"The truth about travel allowance claims…." Article by Steve Marsten

It’s been an interesting week at Sothertons this week. We have been asked several times about travel allowances and associated claims against the allowance as well as being asked to double check returns that some taxpayers have already had lodged.

Generally travel expenses that have been incurred (i.e. an allowance that has actually been spent on a legitimate expense) or that are incidental and relevant to gaining or producing assessable income (like your wage or salary) are deductible provided they are not considered private expenses. Now to make that clear – travel between home and work is considered private in nature unless home is considered a place of work or you have equipment that’s necessary to be transported between home and work.

If an employee receives a travel allowance and they are away from their “ordinary residence” for 6 nights or more then they must maintain a travel diary to record their expenses for breakfast, lunch, dinner and incidentals. If they receive an allowance and claim no more then the allowance then no other records are necessary. Note they must be away from a home and can prove that they have a home AND they must have incurred the travel costs.

Many workers in Gladstone receive a Travel Allowance. The Tax Office has set out clear guidelines for claiming these allowances and in Gladstone the claim allowable under Tax Office guidelines for 2014 is variable depending on your salary level. They vary depending on whether you own or rent a house here or whether you are FIFO. They vary from $118.85 per day to $356.70 per day. BUT here is the kicker – the ruling or Tax Determination as the ATO calls them, states you must have incurred the cost or spent the money. Yes it’s true that you don’t need to keep receipts, but it’s the taxpayer who signs the declaration saying that their return is fully compliant with the tax law – not the tax agent.

 

In summary – if your tax agent or accountant asks you “did you incur any costs for your travel (which as we know, is essentially to and from work) give careful consideration to your answer. Also ask for a full copy of your tax return so you have proof of what you actually declared and claimed. At Sothertons we ensure that Taxpayers claim as much as they are legally entitled to so they have peace of mind. Feel free to phone us for an appointment on 4972 1300.