Private ruling: Work related expenses
Date of advice: 3 January 2018
Published: May 2018
Ruling period: Year ended 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Question and answer | Are the expenses incurred from attending events with clients considered to be work-related expenses? | No.

Relevant facts and circumstances: You are employed in the entertainment industry. The requirements of your role include: ● Responsible for local and international schedules which includes organising and hosting all on-ground activity. ● Promoting to designated national TV, radio and online outlets for all releases as well as establishing and maintaining relationships with this media and the client. ● Managing and working with the team to plan, strategize and implement creative and promotional campaigns resulting in maximum impact and exposure for the client and releases at all times. You have incurred costs attending a number of functions with some clients you work with. The clients are under contract with your employer. Some of these functions were planned and some were on a more unplanned ad-hoc basis. Your employer has reimbursed some costs specifically for the clients and management Your employer has only reimbursed you for events that were organised by your employer. Your colleague’s presence at meetings/functions was needed to assist you in managing media, crowds and itinerary and as a trusted contact for the clients. You employer pays you a car allowance.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 8-1. | Income Tax Assessment Act 1997 Division 32

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 except where the outgoings are of a capital, private or domestic nature. Generally, expenses incurred for meals during a normal work day are not deductible as they are private and domestic expenditure even if you receive an allowance to cover the meal expense. You may be able to claim a deduction for meals eaten during overtime. | Detailed Reasoning - Entertainment expenses: In FC of T v. Cooper 91 ATC 4396; (1991) 21 ATR 1616 the court held that additional expenditure on food and drink was excluded from deductibility as being of a private nature. Hill J stated that (ATC 4415; ATR 1638): 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. Division 32 of the Income Tax Assessment Act 1997 looks at entertainment expenses and states: ’You cannot deduct costs of providing entertainment. Nor can you deduct amounts for property you use for providing entertainment. But there are exceptions.’ One of the exceptions that may apply to you is entertainment industry expenses, Section 32-40 states: | Detailed Reasoning - But the exception does not apply if ...: 3.1 providing *entertainment for payment in the ordinary course of a *business that you carry on. 3.2 providing *entertainment in performing your duties to your employer who carries on a *business that includes providing that entertainment for payment. In your case you are an employee, therefore, you are not carrying on a business. The clients you meet with are not your clients, they are your employer’s clients. As an employee of a business that provides entertainment for payment, you are not actually providing entertainment for payment, instead, you are providing meals and drinks for your employers clients. If you were the employer rather than the employee different rules would apply. While some of your meal expenses may have been incurred outside of a normal working day, these meals may only be eligible for a deduction if you were considered to be working overtime and were paid an allowance. In your case, the expenses are not expected as part of your work contract and job description and they were not requested or arranged at the direction of your employer. The expenses you have incurred are not allowable deductions under Section 8-1 of the ITAA 1997 as they remain a private expense and do not meet the requirements or exceptions to be treated as entertainment expenses under Division 32 of the ITAA1997.