Accommodation and Meals at Remote Sites
The ATO defines an area as remote if it is not in, or adjacent to, an eligible urban area. This means at least 40 km away from an urban centre that had a population of 14,000 or more in the 1981 Census, or 100 km away from an urban centre that had a population of 130,000 or more in the 1981 Census.
Generally accommodation and meals incurred by employees at their place of work is private and non-deductible. As such, accommodation and meals at remote sites should be non-deductible.
This changed with the taxpayers win in the Roads and Traffic Authority of NSW v FCT 93 case which created an exception to the general rule. The Court determined that accommodation and meals expenditure may be deductible to an individual where the individual works at a remote work site for short periods, and is required to live at or near the work site.
As a result of this tax case the ATO then released TD 96/7 and TD 93/230 to clarify when accommodation and meals at remote sites will be tax deductible. This ruling allows employees working at remote work sites for short periods (generally less than 21 days) a deduction for their accommodation and meals. This would not apply if the employee kept coming back to the same place of work. Employees will also need to substantiate their accommodation and meal deductions with the normal written receipts.
Alternatively, if an employer pays for these costs, the employer will be entitled to a tax deduction for the expenses and have no fringe benefits tax liability due to the ‘otherwise deductible rule’. The accommodation and meals benefit received by the employee is tax free to them.