Private ruling: Refreshments
Date of advice: 21 July 2016
Published: August 2016
Ruling period: Year ended 30 June 2016 | Year ended 30 June 2017 | Year ended 30 June 2018
Date scheme commenced: 1 July 2015

Ruling: Q1: Are you entitled to a deduction for the cost of light refreshments while providing ride-sourcing services? | A1: No.

Relevant facts and circumstances: You derive income from ride-sourcing services. To ensure comfort, and to maintain focus on the road in the car during the working day, you will purchase a coffee during the day.

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 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. Expenditure on the daily necessities of life (e.g., food and drink) are generally a private expense and are 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 (ATR at page 1638; ATC at page 4415) For the Commissioner, it was submitted that, except in a rare case, the essential character of food was always private. Exceptions for the cost of entertainment (now excluded from deduction legislatively) and for meals taken while the taxpayer was away from home on a business activity, were acknowledged. 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 at least overnight for the purposes of their employment. Where a taxpayer is required to travel for work purposes the cost of meals may be deductible. The taxpayer must however be travelling for work purposes. For example, an office worker attending an interstate conference. The taxpayer cannot be considered to be travelling for work as they continue to perform their employment duties at their ordinary place of work. You cannot be considered to be travelling for work as you are completing your ride-sourcing services. Your circumstances do not change the essential character of the expense as private or domestic in nature. The expenditure incurred by you on your refreshments is not incurred in gaining or producing assessable income or necessarily incurred in carrying on a business, but is private or domestic in nature. The cost of your portion of the food or drink consumed by you is therefore not deductible under section 8-1 of the ITAA 1997.