Edited version of private ruling

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Ruling

Subject: Travel expenses

Are you entitled to a deduction for travel and meal expenses without substantiation?

No.

This ruling applies for the following period

Year ended 30 June 2010

The scheme commenced on

1 July 2009

Relevant facts

You are an interstate truck driver.

You are paid a 'cents per kilometre' amount for each kilometre you travel.

The amount you receive is the same whether you are away from home on work or not.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1

Income Tax Assessment Act 1997 Section 900-50

Income Tax Assessment Act 1997 Section 900-30

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 the course of gaining or producing assessable income, but are not allowable to the extent that they are of a capital, private or domestic nature.

Meal expenses are normally private or domestic in character. However, where a taxpayer is away from home overnight in connection with an income producing activity, meal expenses are deductible under section 8-1 of the ITAA 1997. The expenditure is not considered private because its occasion is the taxpayer's travel away from home on income producing activities.

As a general rule, written evidence is required to substantiate any work related expense you claim as a deduction.

Section 900-50 of the ITAA 1997 provides that the substantiation requirement to obtain written evidence does not apply to claims by employee taxpayers for expenses covered by a bona fide travel allowance if the amount of the claim for expenses incurred does not exceed the amount the Commissioner considers reasonable (Taxation Determination TD 2009/15). 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.

To determine what is a bona fide allowance to cover meals or expenses incidental to the travel depends on the facts of each case, including the arrangements for payment of the allowance.

Travel allowance must be paid for specific journeys undertaken or to be undertaken for work-related travel. A travel allowance that is not paid to cover relevant expenses for specific work-related travel undertaken is not a travel allowance for the purposes of the exception from substantiation. Paragraph 57 in TR 2004/6 provides examples of expenses relating to allowances that would not qualify for the exception from substantiation because they are not travel allowances paid to cover deductible expenses for specific journeys, these are:

· where a fixed annual travel allowance amount of, say, $2,000 a year is paid, regardless of how often or even whether travel is actually undertaken, or

· where a travel allowance is paid at a certain rate per hour for hours worked, even if deductible work-related travel is not undertaken.

In addition, at paragraph 59 in TR 2004/6 it explains that where an amount for travel expenses has been folded-in as part of a taxpayers normal salary or wages (for example under a work place agreement) it is not considered to be a bona fide travel allowance and the exception from substantiation does not apply.

In your case, your payment is based on a cents per kilometre amount for each kilometre you travel. This is a fixed amount paid for the distance travelled rather than to cover the relevant expenses incurred for specific travel. This amount is paid even when you would not reasonably expect work related expenses to be incurred. It is the Commissioner's view that the allowance you received is not a bona fide travel allowance.

Therefore, you cannot use the reasonable meal allowance amounts for truck drivers. You can only claim a deduction for the work related travel and meal expenses you have actually incurred subject to being able to substantiate your claims in full with written evidence.