ATO Interpretative Decision

ATO ID 2002/495

Income Tax

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Issue

Is the taxpayer who is a live-in carer entitled to a deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for the cost of their meals?

Decision

No. The taxpayer who is a live-in carer is not entitled to a deduction under section 8-1 of the ITAA 1997 for the cost of their meals.

Facts

The taxpayer is employed as a personal carer. They provide 24 hour per day care in home of the person they are caring for. They provide this care for a number of days each week.

The taxpayer provides their own food for their daily meals. They are not paid an allowance for these meals.

Reasons for Decision

Section 8-1 of the 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.

Expenditure on the daily necessities of life (e.g., food and drink) are generally a private expense and are not incurred in gaining or producing assessable income.

The issue of the deductibility of meals was considered by the Full Federal Court in FC of T v. Cooper (1991) 21 ATR 1616; 91 ATC 4396 where Hill J stated (ATR at page 1638; ATC at page 4415)

'Food and drink are ordinarily private matters, and the essential character of expenditure on food and drink will ordinarily be private rather than having the character of a working or business expense. However, the occasion of the outgoing may operate to give to expenditure on food and drink the essential character of a working expense in cases such as those illustrated of work-related entertainment or expenditure incurred while away from home.'

The reference to 'expenditure incurred while away from home' is a reference to the situation where a taxpayer must travel away from home for the purposes of their employment. Where a taxpayer is required to travel for work purposes the cost of meals may be deductible.

The taxpayer must however be travelling for work purposes. For example, an office worker attending an interstate conference or an 'on road' salesman.

The taxpayer cannot be considered to be travelling for work as they continue to perform their employment duties at their ordinary place of work. The taxpayer's circumstances do not change the essential character of the expense as private or domestic in nature.

The expenditure incurred by the taxpayer on meals is not incurred in gaining or producing assessable income and is also private or domestic in nature. The cost of meals incurred by the taxpayer is therefore not deductible under section 8-1 of the ITAA 1997.

Year of income:  Year ended 30 June 2001

Legislative References:
Income Tax Assessment Act 1997
   section 8-1

Case References:
FC of T v. Cooper
   (1991) 21 ATR 1616
   91 ATC 4396

Keywords
Deductions and expenses
Meal & food expenses

Siebel/TDMS Reference Number:  DW316320

Business Line:  Small Business/Individual Taxpayers

Date of publication:  30 April 2002

ISSN: 1445-2782