Taxation Determination

TD 2020/4

Fringe benefits tax: reasonable amounts under section 31G of the Fringe Benefits Tax Assessment Act 1986 for food and drink expenses incurred by employees receiving a living-away-from-home allowance fringe benefit for the fringe benefits tax year commencing on 1 April 2020

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Ruling

1. This Determination sets out the amounts that the Commissioner considers reasonable under section 31G of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) for food and drink expenses incurred by employees receiving a living-away-from-home allowance (LAFHA) fringe benefit for the fringe benefits tax (FBT) year commencing on 1 April 2020.

2. Where the total of food and drink expenses for an employee (including eligible family members) does not exceed the amount the Commissioner considers reasonable, those expenses do not have to be substantiated under section 31G of the FBTAA. Where an employee receives a LAFHA fringe benefit, for the employer to reduce the taxable value of the fringe benefit by the exempt food component, the expenses must be either:

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equal to or less than the amount the Commissioner considers reasonable under paragraph 31G(1)(b), or

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substantiated in accordance with the requirements in subsection 31G(2).

3. If the total of an employee's food or drink expenses exceeds the amount the Commissioner considers reasonable, the substantiation provisions under section 31G of the FBTAA will apply.

Reasonable amount for food and drink - within Australia

4. Table 1 sets out the weekly amounts the Commissioner considers to be reasonable food and drink amounts for a LAFHA paid to employees living away from home within Australia for the FBT year commencing on 1 April 2020. These amounts are the total of food or drink expenses and include any amounts that may have been allowed for home consumption.

Table 1: Amounts of reasonable food and drink - within Australia

('Adults' for this purpose are persons who had attained the age of 12 years before the beginning of the FBT year.)

5. In relation to larger family groupings, the Commissioner accepts the reasonable food and drink amount listed in Table 1, plus:

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$138 for each additional adult, and

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$69 for each additional child.

Reasonable amounts for food and drink - overseas

6. Tables 2, 3 and 4 set out the weekly amounts the Commissioner considers to be reasonable food and drink amounts for a LAFHA paid to employees living away from home outside Australia for the FBT year commencing on 1 April 2020. Table 2 sets out the cost group to which a country has been allocated. Table 3 sets out the reasonable amount for food and drink expenses for each cost group.

7. If the employee lives away from home in a country that is not shown in Table 2, the employee can use the amount for cost group 1 in Table 3.

Table 2: List of countries

If a country is not listed in this table, use the amount for cost group 1 in Table 3.

For the amounts that apply to each cost group, see Table 3.

Table 3: Amounts by cost group

8. Where the employee is accompanied by other family members while overseas, the reasonable food and drink amount per week for the family is worked out by multiplying the amount shown in Table 3 by the relevant factor in Table 4.

Table 4: Factors to apply for family groups - overseas

9. In relation to larger family groups, the Commissioner accepts the reasonable food and drink amounts can be increased for each additional:

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adult by a further 50% of the relevant single adult rate in Table 3, and

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child by a further 25% of the relevant single adult rate in Table 3.

Example 1: calculation of reasonable amounts for food and drink - within Australia

10. Jasper, his wife, and their two children (both under 12 years of age) temporarily move to Brisbane from Sydney for a period of five months (from 1 May 2020 to 30 September 2020, which is 21 weeks and 6 days) for Jasper to work on a project for his employer. Jasper receives a LAFHA from his employer.

11. Jasper does not need to substantiate his family's food and drink expenses during the five-month period if his total expenses do not exceed $12,065 (being $552 per week multiplied by 21 6/7 weeks).

12. If Jasper's family's total food and drink expenses for the period exceed $12,065, Jasper will have to substantiate all of the expenses incurred, or his employer will be liable for FBT on the amount of LAFHA paid to Jasper that is in excess of $12,065.

Example 2: calculation of reasonable amounts for food and drink - overseas

13. Maria is seconded from Australia to Canada by her employer for 25 weeks, starting work in Canada on 1 April 2020. Maria agrees to temporarily move with her husband and child. Maria receives a LAFHA from her employer for the period of the secondment.

14. Maria does not need to substantiate her food and drink expenses if the total expenses do not exceed $15,137 (being $605 per week multiplied by 25 weeks). Table 2 lists Canada as being in cost group 4, and as per Table 3, the reasonable amount for food and drink is $346 per week. A factor of 1.75 for 2 adults and 1 child is applied to this rate as per Table 4).

15. If Maria's total food and drink expenses for the period exceed $15,137, Maria will have to substantiate all of the expenses incurred, or her employer will be liable for FBT on the amount of LAFHA paid to Maria that is in excess of $15,137.

Date of effect

16. This Determination applies to the FBT year commencing 1 April 2020.

Commissioner of Taxation
25 March 2020

Appendix 1 - Explanation

Background

17. This Determination is intended to be read in conjunction with Taxation Determination TD 2013/4 Fringe benefits tax: reasonable amounts under section 31G of the Fringe Benefits Tax Assessment Act 1986 for food and drink expenses incurred by employees receiving a living-away-from-home allowance fringe benefit, for the fringe benefits tax year commencing on 1 April 2013 (now withdrawn). TD 2013/4 sets out the amounts that the Commissioner considers reasonable under section 31G of the FBTAA for food and drink expenses incurred by employees receiving a LAFHA fringe benefit for the FBT year commencing on 1 April 2013. Reasonable amounts were determined for employees within Australia based on the 2009-10 Household Expenditure Survey (HES) conducted by the Australian Bureau of Statistics and indexed to take into account movements in the Consumer Price Index (CPI) since the survey was completed. Reasonable amounts for employees overseas were determined by reference to the relevant annual Taxation Determination which sets out reasonable travel and overtime meal allowance expense amounts. For the FBT year commencing on 1 April 2020, reference is made to Taxation Determination TD 2019/11 Income tax: what are the reasonable travel and overtime meal allowance expense amounts for the 2019-20 income year?

Reasonable amounts for food and drink - within Australia

18. In determining the reasonable amounts for food and drink for substantiation purposes for employees living away from home in Australia, reference was made to the publicly available 2015-2016 HES. The HES food and drink expenditure (including alcoholic beverages) for households in the highest income quintile has been adopted. The HES amounts have been indexed to take into account movements in the food sub-group of the CPI since the survey was completed, to determine the reasonable amounts for food and drink for FBT substantiation purposes.

Reasonable amounts for food and drink - overseas

19. As explained more fully in TD 2013/4, the reasonable amounts for food and drink for a LAFHA paid to employees living away from home outside Australia are based on the relevant annual Taxation Determination which sets out reasonable travel allowance amounts. The most recent Determination, which sets amounts for the 2019-20 income year, is TD 2019/11.

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Not previously issued as a draft

References

ATO references:
NO 1-KK4R10U

Previous Rulings/Determinations:
TD 2015/7
TD 2016/4
TD 2017/5
TD 2018/3
TD 2019/7

Related Rulings/Determinations:

TD 2013/4

Business Line:  SEO

Legislative References:
FBTAA 1986 31G
FBTAA 1986 31G(1)(b)
FBTAA 1986 31G(2)
TAA 1953