Overtime Meal Expenses: What You Need to Know
Working overtime and receiving a meal allowance from your employer, there can be a tax deduction in certain situations. The tax deduction is for the cost of the food and drink that you purchase to eat while working overtime.
Like anything with the Australian Taxation Office (ATO), there are conditions that have to be met. I hope you're excited because we are about to give you the whole box and dice on what you need to know.
What is an overtime meal?
An overtime meal is a meal you buy and eat when working overtime. Make a mental note, it is the meal you eat when working overtime not the meal you eat on your way home, nor is it a meal your employer provides for you a meal that your employer reimburses you for.
Example, if you finish your normal shift and your employer asks you to work for an additional three hours, and you buy and eat a meal during your overtime break, that is an overtime meal. But if you buy some food on the way home after your overtime shift is over, then that is not an overtime meal.
When can you claim an overtime meal expense?
To claim the overtime meal cost if the following apply :
- You buy and eat the meal while working overtime
- You receive an overtime meal allowance under an industrial award or enterprise agreement
- The overtime meal allowance is shown on your income statement and you declare it as income in your tax return
An overtime meal allowance is an amount your employer pays you to buy food and drink when you work overtime. It is a payment specifically for working overtime and it is paid under an industrial instrument, such as an award or enterprise agreement. An amount for overtime meals that is included as part of your normal salary and wages, such as under a workplace agreement, is not an overtime meal allowance.
How much can you claim?
What you can claim depends on what you've spent for your meal or the amount of the allowance. You can claim up to what the Australian Taxation Office (ATO) considers a reasonable amount. What constitutes reasonable is set and publish by the ATO each year. For the 2022-23 financial year, that amount is $33.25 per meal.
You can claim more than that if you have actually spent more than that, though you will need to have kept written evidence, such as receipts, that shows the cost of your meals. You can document these costs easily by having the Deduction Grabber App on your phone.
What records do you need to keep?
You need to keep records of your overtime meal expenses, such as receipts or diary entries, unless you rely on the exception from record keeping. You can be exempted for the keeping of diaries and receipts if you claim under the reasonable amount and you do keep a note of how you got to your claim.
If you do not meet the exemption conditions, you must keep receipts for all your meals and show how you calculated your claim.
Overtime Meal Example:
Jack works as a truck driver and receives an overtime meal allowance of $20 under his enterprise agreement when he works more than 10 hours a day. He usually works 12 hours a day and buys and eats a meal costing him $25 during his overtime. At the end of the year, his employer reports the allowance on his income statement. Jack declares the allowance as income in his tax return. Jack can claim a deduction for $25 for each overtime meal expense, as it is within the reasonable amount of $32.50.
Though Jack doesn't need to keep receipts for his meals, he still needs to be able to keep a record to show how he calculated his tax deduction.
