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Is the taxpayer entitled to claim a deduction for meal expenses incurred when travelling overnight on business under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Yes, the taxpayer is entitled to claim a deduction for meal expenses incurred while travelling overnight on business under section 8-1 of the ITAA 1997.

The taxpayer is in business. The taxpayer travels away from home for several nights every month in connection with the business. The taxpayer incurs expenses for meals while away from home.

Section 8-1 of the ITAA 1997 allows a deduction for all losses and outgoings to the extent to which they are incurred in carrying on a business. However, no deduction is allowed for expenses to the extent to which they are of a capital, private or domestic nature.

Generally, meal expenses are not allowable as a deduction under section 8-1 of the ITAA on the basis there isn't a sufficient connection between the expenditure and the income earning activities of a taxpayer. However, there is, no general proposition that meal expenses can never be deductible: FC of T v. Cooper 91 ATC 4396; (1991) ATR 1616, Roads and Traffic Authority of NSW v. FC of T 93 ATC 4508; (1993) 26 ATR 76, Re Carlaw and FC of T 95 ATC 2166; (1995) 31 ATR 1190, AAT decision in Case 9/96 96 ATC 186.

The deductibility of expenditure on meals will depend on the essential character of the expenditure on the basis of the facts of each case. In this case, the relevant expenses are considered to be incurred in carrying on the business as the business requires overnight travel. The meal expenses are not considered to be private in nature.

As a result, the taxpayer's meal expenses incurred while travelling overnight in the course of the taxpayer's business, are deductible under section 8-1 of the ITAA 1997, provided the relevant substantiation provisions of the ITAA 1997 are satisfied.