Private ruling: Allowances and meal deductions
Published: November 2013
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Is the ferry and travel allowances you receive assessable to you? | A1: Yes. | Q2: Are you entitled to a deduction for meals and incidentals using the reasonable allowance amounts or if you keep evidence to support your claims? | A2: No.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 15-2 | Income Tax Assessment Act 1997 Section 8-1 | Income Tax Assessment Act 1997 Section 15-2 | Income Tax Assessment Act 1997 Section 32-50

Reasons for decision: Summary: Allowance Section 15-2 of the Income Tax Assessment Act 1997 (ITAA 1997) states that your assessable income includes the value to you of all allowances, gratuities, compensation, benefits, bonuses and premiums provided to you in respect of, or for or in relation directly or indirectly to, any employment of or services rendered by you. In your case, you receive a ferry and travel allowance. These allowances are directly related to your employment and as such, are assessable. Meals Section 8-1 of the 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. The receipt of an allowance does not automatically entitle a taxpayer to a deduction. The cost of meals is generally considered to be a private expense and not deductible under section 8-1 of the ITAA 1997. However, where a taxpayer is away from home overnight in connection with an income producing activity, meal expenses are deductible. 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. In your case, you are not away from home overnight. Furthermore, the allowances you receive for ferry and travel are not considered to be bona fide overtime meal allowances. Therefore, you are not entitled to claim a deduction for meal expenses either with or without substantiation as they are considered to be a private expense.

Relevant facts: You travel daily to an island to work on a project. | You are required daily to report to the ferry terminal to be transported to the worksite. | It is compulsory for you to travel to the island by this transport and not allowed to take private transport. | The ferry trip lasts between up to one hour each way depending on ship traffic and weather conditions. | The ferry fees are paid by your employer. | You are paid a daily travel allowance and a ferry allowance. | Your actual working day commences once you land on the island and are transported to the worksite.