Private ruling: Travel Allowance Deductions
Date of advice: 4 July 2017
Published: November 2017
Ruling period: Year ended 30 June 2016
Date scheme commenced: 1 July 2015

Ruling: Q1: Are you entitled to a deduction for travel expenses up to the Commissioner's reasonable allowance amounts, without substantiation when you receive an allowance for your travel for work? | A1: No

Relevant facts and circumstances: You are an employee who is required to travel for work related purposes. You sometimes work interstate, but often overseas in other countries. During your time away, you stay in temporary hotel accommodation as opposed to permanent share houses. You have been paid an allowance by your employer to cover the costs of your meals and incidentals while you are away. The amounts of the allowance have been reflected as a separate line item in your pay slips, but have not been presented separately when your employer prepared your PAYG payment summary. The amounts have been included as part of your gross payments. You are paid, as a minimum, an amount per hour as a Daily Travel Allowance. Depending on the country that you are required to go to, you may be paid and additional allowance on top of that. You have made a number of work trips in the 2016 financial year, spending a total of more than 100 days away. You have not kept receipts for the receipts and you wish to rely on the ATO reasonable amounts.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1 | Income Tax Assessment Act 1997 subdivision 900-H | Income Tax Assessment Act 1997 Section 900-50

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. The cost of meals is generally considered to be a private or domestic expense and not deductible. An exception to this is where you are undertaking work-related travel, for instance you attend a work-related seminar in another town and are required to stay overnight. Travel expenses include the costs of fares, accommodation, meals and incidentals. A deduction is allowable for the cost of meals if you are required to sleep away from home, as the meal expense would then form part of the travel expense. 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 900-50 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 Determination TD 2015/14 publishes these reasonable amounts for the 2015-16 income year. Taxation Ruling TR 2004/6 discusses the conditions when the substantiation exception applies. To be considered a bona fide travel allowance, the travel allowance must be paid for specific journeys undertaken or to be undertaken for work-related travel. A travel allowance that is not paid to cover relevant expenses for specific journeys undertaken or to be undertaken for work-related travel, is not a travel allowance for the purposes of the exception from substantiation. Examples of expenses relating to allowances that would not qualify for the exception from substantiation because they are not travel allowances paid to cover deductible expenses for specific journeys are: ● where a fixed annual travel allowance amount of, say, $2,000 a year is paid, regardless of how often or even whether travel is actually undertaken; or ● where a travel allowance is paid at a certain rate per hour for hours worked, even if deductible work-related travel is not undertaken. In your situation, according to your payment summary, you were not paid a separate allowance in the income year. The amount was instead folded into your wages. You were paid a travel allowance at a certain rate for hours worked, depending on the country of the work related travel. As the amounts are paid at an hourly rate, these amounts are not considered to be bona fide travel allowances for the purposes of exception from substantiation. Accordingly subdivision 900H of the ITAA 1997 will not apply to grant relief from the effects of failing to substantiate. You are not entitled to a deduction for your work related meal expenses without substantiation.