenses you incur on meals are not deductible under section 8-1 of the ITAA 1997.