Private ruling: Work related travel expense
Date of advice: 1 November 2016
Published: February 2017
Ruling period: Year ended 30 June 20YY
Date scheme commenced: 1 July 20XX

Ruling: Question and answer | Are you able to claim $XX as a deduction for overnight meal and travel without substantiation? | Yes.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You are a truck driver. Your employer provides you with an overnight allowance of $YY. The total expense incurred by you is $XX.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1.

Reasons for decision: Summary: An expense is deductible under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) if and to the extent to which it is incurred in gaining or producing your assessable income or in carrying on a business for that purpose. However you cannot claim a deduction for an expense that is of a capital, private or domestic nature. A deduction is only allowable if an expense: ● is actually incurred ● meets the deductibility tests ● Satisfies the substantiation rules. Work-related travel expenses you incur that are directly related to your work as an employee include: ● public transport, including air travel and taxi fares ● bridge and road tolls, parking fees and short-term car hire ● meal, accommodation and incidental expenses you incur while away overnight for work ● expenses for motorcycles and vehicles with a carrying capacity of one tonne or more, or nine or more passengers, such as utility trucks and panel vans ● actual expenses (such as any petrol, oil and repair costs) you incur to travel in a car that is owned or leased by someone else. Taxation Ruling TR 2004/6 Income tax: substantiation exception for reasonable travel and overtime meal allowance expenses and ATOID 2015/14 explains the way in which the substantiation exception operates for work expenses of employees that incur either reasonable travel allowance expenses or reasonable overtime meal allowance expenses. Paragraph 11 of TR 2004/6 explains that an expense must actually be incurred before a claim can be made. A taxpayer cannot automatically claim a deduction just because they receive an allowance. Paragraph 15 of TR 2004/6 highlights that if a taxpayer relies on the exception from substantiation, they may still be required to show the basis for determining the amount of their claim, that the expense was actually incurred and that it was for work-related purposes. Paragraph 41 of 2004/6 states that the receipt of a travel allowance or an overtime meal allowance does not automatically entitle an employee to a deduction, nor does the amount of an allowance received determine if the claim is reasonable. Paragraph 54 of TR 2004/6 clearly states that “the travel allowance must be paid to cover the cost of accommodation (domestic travel only) or food or drink or expenses incidental to the travel (paragraph 900-30(3)(b) of the ITAA 1997)”. According to paragraph 75 of TR 2004/6 the receipt of a travel allowance does not automatically entitle the employee truck driver to a deduction for travel expenses, nor does the amount of a travel allowance received determine if the claim is reasonable. Only the actual amount incurred on work-related travel expenses can be claimed as a deduction. The reasonable rates only set the threshold below which substantiation does not apply. The rates do not determine the deductible amount. Your employer pays you $YY overnight travel and meal allowance; you incur costs of $XX. You can claim $XX without substantiation in your 20YY tax return.