A travel allowance is money your employer pays you to cover the costs you might incur when you travel away from your home overnight to perform your work duties.
We call these costs 'travel allowance expenses'.
Your travel allowance may or may not be shown on your income statement or payment summary.
For an allowance to be a travel allowance, it must be:
- reasonably capable of meeting your expected costs
- for travel that involves sleeping away from home overnight
- a payment to cover a specific journey
- payment as an allowance
- paid to cover travel allowance expenses
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.
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 in Hobart. Josh must keep written evidence of all his meal expenses.End of example
The travel allowance must be an amount you receive for travel that 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 condition.
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 clients 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, the allowance she receives is not a travel allowance and she can't claim a deduction for any meals she buys.End of example
Allowances that don't cover a specific work journey are not travel allowances.
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 is not a travel allowance. The amount is not paid to cover specific journeys and would be paid whether or not he does any overnight travel.
Greg can claim a deduction for the cost of his accommodation, meals and incidental expenses when he travels away from home overnight for work purposes, provided he keeps written evidence of his expenses (and a travel diary if he is away for 6 or more nights in a row).End of example
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. The increase in his base pay is not a travel allowance.
Idris can claim a deduction for the cost of his accommodation, meals and incidental expenses when he travels away from home overnight for work purposes, provided he keeps written evidence of his expenses (and a travel diary if he is away for 6 or more nights in a row).End of example
To be a travel allowance, the allowance must be a payment to cover travel allowance expenses.
This means a travel allowance must cover:
- meals (food or drink)
- incidental expenses.
A travel allowance doesn't have to cover all those expenses. The allowance may still be a travel allowance if it is only paid to cover 1–2 of these expenses.
If the allowance you receive covers an expense other than accommodation, food or drink or incidental expenses, it will not be a travel allowance.
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.
The allowance Helen receives to cover her meal expenses is a travel allowance.
Helen can claim a deduction for her meals, and any incidental expenses she incurs, when she travels to Darwin for 3 days, provided she keeps written evidence of her expenses.
Helen can't claim a deduction for the accommodation expenses her employer pays directly as she doesn't incur an expense.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 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, it is not a travel allowance.End of example