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  • Travel allowance for travel expenses

    Your employer may pay you a travel allowance to cover travel allowance expenses you incur when you travel away from home to perform your employment duties.

    Some exceptions from keeping written evidence and travel records may apply if you receive a travel allowance to cover travel allowance expenses.

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    Deductible travel allowance expenses

    A travel allowance expense is a deductible expense:

    • you incur when you're travelling away from your home overnight to perform your employment duties
    • that you receive an allowance to cover
    • for accommodation, meals (food or drink), or incidentals.

    You incur a travel allowance expense when you either:

    • actually pay an amount for an expense
    • have an obligation pay an amount for the expense.

    You can't claim a deduction where your employer either pays for or reimburses you for the expense.

    If you don't incur any deducible travel allowance expenses, there is no need to consider if a travel allowance record keeping exception applies.

    Example: no deductible travel allowance expenses incurred

    Ainsley lives in Melbourne and is the regional manager of a clothing store chain. She must travel to Sydney for 3 days to attend the annual conference of managers.

    Ainsley’s employer pays for her accommodation, however she buys her own meals while she is in Sydney. When she returns to the office, Ainsley puts in a reimbursement claim for her meals, and her employer subsequently reimburses her for these expenses.

    As Ainsley doesn't incur accommodation expenses and receives a reimbursement for the meal expenses, she can't claim a deduction for these expenses.

    Since Ainsley hasn't received an allowance and she can't claim a deduction for her accommodation and meals, it is not necessary to consider whether she can rely on the travel allowance record keeping exception.

    End of example

    Travel allowances

    If the allowance you receive is not a travel allowance, you can't rely on the travel allowance record keeping exception.

    For an allowance to be a travel allowance, it must be:

    Expected costs

    The travel allowance you receive from your employer must reasonably be expected to cover the costs you will incur while travelling overnight for work. It needs to be more than a token amount.

    Example: allowance not expected to cover costs

    Josh is a server engineer who is travelling from Melbourne to Hobart for a week in order to oversee some upgrades to that office. He receives an allowance of $5 a day for his meal expenses.

    The allowance Josh receives from his employer couldn't reasonably be expected to cover the costs of buying 3 meals per day. This means:

    • the allowance isn't a travel allowance
    • Josh can't rely on the travel allowance record keeping exception for domestic travel.

    As Josh is travelling away from his home overnight for work, Josh can claim a deduction for the amount he spends on meals while he is is in Hobart. Josh must keep written evidence of all his meal expenses.

    End of example

    Sleeping away from home overnight

    The travel allowance must be an amount you receive in respect of travel which involves you sleeping away from your home overnight to perform your employment duties.

    You will not be sleeping away from home overnight if you usually work overnight and occasionally have a short sleep partway through your shift. However, if you take your mandatory long or major rest break while you are travelling away from your home to perform your employment duties, you will meet this criteria.

    Example: not sleeping away overnight

    Freya is a management consultant who works in Sydney. Under her work agreement she receives a meal allowance if she works away from the office for the day.

    When Freya visits her client's interstate, she flies to the interstate location in the morning and returns home the same evening. In these circumstances, Freya receives a meal allowance from her employer.

    As Freya doesn't sleep away from home overnight, she can't claim a deduction for any meals she buys.

    If Freya was entitled to a deduction for meals, the allowance she received would not be a travel allowance for the purposes of the travel allowance record keeping exception.

    End of example

    Specific journey

    Allowances that don't cover a specific work journey are not travel allowances.

    If your allowance doesn't cover specific work journeys, you can't rely on the travel allowance record keeping exception.

    Example: allowance not paid for specific work journeys

    Greg is the regional sales manager for a telecommunication company. As part of his employment duties, he needs to travel to all the stores in his region. Often he has to stay away from his home overnight when he travels.

    In recognition of his travel, his employer pays him an allowance of $3,000 a year regardless of how much travel he does.

    This allowance would not be a travel allowance for the travel allowance record keeping exception. The amount is not paid to cover specific journeys and would be paid regardless of whether he does any overnight travel.

    If Greg does travel away from home overnight for work purposes, he will have to keep written evidence and travel records (if necessary) to claim a deduction for his travel expenses.

    End of example

    Payment as an allowance

    The amount you receive from your employer must be a separate payment you receive as an allowance. The amount can't be rolled into your salary and wages.

    Example: allowance rolled into salary and wages

    Idris used to be paid a travel allowance under his employment contract, but he gave up the allowance 2 years ago for an increase in his base pay. As he is no longer paid a travel allowance, he can't rely on the travel allowance record keeping exception.

    Idris will need to keep written evidence (and potentially travel records depending on how many nights he is away) for all of the expenses he incurs when he travels away from his home overnight for work if he intends to claim a deduction.

    End of example

    Travel allowance expenses

    To be a travel allowance, the allowance must be a payment to cover travel allowance expenses.

    This means a travel allowance must cover:

    • accommodation
    • meals (food or drink)
    • incidental expenses.

    A travel allowance doesn't have to cover all of those expenses. The allowance may still be a travel allowance if it is only paid to cover 1–2 of these expenses. However, the travel allowance record keeping exception only applies to those expenses the allowance covers.

    If the allowance you receive covers an expense other than accommodation, food or drink or incidental expenses, it will not be a travel allowance and you will not be able to rely on the travel allowance record keeping exception.

    Example: allowance paid to cover food or drink

    Helen is travelling from Perth to Darwin to facilitate corporate training for 3 days. She receives a travel allowance to cover her meal expenses (food and drink) but nothing for incidental expenses. Her employer pays for her accommodation directly.

    Helen can't claim a deduction for accommodation expenses her employer pays directly as she doesn't incur an expense.

    As her travel allowance doesn't cover incidentals, she will need to keep written evidence for any incidental expenses she incurs while she is travelling for work.

    Helen can rely on the travel allowance record keeping exception for her meals if:

    • the allowance she receives meets all of the other criteria for being a travel allowance
    • she incurs deductible meal expenses
    • the amount she claims as a deduction for meals is within the reasonable amount the Commissioner publishes.
    End of example

     

    Example: allowance not paid to cover travel allowance expenses

    Minsun works as a salesperson and once a month she must go on a week-long sales tour of regional centres.

    Minsun uses her personal car for this trip and is receives an allowance from her employer to cover the costs of using her own car.

    As the allowance she receives doesn't cover travel allowance expenses, Minsun can't rely on the travel allowance record keeping exception.

    End of example

    If you receive a travel allowance

    Receiving a travel allowance from your employer does not automatically entitle you to claim a deduction for Travel expenses.

    Travel allowances may or may not be shown on your income statement or payment summary.

    If your travel allowance is shown as an allowance on your income statement or payment summary, you:

    • must include the allowance as assessable income in your tax return
    • can claim a deduction for the amount you spent on deductible travel allowance expenses
    • keep written evidence and travel records if you can't rely on the travel allowance record keeping exceptions.

    If your travel allowance isn't shown on your income statement or payment summary and you spent the whole amount on deductible expenses, you:

    • don't include it as income in your tax return
    • can't claim any deduction for the travel allowance expenses your travel allowance covers
    • don't need to keep written evidence or travel records.

    If you do this, you will not pay any income tax on your travel allowance.

    However, if you spent more than the amount of your travel allowance on deductible travel allowance expenses, you:

    • include the allowance as income in your tax return
    • can claim a deduction for the deductible travel allowance expenses you incur
    • keep written evidence and travel records if you can't rely on the travel allowance record keeping exceptions.

    Example: travel allowance on income statement

    William works for a company in Sydney. William’s employer requires him to visit clients in country New South Wales once a month. This involves William sleeping away from his home for around 3–4 nights.

    William’s employer pays him an allowance of $150 per night to cover accommodation, meal and incidental expenses and includes the allowance on his income statement.

    As William’s employer reports the travel allowance on his income statement, he must include that allowance as income in his tax return. William can claim a deduction for the amount he spends on accommodation, meal and incidental expenses while he is travelling away from his home overnight for work.

    Unless he can rely on the travel allowance record keeping exception, William will have to keep receipts or other written evidence for all of his accommodation, meal and incidental expenses.

    End of example

     

    Example: travel allowance not reported on income statement

    George's employment duties require him to occasionally travel away from his home overnight. When he travels overnight for work, his employer pays him an allowance of $80 to cover accommodation expenses. George's employer doesn't show the allowance on his income statement.

    When George travels overnight for work, he stays in the same place which cost him $100 per night.

    As the travel allowance isn't on George's income statement and he has spent the entire allowance amount on deductible travel allowance expenses, he doesn't need to:

    • declare the travel allowance as income in his tax return
    • keep written evidence of his accommodation expenses.

    George also can't claim a deduction for the expenses.

    However, as George has spent more than the amount of the allowance on deductible travel allowance expenses, he can include the amount as income in his tax return. He can then claim a deduction for the amount he spent on accommodation. Unless George can rely on the travel allowance record keeping exception, he will have to keep written evidence.

    If George pays for his own meals while he is away and wants to claim them as a deduction, he will have to keep written evidence for all of his meal expenses. George can't rely on the travel allowance record keeping exception for meal expenses because the allowance George receives from his employer doesn't cover them.

    End of example

    Record keeping and exceptions for travel allowances

    You can rely on the travel allowance record keeping exception for a travel allowance expense if:

    If you can't rely on the travel allowance record keeping exception, you will need to Keeping travel expense records.

    Last modified: 21 Mar 2022QC 68177