Claiming Overtime Meal Allowances

(last updated 30/06/2015)

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Overtime meal allowances, whilst available to most employees, is most common with transport, construction and factory workers who work over a certain time in overtime (usually 2 hours) and is paid in accordance with an industry award.

Many workers are not aware of their taxation entitlements when preparing their income tax returns.

Claiming Overtime Meal Allowance

There are two ways that a tax deduction for overtime meal expense can be claimed:
  • Substantiated - actual cost of the overtime meal but must be supported with evidence of the expense, ie a receipt.
  • Un-substantiated - 2015 rate $28.20. Special substantiation rules apply to overtime meal expenses if you receive an overtime meal allowance paid under an industrial award. A deduction is allowable without substantiation for expenses incurred, provided the claim does not exceed the amount considered reasonable by the ATO.
Note that if a tax deduction is claimed for more than the "reasonable" amount than substantiation is required for ALL of the claim.

Example of Overtime Meal Allowance

The claim can make a substantial difference to tax refunds. For example, a meal allowance included on a PAYG Payment Summary of $840 (70 allowances at $12) could convert to a tax deduction of $1939 - an additional deduction of $1099 ($1939 less $840). Note that the allowance on the PAYG certificate must also be included as income in the recipients tax return.

Overtime Meal Allowance Rules

The overtime meal allowance is commonly paid at the rate of $11 - $15 each allowance and varies depending on various industry awareds (check with your employer for your award rate). The allowance is usually shown separately on the Annual PAYG Payment Summary in the Allowances box and must be included as assessable income in your tax return. See this post for a checklist of eTax Return and Assessable income.

You can claim a deduction for overtime meal expenses incurred if you worked overtime and you received a genuine overtime meal allowance paid under an industrial law, award or agreement. See this post for a checklist of eTax Return and Allowable Deductions.

Employees must be careful to ensure their meal allowance is paid under an award and not folded into a workplace agreement or EBA. In this case, there is no receipt of an overtime meal allowance which is necessary in order to meet the un-substantiated rule above.

In practice, some employers payroll systems don't show the meal allowance separately on their certificates but are included in the "Gross Payments" instead. In these cases, providing the allowance is paid under an award, we ask the client to obtain a letter from their employers confirming the payment of an allowance and the daily rate or check pay slips for details. Alternatively, if an overtime meal allowance is shown separately on your payslip, that will be sufficient evidence of receipt of a genuine overtime meal allowance (providing it is paid under an industrial award). In this case, you should keep copies of pay slips in case of an ATO audit.

E-tax Return

See these posts with tips, calculators and checklists to help you prepare your eTax Return (and get a better refund) with less hassle:
Web Based Tax Return App:

A benefit of using eZtax, our web based tax return app, is we have the genuine online tools, knowledge and experience to get the best tax refund for our clients, making it easy to complete your annual tax return online.

Our Web Based Tax Return App will step you through all the necessary questions to increase your  tax refund and take into account all relevant tax deductions and tax offsets. Try it now. Its FREE to get started! 

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