Private ruling: Deductions
Date of advice: 5 March 2019
Published: May 2019
Ruling period: Period ending 30 June 2018
Date scheme commenced: 1 July 2017

Ruling: Q1: Can you claim the payment of a meal allowance paid as part of your hourly rate, as a deduction? | A1: No

Relevant facts and circumstances: You are employed as a driver. You are paid a common hourly rate for each hour worked. The common hourly rate is paid in lieu of award related conditions: 35 hours ordinary time, overtime, meal allowances, annual leave loading and shift allowances. The meal allowance is not shown separately on your payment summary. You are not required to sleep away from home.

Relevant legislative provisions: Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)

Reasons for decision: Summary: Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for losses and outgoings to the extent to which they are incurred in gaining or producing assessable income or are necessarily incurred in carrying on a business for the purpose of gaining or producing such income. However, you cannot deduct a loss or outgoing under section 8-1 if: ● It is a loss or outgoing of capital, or of a capital nature; or ● It is a loss or outgoing of a private or domestic nature; or ● It is incurred in relation to gaining or producing your exempt income or your non-assessable non-exempt income; or ● A provision of the ITAA 1997 prevents you from deducting it. Expenditure on food and drink is usually considered to be private in nature and will not ordinarily provide the necessary connection to a taxpayer’s income earning activities ( Federal Commissioner of Taxation v Cooper (1991) 21 ATR 1616). However, there are exceptional cases and they include where a taxpayer is required by their employer to travel and sleep away from their home for work purposes ( Roads and Traffic Authority of New South Wales v Commissioner of Taxation (1993) FCR 223). Most industrial awards roll the overtime meal allowance into the normal salary or wage and it is not included as a separate allowance on your payment summary. In this situation, you cannot claim a deduction for overtime meals. As such, no deduction for meals will be allowed under section 8-1 of the ITAA 1997 unless the expenses are incurred by a truck driver who is required to sleep (take their major rest break) away from home for work purposes