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Edited version of your private ruling
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Ruling
Subject: Reasonable Travel Amounts
Question:
Are you entitled to claim a deduction for the Commissioner's reasonable travel amounts, where you include the travel allowance as assessable income and the expenses you incurred are less than the reasonable amounts?
Answer:
No
This ruling applies for the following period
Year ended 30 June 2010
Year ended 30 June 2011
The scheme commenced on
1 July 2009
Relevant facts
You receive an overseas travel allowance from your employer which is paid at a daily rate.
The allowance is paid to compensate for meal, laundry, personal telephone calls and other incidentals of staff members while travelling on business trips
The daily rate paid is less than the Commissioner's published reasonable travel amounts.
This allowance is not shown on your payment summary.
Your employer pays the allowance directly into your bank account.
You have incurred expenses more than the allowance you received, but less than the reasonable amounts.
You have provided copies of your PAYG payment summary and remittance advices.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1
Income Tax Assessment Act 1997 Section 900-30
Income Tax Assessment Act 1997 Section 900-50
Reasons for decision
Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income except where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income.
Section 900-30 of the ITAA 1997 states that travel allowance expenses are work expenses if they are incurred for travel, food or drink and are covered by a travel allowance. A travel allowance is an amount that an employer pays you to cover specific work-related travel expenses you incur for accommodation or food or drink or incidental expenses when travelling in the course of your duties as an employee.
As a general rule, written evidence is required to substantiate any expense you wish to claim as a deduction (for example, receipts or invoices of the expense).
Section 900-50 of the ITAA 1997 states an exception to this rule applies if you receive a bona fide travel allowance to cover accommodation or food and drink and the expenses do not exceed amounts the Commissioner deems reasonable.
Taxation Ruling TR 2004/6 explains that an expense must be actually incurred as required by section 8-1 of the ITAA 1997, before a claim can be made. You cannot automatically claim a deduction just because you receive an allowance.
TR 2004/6 states at paragraph 12 that unless the following exception applies, all allowances must be shown as assessable income in the employee's tax return. However where:
· the allowance received is a bona fide travel allowance
· the allowance received does not exceed the reasonable amount; and
· the allowance has been fully expended on deductible expenses,
· the allowance received is not required to be shown as assessable income in the employee's tax return. Where the allowance is not required to be shown as assessable income in an employee's tax return, and is not shown, a deduction for the expense cannot be claimed in the tax return.
In your case it is accepted you received a bona fide travel allowance to cover meals and incidentals while working overseas and the allowance did not exceed the reasonable amount.
However as you incurred expenses more than the allowance received, you can include the allowance as assessable income and claim travel expenses that you actually incurred. You cannot claim the Commissioner's reasonable travel allowance amounts, if the expenses you incurred are less than the reasonable amounts.
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