Work Related Travel Expenses

What are your substantiation requirements?

You may find yourself in the situation where you have received a travel allowance from your employer and you are spending money while on work related travel for the cost of meals, accommodation and incidentals – so where do you stand with the tax man and what records do you need to keep?

Traditionally when claiming work related deductions you are required to keep copies of relevant invoices and documentation to substantiate your claim, however, there is an exception to the substantiation requirement when claiming expenses for work related travel. Under taxation ruling TR 2004/6 the ATO has set out the rules for which individuals may be exempt from the substantiation requirement and able to claim work related travel and meal expenditure on a “reasonable” basis:

• The Allowance must be paid – the employee is paid an overtime meal or travel allowance and the allowance has an identifiable connection with the nature of expense covered.
• Where the amount is no more than the applicable reasonable amount, substantiation of the claim with written evidence is not required
• If the claim is more than the reasonable amount, the whole claim will need to be substantiated, not just the excess
• For travel expenses the employee must sleep away from home
• In appropriate cases where the substantiation exception is relied on, the employee may still be required to show details of how they worked out their claim and that the expenses were actually incurred.

The “reasonable amount” is reviewed on a yearly basis of what the ATO deems to be reasonable for the costs of meals, accommodation and incidentals in different locations, both domestically and overseas. These amounts can be found via the ATO website with the current Tax Determination TD 2016/13.

In some cases where you are travelling 6 or more nights in a row you may be required to keep a travel diary to record the dates, places, times and duration of your activities and travel to allow for accurate calculation of employment-related and private expenditure.

The substantiation exception does not occur if you did not receive a travel allowance, and in this case you will be required to keep all written evidence as well as travel diaries to substantiate any work related travel claim. The exception also does not apply to accommodation expenses on overseas travel and written evidence will be required.

The ATO have a handy little app for individuals called myDeductions tool  It’s a great way to keep track of your expenses and receipts right from your phone or tablet.

Should you have any queries in regards to work related expenditure you incur, feel free to contact your accountant at Optima Partners.

Rick Filocamo – OP Accountant