Private ruling: Travel allowance
Published: March 2013
Ruling period: Year ended 30 June 2011 | Year ended 30 June 2012 | Year ended 30 June 2013 | Year ended 30 June 2014 | Year ended 30 June 2015 | Year ended 30 June 2016
Date scheme commenced: 1 July 2010

Ruling: Q1: Are you entitled to claim a deduction for meals and incidentals up to the Commissioner's reasonable travel amounts, without written evidence, where the expenses are actually incurred? | A1: Yes. | Q2: Are you required to include the travel allowance received as assessable income and claim your expenses as a deduction? | A2: Yes.

Relevant facts and circumstances: You are an employee. As part of your employment you are required to travel overseas. You were provided a per diem allowance to cover meals and incidentals which is less than the Commissioner's reasonable travel amounts. You spent at least the Commissioner's reasonable amount.

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 900-55

Reasons for decision: Summary: 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 gaining or producing assessable income except where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income. Section 900-30 of the ITAA 1997 states that travel allowance expenses are work expenses if they are incurred for accommodation, food or drink and are covered by a travel allowance. A travel allowance is an amount that an employer pays you to cover specific work-related travel expenses you incur for accommodation or food or drink or incidental expenses when travelling in the course of your duties as an employee. As a general rule, written evidence is required to substantiate any expense you wish to claim as a deduction (for example, receipts or invoices of the expense). Section 900-55 of the ITAA 1997 states an exception to this rule applies if you receive a bona fide travel allowance to cover accommodation or food and drink and the expenses do not exceed amounts the Commissioner deems reasonable. Taxation Ruling TR 2004/6 explains that an expense must be actually incurred as required by section 8-1 of the ITAA 1997, before a claim can be made. You cannot automatically claim a deduction just because you receive an allowance. TR 2004/6 states at paragraph 12 that unless the following exception applies, all allowances must be shown as assessable income in the employee's tax return. However where: · the allowance received is a bona fide travel allowance · the allowance received does not exceed the reasonable amount; and · the allowance has been fully expended on deductible expenses, · the allowance received is not required to be shown as assessable income in the employee's tax return. Where the allowance is not required to be shown as assessable income in an employee's tax return, and is not shown, a deduction for the expense cannot be claimed in the tax return. In your case it is accepted you received a bona fide travel allowance to cover meals and incidentals while working overseas and the allowance did not exceed the reasonable amount. Therefore, you are entitled to claim a deduction up to the Commissioner's reasonable travel amount, where you include the travel allowance as assessable income and the expenses are actually incurred. You may still be required to show the basis for determining the amount of your claim and that the expense was actually incurred for work related purposes.

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