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Ruling

Subject: Work related travel expenses

Question

Are you entitled to a deduction for the cost of airfare, meal and hire car expenses incurred whilst travelling for work?

Answer

Yes.

This ruling applies for the following periods:

Year ending 30 June 2012

Year ending 30 June 2013

The scheme commences on:

1 July 2011

Relevant facts and circumstances

You are employed by a company.

Your work duties involve meeting with clients on a regular basis, as well as attracting new clients.

The company's head office is in city Y.

You live in X and service the company's X based clients.

You travel to Y once or twice a month to service the company's Y based clients. These trips are planned on a client need basis.

You incur expenses for air fares to and from Y, hire car expenses for the purpose of visiting clients, and meal expenses whilst in Y.

The company does not reimburse you for any costs incurred for travel.

You maintain a diary recording client visits, including the reason and the outcome from each visit.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

Income Tax Assessment Act 1997 subdivision 900-B

Reasons for decision

The extent to which travelling expenses would be an allowable deduction is determined under the general deduction provisions in section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997). The general deduction provisions allow a deduction for all loses 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.

Travelling expenses incurred by an employee to carry out their duties of employment are incurred in gaining or producing assessable income and, therefore, are allowable deductions under section 8-1 of the ITAA 1997.

Your employment duties require you to attend a number of business locations in order to service the company's clients. In your case, the cost incurred for air fares, meals and car hire whilst in Y are not private expenses and can be directly attributed to the earning of assessable income.

You would be entitled to a deduction for travel expenses incurred under section 8-1 of the ITAA 1997, if those expenses are not paid or reimbursed by the company.

Substantiation requirements

Subdivision 900-B of the ITAA 1997 sets out substantiation rules for work-related deductions. Under Subdivision 900-B of the ITAA 1997, a deduction is not allowable for a work expense, including travel expense, unless the expense qualifies as a deduction under a provision of the Act and written evidence of the expense has been obtained and retained by the employee taxpayer.

Your travel expense qualifies as a deduction under section 8-1 of the ITAA 1997 and you are also required to retain evidence to substantiate any deduction claimed. Evidence would include receipts for the cost of airfares; hire car rental and meals as well as a travel diary if any trip is longer than 6 nights in duration.