Travel allowances and PAYG withholding
What is travel allowance?
Travel allowance is a payment made to an employee to cover expenses that are:
- incurred when they travel away from their home in the course of their duties
- for accommodation, food, drink or incidental expenses related to the travel.
When you pay an employee a travel allowance, you may be required to withhold an amount from the payment.
Reasonable travel allowance rate
Each year, we publish a determination setting out the amounts considered ‘reasonable’ for claims for domestic and overseas travel allowance expenses. These expenses include:
- deductible expenses which are incidental to travel.
Reasonable travel and overtime meal allowance expense amounts for the 2015–16 income year for various travel destinations are included in Taxation Determination 2015/14.
The rates for domestic travel apply for stays in commercial establishments only, for example:
- serviced apartments.
If a different type of accommodation is used, the rates do not apply.
If you pay the allowance at the same rate or below the 'reasonable travel allowance' rate, and the allowance is separately accounted for, withholding is not necessary, and the travel allowance does not need to appear on your employee's payment summary.
If you pay the allowance above the reasonable travel allowance rate (in total), you are required to withhold from amounts over the reasonable allowances amount. You should include the total amount of the allowance on your employee's payment summary in the allowance box with an explanation.
Find out about:
- TD 2016/13 Income tax: what are the reasonable travel and overtime meal allowance expense amounts for the 2016–17 income year?
Explains the PAYG withholding implications on travel allowances.