at the rate of 17.5% and is tax free until it reaches the threshold of $320 per tax year
Not quite. The employer will not deduct PAYG amounts on payment, but the $320 is still fully taxable.
On the otherhand, any meal allowances paid under Clause B.4.5(a) of the Award are genuinely tax free if properly processed by the employer (they should not appear on your payment summary/group certificate).