Full Court: Long distance truck driver allowed deduction for meal expenses

The Federal Court has upheld an ART decision allowing an employee long distance truck driver, Mr Shaw, a deduction for meal expenses up to the Commissioner’s maximum daily expense amounts as per TD 2020/5. In doing so, the Court confirmed there is a distinction to be drawn between deductibility and substantiation but that the Tribunal was entitled to conclude, on the totality of the taxpayer’s evidence about his spending and eating habits (as well as bank records) that he had spent up to the maximum amounts specified in the TD and that such expenditure was incurred in gaining or producing his assessable income. This brought s900-50 ITAA 1997 into play (he was in receipt of an allowance), which meant he was relieved of the general (and more onerous) substantiation requirements for work expenses under Div 900. The Commissioner’s claims about various errors of law were dismissed by the Court. The Court also held that in the alternative, Mr Shaw was entitled to rely on s900-200 since he had a reasonable expectation that he did not have to substantiate his meals expenditure as long as he restricted his claim to the TD 2020/5 maximum amounts after his tax agent wrongly advised him that was how the law works. (FCT v Shaw [2020] FCA 197, 4 March 2026)

Institute of Financial Professionals Australia Comment: Mr Shaw was lucky at the Tribunal stage because he was seen as a truthful witness. But other truck drivers have walked away from these cases empty handed because their evidence we not as compelling. Best to avoid a dispute in the first place and play by the ATO’s rules by having the driver keep detailed records on his meals for a short period of time. A small inconvenience for a large deduction.