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  • Exceptions for keeping travel expense records

    Generally, you are required to get and keep written evidence, such as receipts, when you claim a deduction for work-related travel expenses. This is known as substantiation of your travel expenses.

    You also need to keep a travel diary when you travel for six or more nights in a row. However, there may be an exception if the deduction you claim is less than the reasonable amount that the Commissioner sets each year and all of the following apply:

    • you are required to travel for work
    • you receive a travel allowance from your employer for the travel
    • you spent money on accommodation, food or drink or other deductible expenses incidental to the travel and you weren't reimbursed.

    If you do not receive an allowance from your employer, you need to keep receipts and a travel diary to claim a deduction as the substantiation exceptions for travel expenses do not apply to you.

    If the expense was for both work and private purposes, you can only claim a deduction for the work-related portion.

    Even if you do not claim more than the reasonable amounts (and an exception applies), we may still check your tax return and ask you to show:

    • you spent the money in the course of performing your work duties – for example, in travelling away from home overnight on a work trip
    • how you worked out your claim – for example, you kept a diary showing the times you were away and how many meals you ate and where
    • you spent the money yourself – for example, using your credit card statement or other banking records – and were not reimbursed – for example, your employer may be asked to confirm you were not reimbursed
    • you correctly declared your allowance as income in your tax return.

    Example – meal allowance

    Zoran works in Melbourne. His employer requires him to travel to the office in Sydney for a week. Zoran is paid a $600 meal allowance to cover breakfast, lunch and dinner for the 5 days he is required to be in Sydney.

    Zoran's employer pays the accommodation directly. Zoran keeps a record of his meal expenses over the week and calculates he spent $500 over the 5 days on food and drink. This is less than the reasonable amount set by the Commissioner.

    Zoran is not required to keep all of his receipts for his expenses on food and drink for this trip to Sydney as the domestic substantiation exception applies. If the ATO asks, Zoran will still have to demonstrate that he was travelling for work, has credit card statements or other records to show he spent the amount he claimed as a deduction, and show he declared the $600 allowance in his tax return.

    Zoran cannot claim a deduction for accommodation because his employer pays for this expense directly. Zoran must keep all receipts for any incidental expenses he has when in Sydney. As he did not receive an allowance for incidental expenses he cannot rely on a substantiation exception for incidental expenses.

    End of example

    Reasonable amounts

    The reasonable amounts for accommodation, food or drink and incidentals are set each year for substantiation purposes. The reasonable amounts are only used to work out if an exception applies. They are not the amount you can claim as a deduction. You should claim only the amount you actually spend.

    The reasonable amounts are set in an annual taxation determination, refer to TD 2017/19 Income tax: what are the reasonable travel and overtime meal allowance expense amounts for the 2017-18 income year?

    What are the travel expense substantiation exceptions

    Domestic travel

    If you are undertaking travel within Australia, you do not need to keep receipts or a travel diary (for travel for six nights or more in a row) when claiming your travel expenses on food and drink, accommodation and incidental expenses, if you:

    • receive a travel allowance for the travel expense from your employer
    • only claim up to the reasonable amount.

    Example

    Ellie received a travel allowance for food, drink and incidentals when she travelled within Australia for work. The allowance paid was shown on her payment summary.

    Ellie is required to include the travel allowance as income in her tax return and can claim a deduction for the amount she spends on work related travel expenses. The allowance paid to her was the same amount as the Commissioner’s reasonable amount so Ellie does not have to keep receipts for all of the expenses that she claims in her tax return in relation to the work travel.

    If asked by the ATO, Ellie will still have to show she went away overnight for work, that she received and declared her travel allowance, and she spent the amount that she is claiming as a deduction, for example from her bank records.

    End of example

    International travel

    If you are undertaking international travel, you do not need to keep receipts when claiming your travel expenses on food and drink, and incidental expenses, if you:

    • receive a travel allowance for the travel expense from your employer
    • only claim up to the reasonable amount.

    You must still get and keep receipts for all accommodation expenses overseas. The exception does not apply.

    You must still keep a travel diary if you are travelling away from home for six or more nights in a row overseas. The exception does not apply.

    A crew member on an international flight

    If you are a crew member on an international flight, you do not need to keep a travel diary (for travel for six or more nights in a row) if:

    • you receive a travel allowance for you to travel as a crew member of an aircraft
    • you only claim up to the amount of your allowance
    • the travel is principally outside of Australia.

    Travel allowances and exceptions

    You cannot automatically claim a deduction just because you receive an allowance. Where you do receive an allowance, you might not have to keep receipts and a diary (as applicable).

    For the exceptions to apply, the travel allowance must be:

    • for accommodation, food or drink, or other expenses incidental to your travel – if you only receive an allowance for food and drink, you cannot rely on the exceptions for your accommodation or incidental expenses
    • to cover a specific work-related journey – the allowance must be calculated based on your journey(s). It cannot be a fixed amount paid to you regardless of how much travel you do
    • a bona fide travel allowance – the allowance must be an amount which will reasonably cover your expenses, and not just a token amount
    • paid to you as an allowance – the allowance cannot be folded in to your salary or wages – it must be a separate amount paid as a travel allowance for your travel.

    Some travel allowances might not appear on your payment summary.

    Example – not a bona fide travel allowance

    Mel receives $30 a day from her employer when she is required to travel. The employer does not pay for any travel expenses directly so Mel is required to organise and pay for everything herself, including meals and accommodation.

    Mel keeps a record of her travel expenses when travelling. Even though the amount she claims in her tax return is less than the Commissioner's reasonable amounts, she must keep all of her receipts because the amount she receives from her employer is not considered to be a bona fide travel allowance – it will not cover the costs Mel will incur when she travels.

    End of example

    See also:

    Travelling for work

    You can only claim a deduction for accommodation, food or drink, and other expenses incidental to your travel if all of the following apply:

    • your work activities require you to undertake travel
    • the work requires you to sleep away from home overnight
    • you have a permanent home elsewhere
    • you do not incur the expenses in the course of relocating or living away from home.

    You are not sleeping away from home overnight if:

    • you are on duty while sleeping at a workplace near your home – for example, you are a hostel worker, a care worker or overnight supervisor at a boarding school
    • you choose to sleep near your workplace, rather than returning home between your shifts.

    Example – meal by meal approach to reasonable amounts

    Bruce is required to travel for work overnight. He leaves at 3pm and returns home at 7pm the following day. Bruce's employer pays him a travel allowance for meals and incidentals for the period of his travel. This is shown on Bruce's payment summary.

    The employer pays for the accommodation directly. To determine if the substantiation exception applies, Bruce must calculate his expenses for dinner on day 1, then separately calculate his expenses for breakfast, lunch and dinner on day 2, as well as calculate his incidental expenses for day 1 and day 2.

    As long as his claim for deduction for each meal and day of incidental expenses is not more than the Commissioner's reasonable amount for each meal and daily incidental amount, Bruce is not required to keep receipts.

    End of example
    Last modified: 21 Jun 2018QC 56003