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  • Travel allowance expenses and the reasonable amounts

    If you receive a travel allowance to cover travel allowance expenses you need to consider if you:

    • can claim a deduction for your expenses
    • if your claim in within the reasonable amounts the Commissioner publishes
    • if you can rely on the travel allowance record keeping exception.

    On this page

    Reasonable amounts

    The Commissioner needs to consider the total of travel allowance expenses your travel allowance covers to be reasonable.

    The reasonable amounts are published each income year, see TD 2021/6 Income tax: what are the reasonable travel and overtime meal allowance expense amounts for the 2021-22 income year?

    For travel allowance expenses the Commissioner publishes daily rates for:

    • accommodation
    • food and drink – as an amount for each breakfast, lunch and dinner
    • other deductible expenses incidental to the travel.

    The reasonable amounts vary depending on your:

    • annual salary
    • the location you travel to for work (domestic or overseas)
    • your occupation (in some instances – for example, airline crew and truck drivers).

    Use the reasonable amount to work out if you can rely on the travel allowance record keeping exceptions.

    The reasonable amounts are not amounts that you can automatically claim as a deduction. You can only claim a deduction for the deductible travel allowance expenses that you actually incur.

    You don't need to keep written evidence or travel records of your travel allowance expenses if you can rely on the travel allowance record keeping exceptions.

    Travel allowance expenses less than reasonable amounts

    You don't have to keep written evidence for any of your expenses, if both:

    • your employer pays you a travel allowance to cover the deductible travel allowance expenses you incur
    • your travel allowance expenses are less than the reasonable amounts.

    Even if you can rely on the travel allowance record keeping exception, we may still ask you to show:

    • when you travelled away from your home overnight for work (including when you left and returned home)
    • you paid for accommodation, food and drink or incidental expenses and the amount you spent
    • you correctly declared the travel allowance as income in your tax return.

    Example: expenses incurred less than the reasonable amount

    Jasha lives in Darwin and is travelling overnight for work to Adelaide. He receives a travel allowance of $150 to cover his accommodation. His employer includes the allowance on his income statement.

    In Adelaide, Jasha stays at a motel for the night that costs him $90. For a person in Jasha’s circumstances, the reasonable amount for accommodation in Adelaide is $157.

    At the end of the income year, Jasha must include the allowance of $150 in his tax return as income. He can also claims a deduction of $90, the amount he incurred on his accommodation.

    Jasha can rely on the travel allowance record keeping exception because:

    • he incurs deductible travel allowance expenses, that is, accommodation
    • he receives a travel allowance from his employer to cover his accommodation expenses
    • the claim amount ($90) is less than the reasonable amount ($157).
    End of example

    Travel allowance expenses more than reasonable amounts

    If the amount you incur on accommodation, food and drink or incidental expenses is more than the relevant reasonable amounts, you can keep either:

    • fewer records and claim a deduction for the reasonable amount
    • written evidence for all of the expenses you incur, and claim a deduction for the amount you spent.

    If the deduction you claim is more than the reasonable amount, you must have written evidence of the whole amount not just for the amount that exceeds the reasonable amounts.

    Example: expenses incurred more than reasonable amount

    Quin lives in Adelaide and travels to Perth for work for 3 nights. She receives a travel allowance of $180 per night to cover her accommodation costs.

    Quin's employer reports the total allowance ($180 × 3 = $540) on her income statement at the end of the income year.

    The reasonable amount for accommodation is $180 for a person in Quin’s circumstances.

    Quin spends a total of $750 ($250 per night × 3 nights) on her accommodation in Perth.

    At the end of the income year Quin must declare her allowance of $540 as income in her tax return.

    Quin can claim a deduction for the amount she incurred ($750) if she keeps written evidence of the whole amount she spends.

    If Quin wants to keep more limited records, she can claim a deduction for up to the reasonable amount ($540) for her accommodation.

    End of example

    Travel allowance less than or more than reasonable amounts

    The travel allowance paid to you by your employer might be the same as the reasonable amounts but it might also be less than or more than those amounts. It is the amount you claim as a deduction that must be reasonable rather than the amount of the allowance you receive.

    If you incur deductible travel allowance expenses and the allowance you receive is a travel allowance, you can claim a deduction up to the reasonable amounts without keeping written evidence and travel records (if applicable) even if:

    • your travel allowance is less than the reasonable amounts
    • your travel allowance is more than the reasonable amounts.

    Example: Allowance more than reasonable amount and expenses incurred less than reasonable amount.

    Kylie is travelling for the week to work in Darwin. She receives a travel allowance of $250 for each night she is away to cover her accommodation costs. Her employer reports the allowance on her income statement.

    For a person in Kylie’s circumstances, the reasonable amount for accommodation in Darwin is $220. Kylie spends $190 a night on accommodation while she is in Darwin for work.

    As the accommodation expense is less than the reasonable amount, Kylie will be able to rely on the travel allowance record keeping exception.

    At the end of the income year, Kylie must declare her allowance of $250 as income in her tax return. She can also claim a deduction for the amount she spent, that is $190 per night, without keeping written evidence.

    Although Kylie can rely on the travel allowance record keeping exception, if her claim is reviewed she will need to be able to show:

    • when she travelled overnight for work
    • that she spent the money on accommodation.
    End of example

    When the record keeping exception applies

    The travel allowance record keeping exception applies to the expenses in the following categories and in the following circumstances.

    Accommodation

    The reasonable amount for accommodation is a daily rate and only applies to commercial establishments that offer short stays, such as motels, hotels and serviced apartments.

    The reasonable amount doesn't apply to other types of accommodation, such as caravan parks or hostels.

    There is no exception from providing records for accommodation expenses you incur while travelling overseas for work purposes. If you travel overseas for work you'll be required to keep written evidence for all of your accommodation expenses.

    Food and drink

    For domestic travel, there is a reasonable amount for breakfast, lunch and dinner. You can't combine the amounts for each meal. That is, you must consider each meal separately to work out whether your claim is reasonable.

    For overseas travel, the reasonable amount for food and drink (meals) is set as a daily rate. This means that the costs you incur for food and drink during each particular day you are travelling for work, only needs to be less than the reasonable daily amount.

    The reasonable amount only applies to the period you are travelling for work purposes.

    Example: meal expenses the exception from record keeping applies to

    Lei travels interstate for work purposes. Lei receives an allowance from his employer to cover his meals for this trip that begins at 11.00am on Wednesday and ends at 4.00pm the next day (Thursday). During the period Lei is travelling for work, it is reasonable to expect that Le will incur expenses for lunch and dinner on Wednesday and breakfast and lunch on Thursday.

    To work out whether he can rely on the travel allowance record keeping exception, Lei has to consider whether the expenses for each meal are less than the reasonable amount.

    If the expenses Lei incurs are less than the reasonable amount for each meal, Lei can claim a deduction and rely on the exception in respect of those meals.

    If Lei incurs more than the reasonable amount for dinner on Wednesday night but he incurs less than the reasonable amount for lunch on the same day, Lei can't combine the reasonable amount for lunch and dinner when considering the reasonable amount. In these circumstances, Lei must limit his deduction for dinner to the reasonable amount or he can claim the full amount on all meals and keep written evidence for them.

    End of example

    Incidental expenses

    The reasonable amount for incidental expenses applies to each day an employee is away. It is not apportioned for part-day travel on the first and last day of the trip.

    Example: incidental expenses the exception from record keeping applies

    Sheena travels from her regular place of work in Sydney to Canberra to meet with clients. Sheena leaves Sydney at 5.00pm on Monday, stays in Canberra for 2 nights and returns to Sydney at 4.30pm on Wednesday.

    Sheena receives a $10 travel allowance for each day she is away to cover her incidental expenses.

    If Sheena incurs deductible incidental expenses while she is travelling for work, she will have to consider if the amount she incurs on each of the 3 days she is travelling for work was less than the reasonable amount.

    Although Sheena is only travelling for part of the day on Monday and Wednesday, she can rely on the travel allowance record keeping exception if her incidental expenses for each day is less than the reasonable amount.

    Just because Sheena receives an allowance to cover her incidental expenses for the 3 days she is travelling, she can't automatically claim the reasonable amount as a deduction. She can only claim the amount she actually spends on incidental expenses.

    End of example

    For more guidance, see TD 2021/6 Income tax: what are the reasonable travel and overtime meal allowance expense amounts for the 2021-22 income year?

    Last modified: 21 Mar 2022QC 68178