Reasonable Travel Allowances – what are they?

For those required to travel for their work and business, they may be paid a travel allowance from their employer to go towards covering their costs whilst travelling away from home.  Generally, allowances received may be considered to be income and required to be declared in the tax return, with then the ability to claim deductions for costs incurred to which the allowance is being paid.

In respect of travel allowances, the Tax Office acknowledged many years ago that it would be reasonable for such travel allowances not be included in the tax return, and not require the taxpayers to keep and produce all the receipts and documents that support the costs were incurred during this travel.  So each year, the Tax Office issues a determination of what it sees as the reasonable travel allowance that can be paid for both domestic and overseas travel.

Where an employer pays an allowance within the determination, and where the employee does not want to claim expenses higher than the reasonable allowance, no disclosure will be required of the allowance.  Whereas if the employee wanted to claim a higher deduction than the allowance received, the employee would be required to keep receipts of all costs incurred and maintain all other documentation under the Tax Act to support the deduction.

The Tax Office produces tables of what would be reasonable allowances for accommodation, food & drink, and incidental costs based on the city/location, and based on salary bands.

Now, from time to time, we are told that some advisers out there will suggest that a person can make a claim in their tax return for travel costs based on these reasonable travel allowance figures in the Tax Office’s determinations.  This is not the case – the Tax Office determination is really saying that you don’t have to keep records for these costs, nor do you need to report the income that is being paid as a reasonable travel allowance.  Certainly, it is not there to allow people to claim a “blanket” tax deduction or travel costs.

A link to the 2009/2010 year reasonable allowance determination (TD 2009/15) can be found by clicking here.

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