Private ruling: Travel allowance
Published: June 2012
Ruling period: Year ended 30 June 2011
Date scheme commenced: 1 July 2010

Ruling: Q1: Is the allowance you received included in your assessable income as a travel allowance? | A1: Yes. | Q2: Are you entitled to a deduction for travel expenses incurred during the periods of employment when you are receiving the travel allowance? | A2: Yes.

Relevant facts and circumstances: You were on call and offered short periods of employment in varying locations until the specific job was completed. You were not employed on a full-time basis for the full year and you began your duties when you arrived at the job site. You received an allowance for each period of employment as accommodation and meal expenses were at the employee's expense. The nature of employment and periods of engagement are on a job completion basis and your time away was not fixed and always for a short period. You maintained your usual place of residence where your family resided and your family did not at any time accompany you at any of the above job locations. As the employment was not full-time you also had other businesses you work for in between engagements. The allowance is paid at a daily rate for the increased cost of accommodation and meals whilst you are at the work location. No Fringe Benefits Tax living away from home declaration was completed for any of the periods that the allowance was paid.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 15-2 | Income Tax Assessment Act 1997 section 8-1

Reasons for decision: Detailed Reasoning - Assessable allowance: Section 15-2 of the Income Tax Assessment Act 1997 (ITAA 1997) states; Your assessable income includes the value to you of all allowances, gratuities, compensation, benefits, bonuses and premiums provided to you in respect of, orfor or in relation directly or indirectly to, any employment of or services rendered by you (including any service as a member of the Defence Force). The allowance you received was in direct connection to your employment and is included in your assessable income. | Detailed Reasoning - Deductibility: Section 8-1 of the 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. Travel allowance expenses are work expenses if they are incurred for travel, food or drink and are covered by a travel allowance. A travel allowance is an amount that an employer pays you to cover accommodation or food or drink expenses you incur 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 expenses). Section 900-50 of the ITAA 1997 states an exception to this rule applies if you receive a travel allowance to cover accommodation or food and drink and the expenses do not exceed the amounts the Commissioner deems reasonable. Taxation Ruling TR 2004/6 discusses the conditions when the substantiation exception applies. The substantiation exception will only apply to those expenses covered by a bona fide travel allowance paid by your employer. Any expenses not covered by the allowance must be supported by written evidence before they can be claimed as a deduction. Please note even when the substantiation exception applies, you are still required to be able to show how you calculated your expenses using a reasonable basis. To be entitled to claim a deduction for travel expenses, in addition to including the travel allowance as assessable income, the expenses must be actually incurred. In your case, the allowance you received is considered to be an assessable travel allowance paid to cover your accommodation and meal expenses. Therefore you are entitled to deduct work related accommodation and meal expenses incurred.

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