Private ruling: Work Related Expenses
Date of advice: 15 September 2017
Published: February 2018
Ruling period: Year ended 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Q1: Are you entitled to a deduction for meal and incidental expenses incurred up to the Commissioner's reasonable allowance amounts, without substantiation when you receive a genuine bona fide travel allowance? | A1: Yes.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You were sent by your employer; to an overseas worksite in a Cost Group 5 country on multiple occasions. In the 20XX/XX financial year, you worked in Cost Group 5 country for several days. Whilst working in a Cost Group 5 country, you were performing normal work duties at a single worksite Your work schedule and flight itineraries describes the dates you arrived in a Cost Group 5 country, the days you were required to work and the location of the worksite. Your employer paid you a travel allowance in local currency in the 20XX/XX Financial Year. The travel allowance was paid according to each full day worked and is intended to cover meal expenses and other associated travel expenses (incidentals). You maintained a permanent home in Australia with your family, who were not able to accompany you when working in a Cost Group 5 country Whilst working in a Cost Group 5 country your accommodation is provided and paid for by your XXXXX, is of a temporary nature and is shared with work colleagues.

Relevant legislative provisions: Income Tax Assessment Act 1997, Section 8-1; Subdivision 900-B and 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. A deduction is only allowable if an expense: n is actually incurred, n meets the deductibility tests, and n satisfies the substantiation rules. Tax Determination (TD) 2016/13 sets out the amounts that the Commissioner considers are reasonable for the substantiation exception in Subdivision 900-B of the ITAA 1997 for the 2016-17 income year- in relation to claims made for overseas travel allowance expenses, including food, drink and incidentals that are covered by the allowance. Schedule 1 of TD 2016/13 show the reasonable amounts for overseas travel expenses. Table 1, Schedule 1 of TD 2016/13 sets out the Cost Group to which a Country has been allocated and XXXX (XXXX) is a Cost Group 5 Country. Table 2, Schedule 1 of TD 2016/13 sets out the reasonable amount for meal expenses and incidental travel expenses for each cost group and for specified employee salary ranges. The reasonable amounts for employees earning $209,001 and above in a Cost Group 5 Country, are $295 (per day) for meals and $60 (per day) for incidentals. TD 2016/13 should be read together with Taxation Ruling (TR) 2004/6 which explains the substantiation exception and the way in which these expenses are able to be claimed. Where the exception from substantiation applies - Paragraph 39 of TR 2004/6 states a taxpayer may still be required to show the basis for determining the amount of their claim and that the expense was actually incurred for work-related purposes. What counts as evidence for a claim subject to the substantiation exception will vary according to individual circumstances and the nature of the expense. If necessary, it is acceptable for a reasonable estimate to be the basis for claims having regard to the taxpayer's occupation and the types of expenses that would be expected to be incurred. This is a significantly lesser requirement than the need to keep written evidence. Section 900-55 of the ITAA 1997 states you can deduct a travel allowance expense for travel outside Australia without getting written evidence under the same conditions as for domestic travel allowances. However for overseas travel covered by a travel allowance you must still keep travel records if the travel involves you being away from your ordinary residence for 6 or more nights in a row.