What is an award transport payment?
An award transport payment is a payment made to you under an industrial instrument that was in force on 29 October 1986. It may be paid to you by your employer in the form of:
- an allowance to cover transport expenses
- reimbursement for car expenses on a cents per kilometre basis (this is also treated as an allowance).
Award transport payments are made to cover transport costs you may incur in the course of performing your work duties. An allowance isn't an award transport payment if it is paid to cover accommodation, meals or incidental expenses when travelling away from your home overnight for work purposes.
Transport expenses may include the cost of driving your car, ride-share and ride-sourcing, flights or catching a train, taxi, boat or bus.
To find out if your transport allowance was paid under an industrial instrument that was in force on 29 October 1986, and the amount that was payable at that date, ask:
- your employer
- your union.
Industrial instruments
An industrial instrument can be any one of the following:
- an award
- an enterprise bargaining agreement or collective agreement
- a Commonwealth, state or territory law
- an order or determination in force under a Commonwealth, state or territory law.
The most common type of industrial instruments that were in force on 29 October 1986 were awards.
An industrial instrument that is a substitution for an earlier version of an industrial instrument is considered a continuation of the earlier instrument. For example, if an industry award was in force on 29 October 1986 and was then updated every few years, the latest version of that award is considered a continuation of the 1986 version.
Income to declare
If you receive an award transport payment you must include it as income in your tax return. You declare the entire payment, even if this is more than the amount that was payable under the award on 29 October 1986.
Exception from keeping written evidence and travel records
Generally, you must keep written evidence to claim a deduction for work-related transport expenses, including a travel diary if you're away for 6 or more consecutive nights.
However, you don't need to keep written evidence or a travel diary if you meet all the following conditions:
- you are paid an award transport payment
- you incur deductible transport expenses that are covered by the award transport payment
- the total of the transport expenses you claim as a deduction is less than the amount payable under the award on 29 October 1986 (the 'award amount'). Your employer or union can tell you the award amount.
This exception doesn't give rise to an automatic deduction. You're still required to incur a deductible expense relating to the transport the payment covers.
If you want to claim a deduction that is more than the award amount on 29 October 1986, you will need written evidence and a travel diary (where necessary) for your whole claim.
Example: award transport payment – exception from keeping written evidence
Terry is paid an award transport payment in the form of an allowance of $2,500 to cover the cost of taxis and other forms of transport when he is travelling away from home overnight for work. His employer has advised him that the amount under the award on 29 October 1986 would have been $1,500. Terry's employer shows the allowance of $2,500 on his income statement.
At the end of the income year, Terry works out that he has incurred travel expenses covered by the award transport payments of $1,450.
Terry must declare the $2,500 award transport payment as income in his tax return. However, he can claim a deduction of $1,450 as work-related travel expenses.
As Terry's deduction is less than the $1,500 award amount, he doesn't have to keep written records such as receipts.
End of exampleHow to claim a deduction
To claim a deduction for transport expenses covered by an award transport payment, your expenses must be incurred in the course of performing your employment duties.
Transport expenses may be for:
- driving your own car, which must be a motor vehicle (excluding a motorcycle or similar vehicle) that carries a load of less than 1 tonne and fewer than 9 passengers (including the driver)
- other forms of transport, including driving a vehicle other than your own car, ride-share and ride-sourcing, flights, or catching a train, taxi, boat or bus.
You claim a deduction for transport expenses as either work-related travel expenses or work-related car expenses. In some circumstances, you claim your deduction as both of these types of expenses.
Claiming for transport expenses within award amount
If you are claiming a deduction for transport expenses (including any car expenses) that is no more than the award amount on 29 October 1986, claim your deduction as work-related travel expenses in your tax return.
You don't need to use the cents per kilometre method or logbook method for your car expenses because you don't need to keep written evidence or a travel diary.
Claiming for car expenses that exceed award amount
If you have additional work-related car expenses that are not covered by the award amount, you have 2 options for claiming a deduction for your car expenses:
- claim the part of your expenses covered by the award amount as work-related travel expenses (you don't need to keep records for this part), and Claiming only the remainder as work-related car expenses based on written records
- Claiming all work-related car expenses based on written records.
Claiming only additional car expenses based on written records
If your work-related car expenses are more than your award amount, you can:
- calculate these expenses using the cents per kilometre method or logbook method
- keep written evidence for the method you choose
- claim your deduction for these additional work-related car expenses as work-related car expenses in your tax return.
For your work-related car expenses deduction, kilometres that are covered by the award transport payment are not counted as work-related kilometres under either the cents per kilometre or logbook methods. However, they are counted as part of the total kilometres travelled for the logbook method.
If you don't know how many work-related kilometres relate to your award transport payment, you can make a reasonable estimate.
If we ask, you must be able to show how you calculated your deduction for work-related travel expenses and that your transport expenses were work-related.
Example: claiming additional car expenses using cents per kilometre method
Carla travels 7,000 kilometres for work during the 2022–23 income year. Of that travel, 3,000 kilometres is covered by an award transport payment.
Carla receives $1,500 for her award transport payment. However, the award amount as at 29 October 1986 is $1,000.
Carla's expenses for the 3,000 kilometres covered by the payment exceed $1,000, but she elects to only claim $1,000 so she doesn't have to keep written records. Carla claims the $1,000 deduction as work-related travel expenses in her tax return.
Carla uses the cents per kilometre method to claim a deduction for the remaining 4,000 kilometres. She claims a deduction for the transport expenses not covered by her award payment as work-related car expenses.
End of example
Example: claiming additional car expenses using logbook method
Haneeta travels 9,000 kilometres for work during the 2022–23 income year. Of that travel, 5,000 kilometres is covered by an award transport payment.
She receives $2,500 for her award transport payment. However, the award amount as at 29 October 1986 is $1,500.
Haneeta keeps a logbook and odometer records. Based on her odometer records, she travelled a total of 13,500 kilometres in the 2022–23 income year.
When working out her claim for the year, Haneeta chooses to rely on the exception from keeping written evidence for the transport expenses covered by the award transport payment. As she has made that choice, the travel covered by that payment won't count as work-related kilometres.
When Haneeta calculates her work-related use of her car based on her logbook, she doesn't include the work-related kilometres covered by the award transport payment as work-related kilometres. However, she includes them in her calculation of the total kilometres she travelled during the income year.
Haneeta calculates her work-related percentage use as:
Total work-related kilometres − work-related kilometres covered by payment
9,000 kilometres − 5,000 kilometres = 4,000 kilometres
Work-related kilometres not covered by payment ÷ total kilometres
4,000 kilometres ÷ 13,500 kilometres = 29.63%
In her tax return, Haneeta claims a deduction of $1,500 as work-related travel expenses. She does not have to keep written evidence for this deduction.
Haneeta can also claim a deduction for 29.63% of her total car expenses as work-related car expenses. She must keep her logbook, odometer records and written evidence of all her car expenses to substantiate her deduction.
End of exampleClaiming all car expenses based on written records
Alternatively, you may choose not to limit any part of your claim for work-related car expenses to the award amount. In other words, you can choose not to rely on the exception from keeping written records and make a claim for all of your work-related car expenses.
If you choose to do this, you:
- must claim your deduction as work-related car expenses in your tax return
- can calculate your claim using either the cents per kilometre method or logbook method
- can't claim a deduction for car expenses covered by your award transport payment as work-related travel expenses
- include any kilometres travelled for work purposes covered by the award transport payment as work-related kilometres.
If you use the logbook method you must keep a logbook, odometer records and written evidence, such as receipts, for all of your car expenses. If you use the cents per kilometre method, you will need to show how you work out your claim and that the kilometres you claim are work-related.
Example: claiming all car expenses using logbook method
Continuing the previous example, suppose Haneeta chooses not to rely on the exception for keeping written evidence, but instead claims all of her work-related car expenses using the logbook method.
Haneeta will be able to include all of the work-related kilometres she travels during the 2022–23 income year (9,000 kilometres) as work-related kilometres when she is calculating her work-related use percentage.
Haneeta will calculate her work-related use of her car as follows:
Total work-related kilometres ÷ total kilometres
9,000 kilometres ÷ 13,500 kilometres = 66.67%
Haneeta can claim 66.67% of her total car expenses as work-related car expenses in her tax return. She must keep her logbook, odometer records and written evidence for all her car expenses to substantiate her deduction.
End of example