ATO Interpretative Decision

ATO ID 2010/187

Income Tax

• This document has changed over time. View its history.

Issue

Are contributions by a shearing industry employee towards the cost of meals provided by their employer deductible if the employee is paid at the 'not found' rate?

Decision

Yes. Provided the taxpayer is travelling away from home overnight in the course of their duties as a shearing industry employee and meets the substantiation requirements in Division 900 of the Income Tax Assessment Act 1997 (ITAA 1997) in relation to the expense, an amount paid as a contribution towards the cost of meals provided by the employer is deductible under section 8-1 of the ITAA 1997.

Facts

The taxpayer is a shearing industry employee and is engaged as part of a shearing team. The taxpayer's employment requires travel away from home and staying overnight at properties where shearing is carried out.

The employer provides the taxpayer with accommodation and meals when the taxpayer is travelling away from home.

The taxpayer is paid at the 'not found' (meals not included) rate of pay as set out in the relevant industrial agreement and makes a contribution at a prescribed rate towards the cost of meals provided by the employer.

Reasons for Decision

The deductibility of meal expenses where an employee is required by the circumstances of their employment to live temporarily away from home was considered by the Federal Court in Roads and Traffic Authority of New South Wales v. Federal Commissioner of Taxation (1993) 43 FCR 223; 93 ATC 4508; (1993) 26 ATR 76. Hill J stated (at FCR 240; ATC 4521; ATR 92):

Where a taxpayer is required by his employer, and for the purposes of his employer, to reside, for periods at a time, away from home and at the work site, and that employee incurs expenditure for the cost of sustenance, or indeed other necessary expenditure which, if the taxpayer had been living at home, would clearly be private expenditure, the circumstance in which the expenditure is incurred, that is to say, the occasion of the outgoing operates to stamp that outgoing as having a business or employment related character.

As the taxpayer is travelling away from home overnight and incurring the meal expense in the course of duties as an employee, the contribution paid by the taxpayer is an outgoing incurred in producing the taxpayer's wages as a shearing industry employee and is deductible under section 8-1 of the ITAA 1997.

As the contribution is a 'work expense' under subsection 900-30(1) of the ITAA 1997, deductibility is conditional on satisfying the substantiation requirements in Division 900. This means the taxpayer must retain written evidence of the amount claimed unless the total amount of work expenses (excluding meal allowance or travel allowance expenses) is less than the threshold set out in section 900-35 of the ITAA 1997.

Year of income:  Year ended 30 June 2011

Legislative References:
Income Tax Assessment Act 1997
   section 8-1
   Division 900
   subsection 900-30(1)
   section 900-35

Case References:
Roads and Traffic Authority of NSW v Federal Commissioner of Taxation
   (1993) 43 FCR 223
   93 ATC 4508
   (1993) 26 ATR 76

Keywords
Domestic travel expenses
Employee allowances
Meal & food allowances
Travel allowances

Siebel/TDMS Reference Number:  1-28753K4

Business Line:  Small Business/Individual Taxpayers

Date of publication:  15 October 2010

ISSN: 1445-2782