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July 31—The Australian Taxation Office July 1 issued Taxation Determination 2015/14, clarifying the reasonable amount for travel and overtime meal allowances for income year 2015-16. Amounts reimbursed by an employer for business travel are not taxable to the employee if they do not exceed the “reasonable amount.”
Under Tax Ruling 2004/6, “a deduction is not allowable for a work expense, including a meal allowance expense or travel allowance expense, unless the expense qualifies as a deduction under a provision of the [Taxation Administration] Act and written evidence of the expense has been obtained and retained by the employee taxpayer.”
The substantiation requirement is waived if the employer pays the employee a travel allowance. Even in cases where substantiation has been waived, however, the employee may still be required to produce certain documentation to prove a tax exemption is appropriate. This may include:
• how the employee calculated the amount of the claim,
• proof that the expenses were actually incurred,
• proof that the expenses qualify for tax exemption (for example, that work-related travel was undertaken),
• proof that a bona fide travel allowance was paid and
• proof that if accommodation is claimed, commercial accommodation was used.
According to TD 2015/14, for employer-reimbursed travel expenses to be excluded from employee taxable income, they “cannot exceed the amount actually incurred, and the expenses must be incurred for work-related purposes and be deductible under the income tax law.”
The tax office determines the amount of “reasonable expenses” by type of expense (accommodation, food and drink, incidentals) and location within Australia travelled to. Tax Determination 2004/6 also provides reasonable expense amounts for travel outside Australia, sorting countries into one of six groups according to the local cost of living.
To contact the reporter on this story: Rick Vollmar at email@example.com
TD 2015/14 is available at http://law.ato.gov.au/atolaw/view.htm?docid=%22TXD%2FTD201514%2FNAT%2FATO%2F00001%22, TR 2004/6 at http://law.ato.gov.au/atolaw/view.htm?docid=TXR/TR20046/nat/ato/00001.
For more information on Australian HR law and regulation, see the Australia primer.
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