Award transport payments
If you receive an award transport payment, you can claim a deduction if you incur work-related transport expenses.
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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 a:
- transport allowance
- reimbursement for car expenses on a cents per kilometre basis (which 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, meal 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 (such as Uber) 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.
You must include an award transport payment as income in your tax return.
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 taken to be a continuation of the earlier industrial instrument. For example, if an industry award that was in force on 29 October 1986 has been updated every couple of years, the latest version of that award is taken to be a continuation of the version of the award that was in force on 29 October 1986.
Claiming 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 in respect of:
- travel away from your home overnight in the course of carrying out your employment duties, for example, the cost of flights
- your vehicle which meets the definition of a car and is used for work-related trips, for example, travel between workplaces
- your vehicle which doesn't meet the definition of a car and is used for work-related trips, for example, travel between workplaces.
Your vehicle will not meet the definition of a car if, it is:
- a motorcycle or similar vehicle
- designed to carry a load of one tonne or more
- designed to carry 9 or more passengers.
Depending on your circumstances, there are different ways to claim your deduction for expenses covered by an award transport payment in your tax return.
Exception from keeping written evidence and travel records
Generally, you must keep written evidence to claim a deduction for transport expenses. If you travel away from your home overnight for work purposes, you will need to keep travel expenses if you're away for 6 or more consecutive nights.
However, you don't need to keep written evidence or travel records if:
- you are paid an award transport payment
- you incur deductible transport expenses which are covered by the award transport payment
- the total of the transport expenses you claim is less than the amount payable under the award on 29 October 1986.
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.
To work out if you must keep written evidence or travel records, you need to know the award amount on 29 October 1986. You can get this information from your employer or union.
If you claim less than the award amount on 29 October 1986, you don't need to keep written evidence or travel records.
If you want to claim more than the award amount on 29 October 1986, you will need written evidence and travel records (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 award transport payment as income in his tax return. However, Terry can claim a deduction of $1,450 as work-related travel expenses.
As Terry's deduction is less than the $1,500 award amount, Terry doesn't have to keep written records such as receipts.
End of exampleDifferent ways to claim your deduction
Depending on your circumstances and whether you chose to rely on the exception from keeping written evidence and travel records, there are different ways to claim transport expenses which are and aren't covered by an award transport payment in your tax return.
Your transport expenses will either be claimed as work-related travel expenses or work-related car expenses. In some circumstances, your deduction will be claimed as both of these types of expenses.
Claim for work-related travel expenses
If you are claiming no more than the award amount on 29 October 1986 for transport expenses (including car expenses), claim your deduction as work-related travel expenses in your tax return. In these circumstances, 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 travel records.
If you have additional work-related car expenses that are not covered by the award payment, you calculate these expenses using the cents per kilometre method or logbook method. The relevant written evidence for the method you choose must be kept and your deduction for these additional work-related car expenses must be claimed as work-related car expenses in your tax return.
For your work-related car expenses claim, kilometres that are covered by the award transport payment are not counted as business kilometres under either the cents per kilometre or logbook method. However, they are counted as part of the total kilometres travelled for the logbook method.
If you don't know how many business 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 claim for work-related travel expenses and that your transport expenses were work-related.
Example: Relying on exception and claiming additional work-related car expenses
Carla travels 7,000kms for work during the 2021–22 income year. Of that travel, 3,000kms are covered by an award transport payment. Carla receives $1,500 for her award transport payment, which has a value of $1,000 in the award on 29 October 1986.
Carla's expenses for those 3,000km 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's deduction for $1,000 is claimed as work-related travel expenses in her tax return.
Carla elects to use the cents per kilometre method to claim the remaining 4,000kms. Carla's deduction for the transport expenses not covered by her award payment is claimed as work-related car expenses.
End of example
Example: Relying on exception and claiming additional work-related car expenses
Haneeta travels 9,000kms for work during the 2021–22 income year. Of that travel, 5,000kms are covered by an award transport payment. She receives $2,500 for her award transport payment, which has a value of $1,500 in the award on 29 October 1986.
Haneeta keeps a logbook and odometer records and based on her odometer records, she travelled a total of 13,500kms in the 2021–22 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 business kilometres.
When Haneeta calculates her work-related use of her car based on her logbook, she doesn't include the work-related kms covered by the award transport payment as work-related kms. However, she includes them in her calculation of the total kms she travelled during the income year.
Haneeta calculates her work-related percentage use as:
Total work-related kms − work-related kms covered by payment
9,000kms − 5,000kms = 4,000kms
Work-related kilometres not covered by payment ÷ total kilometres
4,000km ÷ 13,500km = 29.63%
In her tax return, Haneeta claims a deduction of $2,500 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 exampleClaim for work-related car expenses
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 substantiation and make a claim for all of your work-related car expenses. In this situation, your deduction must be claimed as work-related car expenses in your tax return.
When making your claim for work-related car expenses in your tax return you can use either:
If you choose not to limit your claim for work-related car expenses in this way, you can't then claim car expenses covered by your award transport payment as work-related travel expenses.
Treat any work-related kilometres covered by the award transport payment as business 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 have claim are work-related.
Example: not relying on the exception
If Haneeta from the previous example chooses not to rely on the exception but instead claims all of her work-related car expenses, she will be able to include all of the work-related kilometres she travels during the 2021–22 income year (9,000kms) 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
9,000km ÷ 13,500km = 66.67%
Haneeta can claim 66.67% of her total car expenses as work-related car expenses deduction 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