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OVERNIGHT TRAVEL & OVERTIME MEAL EXPENSES
For the year ended 30 June 2024
TR 2021/1 Scroll to the end and read the examples.
Davy's Case AATA 376 (27 March 2017)
Para 66. "Thirdly, regardless of whether a taxpayer relies on s 900-50 of ITAA 97, they may nevertheless be required to show the basis for determining the amount of the claim, that the expense was actually incurred, and that it was for work-related purpose. In other words, as is stated on s. 900-15 of ITAA 97, the taxpayer may need to produce evidence that the claim qualifies as a deduction under the general provision in s. 8-1 of ITAA 97." It is best to keep every receipt and bank statement.
Expenses claimed must have been incurred and be an allowable deduction - The payment of an allowance does not of itself allow a deduction to be claimed.
Taxation Ruling TR 2004/6 Para 15
If the taxpayer relies on the exception from substantiation, they may still be required to show, the basis for determining the amount of their claim, that the expense was actually incurred, and that it was 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 expenses.
Taxation Ruling TR 95/18 Para 12
The receipt of an allowance does not automatically entitle a taxpayer to a deduction. You must keep every receipt
TR 2021/1 RECORDKEEPING AND EXAMPLES OF CIRCUMSTANCES
THAT ARE ACCEPTIBLE
REASONABLE OVERNIGHT TRAVEL ALLOWANCE
CONDITIONS - OVERNIGHT TRAVEL ALLOWANCE
1. You must be paid a bone fide travel allowance -
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 this context the words 'cover' and 'covered' refer to the nature of the expenses for which the allowance is provided, that is the subject matter to be dealt with by the allowance paid, namely accommodation and applicable meal expenses. (See Re McIntosh and F.C. of T. [2001] AATA 702; 47 ATR 1242).
For accommodation, meal and incidental expenses to be considered under the exception from substantiation, the meal allowance must be a bona fide travel allowance (refer to TR 2004/6) paid or payable under a law of the Commonwealth or of a State or Territory, or an award, order, determination or industrial agreement in force under such a law (section 900-60 of the ITAA 1997).
Historically in some Enterprise Bargaining Agreements negotiated between Employer's Human Resources Departments and Unions there are no Bone Fide Travel Allowances for overnight meals. Instead there may be references to sleepover, inconvenience or accommodation allowances.
Overnight truck drivers where only accommodation allowances are referred to (this legislation is 30 years out of date as most drivers sleep in their cabs). Fortunately the ATO auditors are currently treating the truck driver's accommodation allowance as a meal allowance.
If you travel internationally then try to keep receipts for each country that you visit.
6. You will need a letter from your employer stating that the payment is a bona fide travel allowance paid for meals, incidentals and/or accommodation, the amount of the allowance, the number of allowances paid and the year in which it is paid.
7. Your claims have to be consistent with the employees occupation and type of expense.
If you travel internationally then try to keep receipts for each country that you visit.
Many clients use their mobiles to photograph their receipts then email them to their laptops / iPad / Desktop Computers.
ATO reasonable overnight travel allowances for meals & incidentals
As per Tax Determination for the year ended 30 June 2024.
ATO Are demanding receipts and bank statements for
everything.
The Australian Taxation Office have informed me that you may claim up to the maximum Australian Bureau of Statistics Public Service Rates, if the allowance does not appear on the payment summary as long as the allowance is shown as assessable income in the tax return without having to substantiate expenses as per Tax Ruling 2004/6 paragraph 11, 15, 25, 31, 37 & 39. 'Where the allowance is not required to be shown as assessable income in the employee's tax return, and is not shown, a deduction for the expense cannot be claimed in the tax return.'
'The object of this ruling is so you can decide between either maintaining fewer records and claiming up to the reasonable amount for those deductible expenses actually incurred that are covered by the allowance or keeping written evidence to substantiate your claim. It is acceptable for a reasonable estimate to be the basis for claims having taken into account the taxpayer’s occupation and type of expenses that would usually be incurred. This is a significantly lesser requirement than the need to keep written evidence.'
This statement may be misleading as you must still have receipts for 28 days and prove a regular pattern of expenditure. It is best to keep every receipt.
TR 2021/1
OVERNIGHT TRAVEL EXPENSES WITH NO TRAVEL ALLOWANCE PAID
CONDITIONS
1. You must be stay overnight away from your home and usual place of work.
2. You must not stay in one town for more than 21 days (Roads and Traffic Authority of NSW case; MT 2030).
3. You must keep written evidence.
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.
RECORD KEEPING
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.
I recommend that you keep every receipt you can, take a photos of them with your mobile then email them to your laptop.
ATO
TR 2021/1 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).
We have clients from the following locations:
Brisbane, Gold Coast, Sydney, Newcastle, Sunshine Coast, Cairns, Canberra,
Melbourne, Adelaide, Perth, Darwin.
Other:
Brisbane, Albion, New Farm, Teneriffe, Newstead, Windsor,
Wilston, Bowen Hills, Wooloowin, Herston, Lutwyche, Hamilton, Eagle
Farm, Gordon Park, Fortitude Valley, Clayfield, Ascot, Hendra,
Nundah.
Morayfield, Burpengary, Caboolture, Bellmere, Wamuran, Narangba,
North Lakes, Mango Hill, Kallangur, Dakabin, Deception Bay, Bribie
Island, Elimbah, Kippa-Ring.
DISCLAIMER
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.
We do tax returns for individuals, trusts, companies, partnerships, contractors, ABNs and
sole traders.
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Professional Standards legislation