The Australian Taxation office has issued a new Tax Ruling that clarifies some issues with travel allowances TR 2017/D6 .
Employers can choose to pay an employee a meal travel allowance directly, not as part of the Payroll System. The employer is entitled to claim this payment as an expense where it must meet the requirements of a bona fide allowance.
A travel allowance is assessable income in the hands of the employee, but it is not automatically deductible.
Home to work travel is generally not deductible. Exceptions may be found if the employee is under the direction of the employer whilst traveling. And special circumstances may make the travel deductible, like the remoteness of the work location or the need to continuously change work location.
Travel between different work locations or between work and related study remains deductible.
Travel for reasons of convenience or choice is generally private in nature and not deductible.
Where the expenditure qualifies, and the allowance is below the reasonable limit, a taxpayer can claim the allowance without substantiation like receipts. But be careful! Conditions must be met.
- The travel must be as an employee (not as a sole trader or partner) &
- Must receive a bona fide travel allowance for a specific work trip &
- The employee must be sleeping away from their normal residence &
- The rates and substantiation rules apply only to food and incidental costs and domestic accommodation (not overseas accommodation) &
- Accommodation allowance rates only applies if staying in Commercial Accommodation (not staying with family) &
- The employee must have spent the allowance & keep records to prove that the allowance was fully spent.
The ATO is actively reviewing a large number of travel deduction claims.
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