Private ruling: Overtime meals
Published: November 2011
Ruling period: Year ended 30 June 2009 | Year ended 30 June 2010 | Year ended 30 June 2011

Ruling: Question and Answer | Are you entitled to a deduction for the costs incurred for overtime meals, up to and not exceeding the ATO reasonable limit, when you have recorded the gross meal allowance received from your employer as assessable income? | Yes.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You are employed as a truck driver. You often work overtime. When you work overtime you are paid an allowance for overtime meals by your employer under the Transport Workers Award 1998. The allowance you are paid is $X per overtime. You spend more than the allowance of $X for meals when you work overtime. The overtime meal allowance is shown on your payslip but is not included on your PAYG payment summary. You have a letter from your employer which states the meal allowance has not been shown on the Payment Summary nor included in the "Gross" income. You have recorded the gross meal allowance received from your employer as assessable income. You wish to claim a deduction for the amount which is the excess of your allowance up to the reasonable amount.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1. Reason for Decision | Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) generally allows a deduction for any loss or outgoing to the extent that it is incurred in gaining or producing assessable income. However, you cannot claim a deduction for a loss or outgoing to the extent that it is of a capital, private or domestic nature. | The types of expenses that are deductible for employee truck drivers are considered in Taxation Ruling TR 95/18. Expenditure on meals consumed by employees throughout the course of a working day is generally considered to be private in nature. However, the cost of meals bought while working overtime may be deductible, if an award overtime meal allowance has been received. | The general rule is that no deduction is allowable for expenses incurred by an employee on food and drink for which a meal allowance, that is not a travel allowance, is paid unless the employee obtains written evidence of the expenses. An important exception to this rule applies if the employee receives an overtime meal allowance and the Commissioner considers the total of the expenses claimed to be reasonable. | The Commissioner publishes the amount considered to be reasonable each year. For the 2010-11 income year the reasonable amount for overtime meal allowance expenses was $26.45 (Taxation Determination TD 2011/17). | The deductibility of overtime meal expenses without substantiation is considered further in Taxation Ruling TR 2004/6. To claim a deduction for overtime meal expenses an employee must work overtime, have actually incurred the expenses claimed and be eligible to receive an allowance which is paid or payable under an industrial instrument in force under Australian law to buy food or drink in connection with that overtime. | Where a taxpayer receives an overtime meal allowance and the expenses claimed by the taxpayer are no more than the reasonable amount for a particular year as set out in the relevant ruling, the cost of the meals may be deductible without the need for written evidence under section 900-60 of the ITAA 1997. While substantiation is not required, a taxpayer will still need to show how they calculated the expense. | Where the following conditions are met the allowance is not required to be included in the taxpayer's assessable income: | · the allowance is not shown on the taxpayer's payment summary | · the allowance received is a bona fide overtime meal allowance | · the allowance received does not exceed the reasonable amount | · the allowance has been fully expended on deductible expenses. | In accordance with PAYG Bulletin No. 1, an employer is not required to show overtime meal allowance amounts on the employee's payment summary if the amount paid is less than a reasonable allowance. Where the allowance is not required to be shown as assessable income in the employee's tax return, and is not shown, a deduction for the expense cannot be claimed in the tax return (paragraph 12 of Taxation Ruling TR 2004/6). | Your allowance was not shown on your payment summary; however you may choose to include it. If you include your overtime meal allowance in you assessable income, you would then be entitled to a deduction for the costs incurred in purchasing overtime meals up to the reasonable amount for meal expenses actually incurred if the conditions set out in TR 2004/6 were met. | While you are not required to provide substantiation in those instances, you still need to show how you calculated the amounts. If the expenses incurred on overtime meals exceed the reasonable amount and you sought to claim the full amount, the whole claim would be required to be substantiated with written evidence.

Reasons for decision: Summary: Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) generally allows a deduction for any loss or outgoing to the extent that it is incurred in gaining or producing assessable income. However, you cannot claim a deduction for a loss or outgoing to the extent that it is of a capital, private or domestic nature. The types of expenses that are deductible for employee truck drivers are considered in Taxation Ruling TR 95/18. Expenditure on meals consumed by employees throughout the course of a working day is generally considered to be private in nature. However, the cost of meals bought while working overtime may be deductible, if an award overtime meal allowance has been received. The general rule is that no deduction is allowable for expenses incurred by an employee on food and drink for which a meal allowance, that is not a travel allowance, is paid unless the employee obtains written evidence of the expenses. An important exception to this rule applies if the employee receives an overtime meal allowance and the Commissioner considers the total of the expenses claimed to be reasonable. The Commissioner publishes the amount considered to be reasonable each year. For the 2010-11 income year the reasonable amount for overtime meal allowance expenses was $26.45 (Taxation Determination TD 2011/17). The deductibility of overtime meal expenses without substantiation is considered further in Taxation Ruling TR 2004/6. To claim a deduction for overtime meal expenses an employee must work overtime, have actually incurred the expenses claimed and be eligible to receive an allowance which is paid or payable under an industrial instrument in force under Australian law to buy food or drink in connection with that overtime. Where a taxpayer receives an overtime meal allowance and the expenses claimed by the taxpayer are no more than the reasonable amount for a particular year as set out in the relevant ruling, the cost of the meals may be deductible without the need for written evidence under section 900-60 of the ITAA 1997. While substantiation is not required, a taxpayer will still need to show how they calculated the expense. Where the following conditions are met the allowance is not required to be included in the taxpayer's assessable income: · the allowance is not shown on the taxpayer's payment summary · the allowance received is a bona fide overtime meal allowance · the allowance received does not exceed the reasonable amount · the allowance has been fully expended on deductible expenses. In accordance with PAYG Bulletin No. 1, an employer is not required to show overtime meal allowance amounts on the employee's payment summary if the amount paid is less than a reasonable allowance. Where the allowance is not required to be shown as assessable income in the employee's tax return, and is not shown, a deduction for the expense cannot be claimed in the tax return (paragraph 12 of Taxation Ruling TR 2004/6). Your allowance was not shown on your payment summary; however you may choose to include it. If you include your overtime meal allowance in you assessable income, you would then be entitled to a deduction for the costs incurred in purchasing overtime meals up to the reasonable amount for meal expenses actually incurred if the conditions set out in TR 2004/6 were met. While you are not required to provide substantiation in those instances, you still need to show how you calculated the amounts. If the expenses incurred on overtime meals exceed the reasonable amount and you sought to claim the full amount, the whole claim would be required to be substantiated with written evidence.

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