Private ruling: Travel expenses
Date of advice: 11 July 2016
Published: August 2016
Ruling period: Year ended 30 June 2014 | Year ended 30 June 2015 | Year ending 30 June 2016
Date scheme commenced: 1 July 2013

Ruling: Q1: Will the Commissioner, grant discretion from substantiation for your overseas travel expenses? | A1: No

Relevant facts and circumstances: You were appointed in a position of an overseas Campus in joint venture with an Australian University. You undertook negotiations for the additional remuneration loading for the position asking for the whole or a portion of the remuneration increment to be recognised as a living away from home compensation or allowance. You were under the comprehension the compensation package was for two components of responsibility and additional living costs. Under the university travel policies employees undertaking authorised travel are able to claim expenditure reimbursement on compilation of a claim with invoices attached or receive an honorarium of a university prescribed $ per day for incidentals and food, set on the basis of global travel locations. The university does not include this nominal allowance entitlement or reimbursement on the PAYG summaries of university employees. You have stated that this per diem amount is $xx to $xx per day for travel 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 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. Taxation Ruling TR 2004/6 examines situations where you may be entitled to an exemption from substantiating travel expenses, where the expense is not more than the reasonable amounts published by the Tax Office. Paragraph 18 of TR 2004/6 states that for overseas travel allowance expenses to be considered for exception from substantiation, you must be paid a bona fide travel allowance. The allowance must be paid to cover work-related travel expenses incurred for travel away from your ordinary residence, undertaken in the course of performing duties as an employee and which involves sleep away from home. Further at paragraph 61 of TR 2004/6 the ruling provides an example where a token amount of allowance, for instance $5 per day to cover meals for travel that involves sleeping away from home, would not be considered a payment that is expected to cover the purchase of three meals per day while travelling for work. The payment would not be considered a travel allowance for the purposes of the exception from substantiation. Paragraph 86 of TR 2004/6 states, a 'bona fide travel allowance' is an amount that could reasonably be expected to cover accommodation, or meals or expenses incidental to travel. This does not require that the amount paid by the employer must equate dollar for dollar to the employee's actual expenditure. However there must be relativity between the quantum of the travel allowance and the purpose for which it is said to be paid. A token amount, or a general payment, is not a bona fide travel allowance . In your situation you are reimbursed by your employer who pays you a per diem rate of between $xx -$xx per day for your travel no matter where you travel. In comparison to the per diem rate for a level 5 country such as Singapore of $355.00 per day, (as published by the Commissioner), the payment you received is clearly nominal. Therefore, it is considered the payment you received is not a bona fide travel allowance. As a result, you are not exempt from substantiation, you can only claim a deduction for the travel expenses you have actually incurred subject to being able to substantiate your claims in full with written evidence.