Private ruling: Meals
Published: February 2014
Ruling period: Year ended 30 June 2012 | Year ended 30 June 2013
Date scheme commenced: 1 July 2011

Ruling: Q1: Are you entitled to claim a deduction for expenditure incurred on meals, both locally and overseas? | A1: No


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. In establishing a connection, it must be shown that the outgoing is relevant and incidental to the gaining of assessable income. In most circumstances the purchasing of meals would be considered a private expense. In some limited circumstances this expense may be characterised as an income producing expense and may be an allowable deduction. However there is an onus on the taxpayer to prove that such an outlay should be an allowable deduction. This was highlighted in Case P30 25 CTBR (NS); Case 94 82 ATC 139 when the Board of review disallowed a claim for the purchase of newspapers by a real estate salesman. The real estate salesperson would gather information from the daily papers to assist him in selling real estate. The salesperson was however, unable to demonstrate that his income was affected by expenditure on the newspapers. The expense retained its private character and the deduction was not allowed. In your case, you are employed in a particular field. Your duties include business development and you are required to have a thorough understanding of market trends. It is not a duty of your employment to dine in restaurants, as it would be for a food critic, and it is not a prerequisite of earning your income that you incur such expenses. While knowledge acquired from the sampling of these meals may assist you to carry out your employment duties more efficiently, the expense is not necessarily incurred in order to earn that income. Dining out at restaurants has the character of a private expense. The connection is too general or tenuous to allow a deduction for any portion of the cost. Accordingly you are not entitled to a deduction under section 8-1 of the ITAA 1997 for the cost incurred in purchasing the meals.

In your roll you are required to oversee establishments which include food & beveridge outlets inclusive of function areas, varying from casual diners to fine dining restaurants. | During the relevant financial years, you incurred meal expenses locally and while you were overseas undertaking market research. | As part of your employment, you are required to have a thorough understanding of how the market trends, and all that encompasses the success of businesses. | This includes market research and in some cases models are created from the research. | In doing so you have taken your staff out for meals and met up with others overseas, to gather market research and to keep up with industry trends. | The meals were consumed by you, with colleagues and others who work in your field. | You have paid for the meals yourself.