Private ruling: WRE – travel - meals
Date of advice: 5 October 2017
Published: February 2018
Ruling period: Year ended 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Q1: Are you entitled to a deduction for meal expenses? | A1: No

Relevant facts and circumstances: You are employed by N and work in location A. You also source additional work in location B, C and D. Your additional work is sourced through an agency. You provide the agency with the days you are not working for N and they find you additional work during those periods. There is no connection between your employment with N and the additional work you source through the agency. You live with your family in location A. You incur additional expenses for meals when you travel to B, C and D to complete the additional work.

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

Reasons for decision: Summary: 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 the course of gaining or producing assessable income, but are not allowable to the extent that they are of a capital, private or domestic nature. Generally, accommodation, meal and incidental expenses are private in nature and are not deductible. In Lunney v. FC of T (1958) 100 CLR 478 ( Lunney’s Case ) the Full High Court laid down the principle that for a deduction to be allowable it is not enough for the expenditure to be an essential prerequisite to the derivation of assessable income. In that case it was held that the costs incurred by a taxpayer in travelling to the place where they work are expenses incurred in order to enable them to earn income but are not expenses incurred in the course of earning that income. 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. In your case, a deduction would not be allowable for meal expenses you incur while you are staying away from home for the additional work. As in Lunney’s Case , these expenses are incurred in order to put you in a position to be able to earn income but are not incurred in the actual course of gaining or producing that income. And, as per Tom’s Case, the expenses are considered to be private in nature as they are incurred due to your choice of where you live and where you work. As the expenses are private in nature they would not be deductible under section 8-1 of the ITAA 1997.