Under a new Tax Determination issued by the Commissioner of Taxation on 3 July 2017 the reasonable amount for travel expenses for food and drink for employee truck drivers who receive an allowance will be $55.30 per day effective from 1 July 2017.
Previously this allowance was $97.40 per day.
This change has been brought about, says the Tax Office, due to a number of employee truck drivers in receipt of a travel allowance not being able to substantiate or validate the cost of expenses claimed in their tax returns:
- Employee truck drivers who do not receive a travel allowance and truck drivers who are owner-drivers must substantiate all travel expenses with written evidence (refer to paragraphs 76 to 80 of TR 2004/6).
- For the 2017-18 income year the reasonable amount for travel expenses (excluding accommodation) of employee truck drivers who have received a travel allowance and who are required to sleep (take their major rest break) away from home is $55.30 per day.
- Employee truck drivers who receive a travel allowance and spend less than the reasonable amount on food and drink they consume while travelling do not have to keep detailed written evidence of expenditure (for example, all of the receipts). On review or audit, employee truck drivers will be required to show how they calculated the amount they claimed, including evidence that they travelled for work on the relevant days and were required to sleep or take their major rest break away from home. They will also be required to show that they received a travel allowance for the relevant days, and correctly returned this allowance as income in their tax return.
- If an employee truck driver wants to claim more than the reasonable amount, the whole claim must be substantiated with written evidence, not just the amount in excess of the reasonable amount.
- All accommodation expenses incurred by employee truck drivers as part of work-related travel must be substantiated with written evidence.
Kevin is required to travel regularly from Melbourne to Adelaide and sleep away from home in his truck cab, then return home to Melbourne the next day. Kevin is paid a travel allowance of $40 per day for such trips. Kevin’s usual pattern is to stop and eat four times at road houses over the two days. Kevin usually has a meal, a coffee and buys a drink for the road, and spends between $25 and $40 for each meal. In the 2017-18 income year, Kevin’s records show that he made this trip 100 times, received an allowance of $8,000, and spent $14,000 on food and drink he consumed when travelling.
When completing his tax return, Kevin must correctly declare the travel allowance as income in his tax return. Because Kevin calculated that he spent more than the reasonable amount on food and drink when travelling, he has 2 choices, as follows:
- Kevin can claim $14,000 as a travel expense if he got and kept all of his receipts for the food and drink he purchased and consumed when travelling; or
- Kevin can rely on the reasonable amount and claim $11,060 ($55.30 x 200 days) as a travel expense. If Kevin relies on the reasonable amount and his tax return is checked by the ATO, Kevin will be asked to show he travelled this route 100 times, that he received a travel allowance from his employer for the 200 days that he was required to travel, that he correctly declared this allowance as income in his tax return and that he typically spent $55 or more a day on food and drink when making this trip (for example, by reference to diary entries, bank records and receipts that he kept for some of the trips).
If Kevin’s travel allowance was not shown on his payment summary and he fully spent the allowance, he can choose to leave it out of his tax return and not claim any deductions for the meals and drinks he buys when travelling from Melbourne to Adelaide.
The Tax Office recommends that employee truck drivers keep all food and drink receipts to support their travel expenses deduction entitlement when their tax returns are prepared as well as diary entries or log books to support the nights they were required to sleep away from home
Employers will need to decide whether they continue to pay the allowance at the previously higher rate and deduct tax from the excess over the $55.30 or reduce the allowance to within the new rate threshold
If this change affects you please contact the team at OBT for further clarification on 5462 2277.