Claiming Overnight Travel Allowance

ATO Travel and Overnight Allowance

Claiming overnight travel allowances can be a tricky area. Our blog receives lots of hits on this topic and also receives many comments and questions. You can also see these posts with tips, calculators and checklists to help you prepare your eTax Return (and get a better refund) with less hassle - checklist of eTax and Assessable Income and deductions and checklist of eTax and Allowable Deductions.

The problem with claiming travel allowance is the two ways that travel can be claimed:
  1. Reasonable Travel Allowance Expense Method; or
  2. LAFHA (Living Away From Home Allowance)
Reasonable Travel Allowance Expense Method

Key points of claiming travel allowance expenses and overtime meal allowance expenses are:
  •  Allowance must be paid - The substantiation exception only applies if the employee is paid a assessable overtime meal allowance or a assessable travel allowance. The allowance must have an identifiable connection with the nature of the expense covered.
  • 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.
  • For travel 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.
The ATO sets out "reasonable" amounts that can be claimed for each night which attracts the substantiation exception (without receipts) while travelling away from home for work. However, to be entitled to it the employee must be in receipt of a taxable "travel" allowance to cover the costs of meals and or accommodation while away.

This is called "Reasonable Travel Allowance Expense" method and does not require SUBSTANTIATION of the deductible amount claimed. In other words,if you meet the requirements of this method the claim does not have to be supported by receipts and invoices.

The deductions that can be claimed using this method are:
  • overtime meal allowance expenses - for food and drink in connection with overtime worked and where a meal allowance has been paid under an industrial instrument;
  • domestic travel allowance expenses (amount varies on location) - allows for accommodation, food and drink, and incidentals;
  • travel allowance expenses for employee truck drivers ($93.40 base rate for 2015 - food, drink and incidentals that are covered by the allowance; and
  • overseas travel allowance expenses - food, drink and incidentals that are covered by the allowance.

What Can Be Claimed:

There are three components to the "Reasonable Travel Allowance Expense" claim. Following is an example of the amounts claimable for Brisbane (total claim allowed without receipts $322.25) for 2015:
  • accommodation - $201.00
  • meals - $102.55 (B'fast $25.35; Lunch $28.55; Dinner $48.65)
  • incidentals - $18.70
Keeping Records of Overnight Travel

The following tables explain what records you need if you are claiming domestic or overseas travel expenses for accommodation, food, drink or incidentals.
If you did not receive a travel allowance:

Domestic travel
Overseas travel
Written evidence
Travel diary
Written evidence
Travel diary
Travel less than 6 nights in a row
Yes
No
Yes
No
Travel 6 or more nights in a row
Yes
Yes
Yes
Yes

If you received a travel allowance and your claim does not exceed the reasonable allowance amount:

Domestic travel
Overseas travel
Written evidence
Travel diary
Written evidence
Travel diary
Travel less than 6 nights in a row
No
No
No*
No
Travel 6 or more nights in a row
No
No
No*
Yes
*Regardless of the length of the trip, written evidence is required for overseas accommodation expenses but not for food, drink and incidentals
If you received a travel allowance and your claim exceeds the reasonable allowance amount:

Domestic travel
Overseas travel
Written evidence
Travel diary
Written evidence
Travel diary
Travel less than 6 nights in a row
Yes
No
Yes
No
Travel 6 or more nights in a row
Yes
Yes
Yes
Yes


There are different amounts claimable for different locations so we recommend you use a registered tax agent/accountant to help you prepare your tax return to obtain the maximum refund. Alternatively, if you use our online tax return system we will help you obtain the maximum refund:


LAFHA (Living Away From Home Allowance)

Many workers, and some employers, confuse the "Reasonable Travel Allowance Expense" Method with the LAFH allowance which is paid under the FBT rules - this is a tax free allowance on which the employer pays FBT. In this case there is no deduction available to employees as the allowance is exempt income. Expenses can not be claimed against exempt income.

This LAFH allowance method has undergone a lot of changes in 2013 onwards, requiring employees to make declarations for employers and to keep records of amounts expended on accommodation and or meals while living away from home. See this post for details of Changes to LAFH Allowance.

E-tax Return

See these posts with tips, calculators and checklists to help you prepare your eTax Return (and get a better refund) with less hassle:
Web Based Tax Return App:

A benefit of using eZtax, our web based tax return app, is we have the genuine online tools, knowledge and experience to get the best tax refund for our clients, making it easy to complete your annual tax return online.

Our Web Based Tax Return App will step you through all the necessary questions to increase your  tax refund and take into account all relevant tax deductions and tax offsets. Try it now. Its FREE to get started!  

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