Key points from Taxation Ruling TR 2004/6 about claiming travel allowance expenses and overtime meal allowance expenses are:
Claim must be allowable - A deduction claim cannot exceed the amount actually incurred for work-related purposes. The payment of an allowance does not of itself allow a deduction to be claimed.
Allowance must be paid - The substantiation exception only applies if the employee is paid an overtime meal allowance or a travel allowance. The allowance must have an identifiable connection with the nature of the expense covered.
For travel allowance expenses - The employee must sleep away from home.
Substantiation exception - Where the amount claimed is no more than the applicable reasonable amount, substantiation of the claim with written evidence is not required.
Claims in excess of reasonable amounts - If the amount claimed is more than the reasonable amount, the whole claim must be substantiated, not just the excess.
Verification of reasonable claims - In appropriate cases, where the substantiation exception is relied on, the employee may still be required to show:
- how they worked out their claim;
- an entitlement to a deduction (e.g. that work-related travel was undertaken);
- a bona fide travel allowance was paid; and
- if accommodation is claimed, that commercial accommodation was used.
The nature and degree of evidence will depend on the circumstances: for example the circumstances under which the employer pays allowances, the occupation of the employee, and the total amount of allowances received and claimed during the year by the employee.
Tax return treatment - Where a travel or overtime meal allowance which does not exceed the reasonable amounts is not shown on the payment summary, and it has been fully spent on deductible expenses, neither the allowances nor the expenses need be shown on the employee's tax return. If an amount less than the allowance has been spent, the income tax return must include the allowance and the expense claimed. Whenever a claim is made for overtime meal or travel allowance expenses the allowance must also be included in the tax return.