Income Tax and GST – Treatment of Meal Expenses

Income tax and GST - Treatment of meal expenses. IRD issued interpretation statement explaining the meal allowance and its tax treatment. IS 21/06

1. This statement covers the income tax and GST treatment of meal expenses incurred by self-employed persons. It also discusses the treatment of meal allowances paid to employees to illustrate the differences with the treatment of self-employed persons, and the treatment of entertainment expenditure for the same reason.
   
   
2. The Act denies a deduction for an amount of expenditure or loss to the extent to which it is of a private or domestic nature (the “private limitation,” s DA 2(2).
   
   
3. There are limited circumstances where amounts expended on food may be deductible, such as where the requirements of a taxpayer’s business imposed extra meal costs because of a remote working location or unusual working hours.
   
   
4. Employees receiving meal allowances or reimbursements while performing their duties (deductible expenditure to the employer, exempt income of the employee, not subject to FBT); or
   
   
5. “Self-employed” persons incorporating a closely held company and becoming an employee to receive the same treatment as any other employee.
   
   

*The above article is a high-level explanation of the methods of calculation, and there may be other technicalities/rules that are applicable. The complexity of the calculations can also vary. Please reach out to us if you have specific questions regarding your situation.

Please note that the above does not constitute specific tax advice and only intends to be a general advice. If you require specific advice related to your situation, please reach out to our tax consultant using the ‘contact us’ option.

{proforms 1}