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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Claiming Overtime Meal Allowances

(last updated 30/06/2015)

Related Posts:
Overtime meal allowances, whilst available to most employees, is most common with transport, construction and factory workers who work over a certain time in overtime (usually 2 hours) and is paid in accordance with an industry award.

Many workers are not aware of their taxation entitlements when preparing their income tax returns.

Claiming Overtime Meal Allowance

There are two ways that a tax deduction for overtime meal expense can be claimed:
  • Substantiated - actual cost of the overtime meal but must be supported with evidence of the expense, ie a receipt.
  • Un-substantiated - 2015 rate $28.20. Special substantiation rules apply to overtime meal expenses if you receive an overtime meal allowance paid under an industrial award. A deduction is allowable without substantiation for expenses incurred, provided the claim does not exceed the amount considered reasonable by the ATO.
Note that if a tax deduction is claimed for more than the "reasonable" amount than substantiation is required for ALL of the claim.

Example of Overtime Meal Allowance

The claim can make a substantial difference to tax refunds. For example, a meal allowance included on a PAYG Payment Summary of $840 (70 allowances at $12) could convert to a tax deduction of $1939 - an additional deduction of $1099 ($1939 less $840). Note that the allowance on the PAYG certificate must also be included as income in the recipients tax return.

Overtime Meal Allowance Rules

The overtime meal allowance is commonly paid at the rate of $11 - $15 each allowance and varies depending on various industry awareds (check with your employer for your award rate). The allowance is usually shown separately on the Annual PAYG Payment Summary in the Allowances box and must be included as assessable income in your tax return. See this post for a checklist of eTax Return and Assessable income.

You can claim a deduction for overtime meal expenses incurred if you worked overtime and you received a genuine overtime meal allowance paid under an industrial law, award or agreement. See this post for a checklist of eTax Return and Allowable Deductions.

Employees must be careful to ensure their meal allowance is paid under an award and not folded into a workplace agreement or EBA. In this case, there is no receipt of an overtime meal allowance which is necessary in order to meet the un-substantiated rule above.

In practice, some employers payroll systems don't show the meal allowance separately on their certificates but are included in the "Gross Payments" instead. In these cases, providing the allowance is paid under an award, we ask the client to obtain a letter from their employers confirming the payment of an allowance and the daily rate or check pay slips for details. Alternatively, if an overtime meal allowance is shown separately on your payslip, that will be sufficient evidence of receipt of a genuine overtime meal allowance (providing it is paid under an industrial award). In this case, you should keep copies of pay slips in case of an ATO audit.

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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