Edited version of your written advice

Authorisation Number: 1013100992160

Date of advice: 29 September 2016

Ruling

Subject: Work related motor vehicle expenses

Question 1

Is the fares allowance received by you regarded as an award transport payment?

Answer

Yes.

Question 2

Where you have incurred deductible travel expenses, are you entitled to claim a deduction up to $7.60 per day without written evidence?

Answer

Yes.

Question 3

Where you have incurred deductible travel expenses, are you entitled to claim a deduction of more than $7.60 per day without written evidence?

Answer

No.

Question 4

Are you entitled to claim a deduction in relation to the travel time allowance on your payment summary?

Answer

No.

Question 5

Are you entitled to claim a deduction in relation to the incidentals allowance on your payment summary?

Answer

No.

This ruling applies for the following period:

Year ending 30 June 2015

The scheme commences on:

1 July 2014.

Relevant facts and circumstances

You were employed as a Tradesman under the relevant Contracting Award 2010. This award supersedes awards which were in force on 29 October 1986.

Under the Award and in addition to your hourly rate of pay, you receive a fares allowance of an amount per day.

You received an amount as a fares allowance. This amount is shown separately on your payment summary.

You received an amount travel time allowance. This amount is shown separately on your payment summary.

You received an amount incidentals allowance. This amount is shown separately on your payment summary.

Throughout the year, you work at different work sites.

You are not away overnight for work related purposes.

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 900-220.

Income Tax Assessment Act 1997 Section 900-225.

Income Tax Assessment Act 1997 Section 995-1.

Reasons for decision

Fares allowance

Section 900-220 of the Income Tax Assessment Act 1997 (ITAA 1997) defines an award transport payment as being a transport payment covering particular travel that was paid under an industrial instrument that was in force on 29 October 1986.

Section 900-225 of the ITAA 1997 states that an industrial instrument that comes into force in substitution for another industrial instrument is taken to be a continuation of the original instrument.

An industrial instrument is defined as an award, determination or industrial agreement in force under an Australian Law (section 995-1 of the ITAA 1997). The Electrical, Electronic and Communications Contracting Award 2010 is considered an industrial agreement in force under Australian Law.

Section 900-220 of the ITAA 1997 defines a transport payment as including an amount your employer pays you for travel by you in the course of working for that employer and for the purpose of covering your transport expenses. However, an amount is not a transport payment if it is, or is part of, a travel allowance.

A travel allowance is defined in section 900-30 of the ITAA 1997. It is a payment made to you by your employer to pay you for expenses relating to accommodation, food and drink or expenses incidental to that travel.

As you were not travelling away from home overnight for work related purposes, your fares allowance is not regarded as a travel allowance.

There has been a succession of awards and agreements governing your work conditions which supersede the previous, tracing back to an award which was in force on 29 October 1986. Accordingly it is accepted that you receive an award transport payment for the purposes of section 900-220 of the ITAA 1997.

Deductibility of expenses under fares allowance

Where you receive an award transport payment, you can generally deduct your work related travel expenses without substantiation when your claim does not exceed the award rate as at 29 October 1986. When you claim deductions in excess of this amount, you must substantiate the whole of the claim, not just the excess (section 900-215 of the ITAA 1997).

A deduction is only allowable if an expense:

• is actually incurred,

• meets the deductibility tests, and

• satisfies the substantiation rules.

You are paid an award transport payment amount per day. As at 29 October 1986, the amount you were entitled to was $7.60 per day. Therefore, you would be allowed a deduction for work related travel expenses incurred up to $7.60 per day without having to provide written evidence of the expenses. If your allowable work related expenses are over $7.60 per day, you are still entitled to a deduction, however you would need to provide written evidence for the entire amount you claim.

Also if you rely on the exception from substantiation you may still be required to show the basis for determining the amount of your claim, that the expense was actually incurred, and that it was for work-related purposes.

Travel time allowance

In regards to your travel time allowance it is not considered a bona-fide travel allowance as it is paid daily on days you present yourself at the workplace.

Taxation Ruling TR 2004/6 defines a bona fide travelling allowance as:

18. For domestic or overseas travel allowance expenses to be considered for exception from substantiation, the employee must be paid a bona fide travel allowance. The allowance must be paid to cover work-related travel expenses incurred for travel away from the employee's ordinary residence, undertaken in the course of performing duties as an employee (subsection 900-30(3) of the ITAA 1997) and which involves sleep away from home. The work-related travel expenses must be for accommodation, or food or drink, or expenses incidental to the travel.

As the travel time allowance is not paid in relation to accommodation, or meals or expenses incidental to travel incurred while away overnight for work you are not entitled to claim a deduction as no additional expenses have been incurred.

Incidental allowance

You were also in receipt of an incidental allowance. This payment is to compensate you for the additional expenses incurred 'for travel in excess of the 50km, employees using their own vehicle will be compensated for consideration of the 'incidental expenses actually incurred'.

As per TR 2004/6, a work-related travel expense must be incurred, you cannot just automatically claim a deduction just because you receive an allowance and only the amount actually spent for work purposes can be claimed as a deduction. The travel allowance paid must be a bona fide travel allowance paid to cover accommodation and meals.

As per TR 2004/6

A 'bona fide travel allowance' is an amount that could reasonably be expected to cover accommodation, or meals or expenses incidental to travel. This does not require that the amount paid by the employer must equate dollar for dollar to the employee's actual expenditure. However there must be relativity between the quantum of the travel allowance and the purpose for which it is said to be paid. A token amount, or a general payment, is not a bona fide travel allowance. In this context the words 'cover' and 'covered' refer to the nature of the expenses for which the allowance is provided, that is the subject matter to be dealt with by the allowance paid, namely accommodation and applicable meal expenses. (See Re McIntosh and F.C. of T. [2001] AATA 702; 47 ATR 1242

As you are being compensated for the incidental travel, the incidental allowance is also not considered bona fide travel allowance as your employer is compensating you for any additional expenses you may incur as the expenses are intended to be covered by the allowance.

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