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OVERNIGHT TRAVEL EXPENSES WITH NO TRAVEL ALLOWANCE PAID

 

TR 2017/D7 Please scroll to the end and read the examples.

 

PLEASE SUMMARIZE THE FOLLOWING:

Air fares

Taxis or car hire

Accommodation

Meals

Water

Alcohol - e.g. wine & beer

Snacks

Toiletries

Reading materials - e.g. newspapers, magazines, books, etc.

Movies - e.g. DVDs, in-house, cinema, etc.

 

EMPLOYERS

Most employers usually pay for only accommodation and meals for their employees but there are many other incidental expenses that are not reimbursed, these are usually a tax deduction. e.g. alcohol, snacks, toiletries, movies, etc.

 

ATO Practice Statement LA 2005/7

In some circumstances BPAY and internet banking statements may include sufficient details to support the correctness of your claims. Suppliers may not issue a receipt containing all the information required by the substantiation legislation. However you may use a combination of other documents to support your claims.

In some cases if a credit card statement has the date of the transaction, the name of the supplier and the amount paid and you make a note on the credit card statement detailing the items purchased with their respective prices, the Tax Office may accept this as sufficient evidence. See examples below.

The above does not apply for EFTPOS transactions because bank statements do not show cash withdrawals separately.

Practice Statement LA 2005/7

Example 2 - use of a bank or credit card statement combined with other evidence

22. Kylie, having just started her first full time job as a clerical worker, purchased a pen for use at work costing $50 from a jeweller's shop. She also bought a pair of earrings for $100 and paid for both items on her credit card. Having never completed a tax return before, she was not aware that the pen would be a deductible expense. She did not request or receive a receipt.

23. When it was time to prepare her return, Kylie realised that she could claim her pen as a work expense. She had also incurred union fees of $478, which were recorded on her payment summary.

24. Kylie checked her credit card statement and found that it showed an amount of $150 and the name of the jeweller's shop. Initially, she decided it would be safest not to claim for the pen because she had no specific receipt and she was not sure of the exact amount. However, she had kept the box the pen had been packaged in, and upon checking the box for further information noted the $50 price sticker on the outside. Before lodging her income tax return, Kylie made a note on the credit card statement detailing the two items and their respective prices and kept the pen packaging along with her bank statement.

25. By keeping the pen packaging and the credit card statement including her notation, Kylie has ensured she has sufficient information to substantiate her expense. The ATO will accept the combination of the pen packaging and the credit card statement as sufficient evidence to substantiate her claim.

26. Had Kylie not kept the box that her pen came in with the price sticker on it, but was able to obtain from the jewellery store a written breakdown of how much she spent on each of the items, she would also have been able to make a note on her credit card statement detailing the two items and their respective prices, and would have had sufficient evidence to substantiate her claim. The ATO would accept the combination of the credit card statement containing Kylie's notation and the written price breakdown from the jewellery store as sufficient substantiation.

 

TR 2017/D6 Example 5

Working at new locations every few weeks and staying away from home

Special demands travel (deductible)

Work-related accommodation (deductible)

Mike is an employee foreman specialising in road construction, particularly intersection construction. He works for a road construction firm, which has an office near Mike's home in Melbourne. Mike does not have a set desk as he is rarely in the office, only attending meetings one or two times per month.

Mike is mainly based and required 'on-site', which can be anywhere throughout Victoria. He generally works Monday to Friday, and is paid separate weekend rates if required to work on weekends.

Work equipment required for the projects is carried on trucks driven by other employees.

Projects can be between 50 to 200 kilometres away from Mike's home or the firm's office, and can last for periods ranging from one to eight weeks. Where a project is more than 100 kilometres from home, Mike is paid a daily 'travel allowance' by his employer for the number of days of the project to help cover the cost of his accommodation and meals.

Apart from being paid for weekend work and receiving the daily 'travel allowance', Mike's salary package recognises all aspects of his position, including the requirement for him to travel between Melbourne and various project sites at the start and end of each project. His employer requires Mike to respond to any work calls received while in transit between Melbourne and the project sites.

It is up to Mike to decide if he stays away from home overnight when at project locations. If he does stay away, he arranges his own accommodation and meals. Typically, where the project is more than 100 kilometres from home, Mike usually chooses to stay in short term accommodation such as motels, bed and breakfasts, or a cabin or caravan at a caravan park, depending on what is available in the area in which his 'road construction team' is working.

Mike always stays in one accommodation location for each project and commutes between that accommodation and the project site.

Mike does not travel from one project to the next or from one work site to the next. Mike will usually travel from home to a particular project site and then return home upon completion of that project.

On occasions Mike chooses to travel back to Melbourne from a project location during the week or on weekends, rather than staying away from home overnight. On these occasions, he returns to the project location in time to recommence work at the required time. He undertakes this travel at his own cost.

Mike's transport expenses for trips between Melbourne and the project locations at the start and end of each project and are deductible. Mike undertakes this travel in the performance of his work activities, which reflect special demands associated with ongoing travel between various work locations.

Mike's accommodation, meals and incidentals for the periods he spends away from Melbourne on projects are deductible because the travel is required by his work and he is not living away from home.

The cost of travel between project locations and Melbourne during the week and on weekends is not deductible. It is not undertaken in performing Mike's duties, and occurs by choice for personal reasons.

Further, Mike cannot deduct accommodation and meal expenses for periods when he has returned home, including for periods when Mike receives a travel allowance to cover the costs of working away from home and he chooses to travel home. These are private expenses (Return to paragraph 40 or 58 of this draft Ruling).

 

 


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The information provided in the above documents is not intended to be, nor should it be construed as tax advice. Any specific recommendation for a client can only be done after their individual circumstances have been determined by David Douglas Accountants.

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