Private ruling: Meal allowance
Date of advice: 10 September 2015
Published: September 2015
Ruling period: Year ended 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Are you entitled to claim a deduction in relation to an overtime meal allowance where the amount has been incorporated into your hourly rate? | A1: No.

Relevant facts and circumstances: You are an employee. The industrial agreement under which you are employed has folded-in the overtime meal allowance into the hourly rate you are paid. You are paid the same amount regardless of the number of times you work overtime.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1 | Income Tax Assessment Act 1997 Section 900-60 | Income Tax Assessment Act 1997 Section 32-50

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. Allowances received by an employee from an employer are generally assessable income to the employee. However, an employee is not automatically entitled to a deduction for expenses incurred in relation to an allowance. The expenses must meet the criteria for deductibility under section 8-1 of the ITAA 1997 and the substantiation requirements. The cost of meals is generally considered to be a private or domestic expense and not deductible. However subsection 900-30(4) of the ITAA 1997 states that overtime meal allowance expenses are work expenses if they are incurred for food or drink and are covered by a meal allowance. A meal allowance is an amount that the employer pays to an employee to enable the employee to purchase food or drink (see subsection 900-30(5) of the ITAA 1997). Additionally, under section 32-50 of the ITAA 1997, a deduction may be allowable for the cost of meals to do with overtime worked by a taxpayer if the taxpayer receives a genuine overtime meal allowance under an industrial instrument to buy the food or drink. That is, to be a genuine overtime meal allowance, the allowance needs to be paid for specific individual instances that you work overtime and the amount of the allowance must enable you to buy food and drink in connection with the overtime worked. Taxation Ruling TR 2004/6 deals with the substantiation exception for reasonable overtime meal allowance expenses. Paragraph 51 of TR 2004/6 provides that an amount for overtime meals that has been folded-in as part of normal salary or wages, for example, under a workplace agreement, is not considered to be an overtime meal allowance. In your case, an overtime meal allowance has been folded-in to the hourly rate you are paid. You receive the same amount regardless of the number of times you work overtime. As you do not receive a separate overtime meal allowance in connection with a specific overtime occasion, you do not receive an allowance for the purposes of section 32-50 of the ITAA 1997. Accordingly, you are not entitled to claim a deduction for overtime meal expenses under section 8-1 of the ITAA 1997, and as such the substantiation exception for reasonable overtime meal allowance expenses in section 900-60 of the ITAA 1997 has no application.