Edited version of your private ruling

Authorisation Number: 1012610270883

Ruling

Subject: WRE - travel - reasonable allowances - no separate travel allowance

Question

Are you able to rely on the exception from substantiation for the keeping of written evidence for travel allowance expenses?

Answer

No.

This ruling applies for the following period

Year ended 30 June 2013

The scheme commences on

1 July 2012

Relevant facts and circumstances

You are employed as a long distance truck driver.

The nature of your employment requires that you sleep away from home.

You are employed under a workplace agreement (the Award).

The Award provides that the rates paid per kilometre are inclusive of an industry disability allowance of 1.3 times the ordinary rate, to compensate for, amongst other things, the absence of normal resting facilities and normal bed at night, and the necessity to eat at roadside fast food outlets.

The Award provides that an employee engaged in ordinary travelling on duty or on work on which the employee is unable to return home and takes their major rest break under the applicable driving hours regulations away from home must be paid an amount per occasion, except where the employee is provided with suitable accommodation away from the vehicle.

Under your workplace agreement, the Award has been varied such that you did not receive an amount on each occasion you were unable to return home to take your major rest break under the applicable driving hour's regulations; rather, your hourly rate was increased to compensate you for giving up this amount.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

Income Tax Assessment Act 1997 Division 900

Income Tax Assessment Act 1997 Subdivision 900-B

Income Tax Assessment Act 1997 subsection 900-30(3)

Income Tax Assessment Act 1997 section 900-50

Reasons for decision

You can deduct from your assessable income all losses or outgoings to the extent that they are incurred in gaining or producing your assessable income, except where the losses or outgoings are of a capital, private or domestic nature (section 8-1 of the ITAA 1997).

An employee truck driver, who in the course of earning assessable income is required to sleep away from home is considered to be travelling for work and may incur meal expenses as part of a work related travel expense (Taxation Ruling TR 95/18 Income tax: employee truck drivers - allowances, reimbursements and work-related deductions).

Division 900 of the ITAA 1997 outlines the substantiation rules for work-related expenses.

Subdivision 900-B 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 travel allowance if the amount of the claim for expenses incurred does not exceed the amount the Commissioner considers reasonable.

Taxation Ruling TR 2004/6 Income tax: substantiation exception for reasonable travel and overtime meal allowance expenses explains the way in which the substantiation exception operates for work expenses of employees that are reasonable travel allowance expenses.

For 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 that travel (paragraph 18 of TR 2004/6).

A travel allowance that is not paid or payable to cover specific work-related travel is not considered a travel allowance for the purposes of the exception from substantiation (paragraph 19 of TR 2004/6).

The travel allowance must be paid for specific journeys undertaken or to be undertaken for work-related travel (paragraph 56 of TR 2004/6).

An amount for travel expenses that has been folded-in as part of normal salary wages, for example under a workplace agreement, is not considered to be an allowance. If an allowance has been folded-in as part of normal salary/wages the exception from substantiation in Subdivision 900-B of the ITAA 1997 does not apply (paragraph 59 of TR 2004/6).

Truck drivers generally do not incur accommodation expenses when travelling for work as they sleep in their truck. If a truck driver incurs accommodation expenses, a receipt or similar document must be obtained to substantiate the expense, irrespective of whether they receive a travel allowance (paragraph 197 of TR 95/18 and paragraph 72 of TR 2004/6).

Claims for work-related travel expenses by employee truck drivers who are required to sleep away from home and who do not receive a travel allowance, must be substantiated. Written evidence is required to substantiate accommodation, meal and other work-related travel expenses. Travel records must be kept for work-related travel of six or more nights in a row.

In your case you were paid an increased hourly rate which included compensation for the necessity to eat at roadside fast food outlets, as well as compensation for those occasions where you were unable to return home and took your major rest break under the applicable driving hours regulations away from home. As the amount paid was folded-in to your normal rate, it is not a travel allowance. Also, as the amount paid is not an allowance it cannot be an allowance paid for specific journeys undertaken.

As you did not receive an allowance that was paid to cover the cost of accommodation, meals and/or incidentals when you were required to sleep away from home in the course of performing your employment duties, the exception from substantiation provisions in Subdivision 900-B of the ITAA 1997 do not apply. You are required to have the necessary written evidence to substantiate your deduction claims for accommodation, meals and incidentals.