Private ruling: Restaurant meals
Published: September 2014
Ruling period: Year ended 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Q1: Are you entitled to a deduction for the cost of dining in restaurants? | 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 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 cost of dining at a restaurant 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. You are not required to incur the expense by your employer and your employer does not assist you by either contributing to the bill or paying you an allowance for the cost of the meals. Furthermore, your profit share is based on you achieving KPI's relating to the management of the kitchen and kitchen staff rather than the restaurant or the restaurant staff. While knowledge acquired from dining at other restaurants may assist you to carry out employment duties more efficiently, the expense is not necessarily incurred in order to earn that income. Dining in restaurants either with company or alone 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 for the cost incurred in dining at restaurants.

Relevant facts: You are a chef at a restaurant. | You are entitled to a share in profits subject to achieving various key performance indicators (KPI's) specific to the running of the kitchen. | You eat at restaurants close to your employer's restaurant to research their meals, menus and staff. | You do not visit the kitchen or speak to the chef or kitchen staff when visiting the restaurants. | You dine with others or alone.