Private ruling: Travel expenses - substantiation
Published: October 2012
Ruling period: Year ending 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: Are you entitled to claim work-related travel expenses using the Commissioner's reasonable allowance amount when you have not received a travel allowance? | A1: No

Relevant facts and circumstances: You travel overseas in the course of your employment. Your employer pays your accommodation expenses and reimburses you for food and incidentals. These reimbursements are not shown on your payment summary. The amount you have been reimbursed by your employer is less than the Commissioner's reasonable allowance amount. You believe that you have spent more than the Commissioner's reasonable allowance amount on food and incidentals but do not have receipts for these expenses.

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

Reasons for decision: Summary: Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for work related travel expenses including the actual cost of meals and accommodation away from home. Where a taxpayer is paid a travel allowance to cover the cost of meals, accommodation and incidentals while away from home, a deduction for expenses relating to these outgoings may be allowable without the need to comply with the substantiation requirements if the expenditure claimed is reasonable. Generally, the Commissioner releases a Taxation Determination setting out the amounts the Commissioner considers reasonable in respect of claims made for work related travel expenses for a particular income year. Taxation Ruling TR 2004/6 details the circumstances where the relief from substantiation is available to employees who receive a travel allowance. In order to qualify as a travel allowance, the allowance: · must be paid for specific instances of travel where the employee stays overnight away from home · must be paid for accommodation, food and drink or incidentals · must be paid as an allowance, that is, not folded in as part of normal salary and wages; and · must be a bona fide travel allowance. Taxation Ruling TR 92/15 discusses the difference between an allowance and a reimbursement. A payment is an allowance when a person is paid a definite predetermined amount to cover an estimated expense. It is paid regardless of whether the recipient incurs the expected expense. The recipient has the discretion whether or not to expend the allowance. A payment is a reimbursement when the recipient is compensated for an expense already incurred although not necessarily disbursed. The payment is made on the basis of the employee substantiating the expenses they have already incurred and receiving payment from their employer for those amounts. In your case, the payments you received are considered to be a reimbursement, not a travel allowance. As you have not received a travel allowance, you cannot use the Commissioner's reasonable amount to determine your deduction claim. The Commissioner's reasonable allowance amount is not intended to be the basis for the calculation of travel expense deductions. The reasonable allowance amount determines whether written evidence is required to substantiate a deduction claim which is calculated using the actual expenses incurred, for taxpayers who have received a travel allowance. Even if a taxpayer's claim is below the reasonable amount, they may still be required to demonstrate how they calculated the amount of their deduction claim. It is not sufficient to merely multiply the Commissioner's reasonable amount by the number of nights of work-related travel, as this is not a reflection of the expense actually incurred by the taxpayer. The receipt of a travel allowance does not automatically entitle an employee to a deduction, nor does the amount of an allowance received determine if the claim is reasonable. Only the actual amount incurred on work-related travel expenses can be claimed as a deduction You cannot arbitrarily claim a deduction for the difference between the amount reimbursed by your employer and the Commissioner's reasonable amount. You may be entitled to a deduction if the amount of travel expenses you have incurred is greater than the amount reimbursed by your employer, but only if you satisfy the substantiation provisions contained in Division 900 of the ITAA 1997. As discussed above, as you have not received a travel allowance you cannot use the Commissioner's reasonable allowance amount and must provide substantiation of all of your expense deduction claims.

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