Tax deductions for work related travel can be confusing and complicated. Here’s a brief summary of what records you need to keep:
Generally you need to keep written evidence, i.e. receipts to claim a deduction for work related travel. Where the travel is more than 6 nights you will also be required to keep a travel diary. However, there are exceptions to this where the deduction you claim is no more than the reasonable daily allowance set by the ATO and the following apply:
- you are required to travel for work
- you receive a travel allowance from your employer for the days you are travelling
- you spent the money on accommodation, food, drink and incidentals and were not reimbursed for these expenses.
So, where you have received a travel allowance by your employer AND your claim does not exceed the reasonable daily allowance you do not need to keep a travel diary or written evidence.
However, where the claim exceeds the reasonable daily allowance then you will need to keep all written evidence (not just for the amount over the reasonable allowance) and keep a daily travel diary when the travel is 6 or more nights in a row,
If you do not receive a travel allowance from your employer:
If your employer does not pay you a travel allowance you need to keep all written evidence and a keep a daily travel diary when the travel is 6 or more nights in a row.
What is a travel diary:
Your travel diary should document the dates of travel including the places visited with time and duration noted of the activities you did that day. The purpose of the diary is to work out the work related days of your trip. The travel diary is only needed where the domestic travel is for 6 nights or more in a row.
Although a travel diary may not be required, keeping one can assist you later with working out the work related part of your claim should you have had some personal days in your travel and also provide some evidence of your work travel should the ATO decide to check your deduction.
What are the reasonable allowance rates:
The ATO sets standard daily rates for domestic travel covering the different cities in Australia. The daily rate covers accommodation, food, drink and incidentals. If you receive a travel allowance you can check with your employer what daily allowance you have been paid and should also check if it is the ATO daily allowance. Your employer could pay you more than the ATO allowance, however your substantiation requirements are still based on the ATO reasonable allowances.
If you are an employer:
Travel allowances should be paid prior to your employee travelling. We can help you work out the correct allowance.