Eligibility for the record keeping exception
Generally, to claim a deduction you need to keep detailed records of your travel allowance expenses as evidence for your claims.
However, you may not need to keep detailed records if you receive a travel allowance and your expenses meet certain conditions.
The eligibility conditions depend on the type of travel:
Domestic travel
You will be able to rely on the record keeping exception if:
- you receive a travel allowance from your employer
- you incur deductible travel allowance expenses
- you must incur the expenses and they must be deductible – merely receiving a travel allowance from your employer does not automatically entitle you to claim a deduction
- your travel allowance expenses are within the reasonable amounts.
If you meet these conditions you don't need to keep written evidence of your accommodation, food and drink and incidental expenses, or a travel diary. But you still need records showing that you incurred the expenses on work-related travel. If your deduction for travel allowance expenses exceeds the reasonable amounts, you will need to keep:
- written evidence for your whole claim
- a travel diary if you travel for 6 or more nights in a row.
Example: expenses incurred less than the reasonable amount
Jasha lives in Darwin and travels overnight for work to Adelaide. He receives a travel allowance of $150 to cover his accommodation. His employer includes the allowance on his income statement.
In Adelaide, Jasha stays at a motel that costs him $90 for the night. For a person in Jasha’s circumstances, the reasonable amount for accommodation in Adelaide is $157.
At the end of the income year, Jasha must include the allowance of $150 in his tax return as income. He can also claim a deduction of $90, the amount he incurred on his accommodation.
Jasha can rely on the travel allowance record keeping exception because:
- he incurs deductible travel allowance expenses, that is, accommodation
- he receives a travel allowance from his employer to cover his accommodation expenses
- his deduction ($90) is less than the reasonable amount ($157).
Example: expenses incurred more than reasonable amount
Quin lives in Adelaide and travels to Perth for work for 3 nights. She receives a travel allowance of $180 per night to cover her accommodation costs.
Quin's employer reports the total allowance ($180 × 3 = $540) on her income statement at the end of the income year.
The reasonable amount for accommodation is $180 for a person in Quin’s circumstances.
Quin spends a total of $750 ($250 per night × 3 nights) on her accommodation in Perth.
At the end of the income year, Quin must declare her allowance of $540 as income in her tax return.
Quin can claim a deduction for the amount she incurred ($750) if she keeps written evidence of the whole amount she spends.
If Quin wants to keep more limited records, she can claim a deduction for up to the reasonable amount ($540) for her accommodation.
End of exampleOverseas travel
The exception from keeping written evidence and a travel diary for overseas travel works in the same way as the exception for domestic travel except:
- you must keep written evidence for all your accommodation expenses
- you must keep a travel diary if you are away from your home for 6 or more nights in a row.
Overseas travel for airline crew
If you are an airline crew member on an overseas flight, you can claim a deduction for your travel allowance expenses without keeping a travel diary, if:
- your travel allowance covers your travel as a crew member on an aircraft
- your travel is principally outside Australia
- your deduction for expenses covered by your travel allowance doesn't exceed the allowance you receive.
This exception only applies to keeping a travel diary.
To rely on the exception from keeping written evidence for your food and drink and incidental expenses:
- you must incur deductible travel allowance expenses
- you must receive a travel allowance from your employer
- your deduction for travel allowance expenses must be within the reasonable amounts.
You must keep written evidence for all your accommodation expenses.
Exception for overseas travel by airline crew – claim within reasonable amounts
|
Travel period (days) |
Written |
Travel |
|---|---|---|
|
Less than 6 nights in a row |
Yes – for accommodation |
No |
|
6 or more nights in a row |
Yes – for accommodation |
Yes, except crew members claiming less than their travel allowance |
Exception for overseas travel by airline crew – claim exceeds reasonable amounts
|
Travel period (days) |
Written |
Travel |
|---|---|---|
|
Less than 6 nights in a row |
Yes – for the whole claim |
No |
|
6 or more nights in a row |
Yes – for the whole claim |
Yes, except crew members claiming less than their travel allowance |
Example: travel records and written evidence for international airline crew
Orla works for an airline as a captain and flies long-haul international routes to the United States of America. She receives a travel allowance for meals when she stays overnight.
The amount of Orla's allowance is:
- $25 for breakfast
- $56 for lunch
- $67 for dinner.
Orla’s regular itinerary is as follows:
- Days 1 and 2: flies from Sydney to Los Angeles on an overnight flight and spends an additional night in Los Angeles to rest
- Days 3 and 4: flies from Los Angeles to New York and stays 2 nights there to rest
- Days 5 and 6: flies from New York to Los Angeles and spends 2 nights there to rest
- Day 7: flies back to Sydney.
All up, Orla is away from home for 6 nights.
While in Los Angeles, Orla spends:
- $22 on breakfast
- $18 on lunch
- $46 on dinner.
While in New York, Orla spends:
- $23 on breakfast
- $25 on lunch
- $40 on dinner.
Even though Orla is away from her home for 6 nights in a row, she doesn't need to keep a travel diary because the amounts she spends on meals is less than the travel allowance her employer pays her.
Her meal expenses are also less than the reasonable amounts for the United States of America, so Orla does not need to keep written evidence for her meal expenses. She can rely on the overseas travel allowance record keeping exception.
However, Orla can only claim the amount she incurs on meals as a deduction, and she still needs to show how she works out the amount of her claim.
End of exampleReasonable amounts
To be eligible for the record keeping exceptions, your deduction for travel allowance expenses must be within the 'reasonable amounts'.
We specify the reasonable amounts in TD 2023/3 Income tax: what are the reasonable travel and overtime meal allowance expense amounts for the 2023–24 income year?
For travel allowance expenses we provide daily rates for:
- accommodation
- food and drink – as an amount for each breakfast, lunch and dinner
- other deductible expenses incidental to the travel.
The reasonable amounts vary depending on:
- your annual salary
- the location you travel to for work.
There are also reasonable amounts specifically for employee truck drivers.
You can't automatically claim the reasonable amounts as a deduction. You can only claim a deduction for the deductible travel allowance expenses that you actually incur.
Accommodation
The reasonable amount for accommodation is a daily rate and only applies to commercial establishments that offer short stays, such as motels, hotels and serviced apartments.
The reasonable amount doesn't apply to other types of accommodation, such as caravan parks or hostels.
There is no record keeping exception for accommodation expenses you incur while travelling overseas for work purposes. If you travel overseas for work you need to keep written evidence for all your accommodation expenses.
Food and drink
For domestic travel, there is a reasonable amount for breakfast, lunch and dinner. You can't combine the amounts for each meal. That is, you must consider each meal separately to work out whether your claim is reasonable.
For overseas travel, the reasonable amount for food and drink (meals) is set as a daily rate. This means the costs you incur for food and drink during each day you are travelling for work only needs to be less than the reasonable daily amount.
The reasonable amount only applies to the period you are travelling for work purposes.
Example: meal-by-meal approach to reasonable amounts
Lei travels interstate for work purposes. His trip begins at 11:00 am on Wednesday and ends at 4:00 pm the next day (Thursday).
Lei receives a travel allowance from his employer to cover his meals for this trip. During the period Lei is travelling for work, it is reasonable to expect that Lei will incur expenses for lunch and dinner on Wednesday and breakfast and lunch on Thursday.
To work out whether he can rely on the travel allowance record keeping exception, Lei has to consider whether the expenses for each meal are less than the reasonable amount.
If the expenses Lei incurs are less than the reasonable amount for each meal, Lei can claim a deduction and rely on the exception for those meals.
If Lei incurs more than the reasonable amount for dinner on Wednesday night but less than the reasonable amount for lunch on the same day, he can't combine the reasonable amount for lunch and dinner when considering the reasonable amount. He must limit his deduction for dinner to the reasonable amount, or claim the full amount on all meals and keep written evidence for them.
End of exampleIncidental expenses
The reasonable amount for incidental expenses applies to each day you are away. It is not apportioned for part-day travel on the first and last day of the trip.
Example: incidental expenses and the reasonable amounts
Sheena travels from her regular place of work in Sydney to Canberra to meet with clients. She leaves Sydney at 5:00 pm on Monday, stays in Canberra for 2 nights and returns to Sydney at 4:30 pm on Wednesday.
Sheena receives a $10 travel allowance for each day she is away to cover her incidental expenses.
If Sheena incurs deductible incidental expenses while she is travelling for work, she will have to consider if the amount she incurs on each of the 3 days she is travelling for work was less than the reasonable amount.
Although Sheena is only travelling for part of the day on Monday and Wednesday, she can rely on the travel allowance record keeping exception if her incidental expenses for each day is less than the reasonable amount.
The fact that Sheena receives an allowance to cover her incidental expenses does not mean she can automatically claim the reasonable amount as a deduction. She can only claim the amount she actually spends on incidental expenses.
End of exampleTravel allowance less than or more than reasonable amounts
It doesn't matter if the travel allowance you receive from your employer is the same as, less than or more than the reasonable amounts. It is the amount you claim as a deduction that must be reasonable, rather than the amount of the allowance you receive.
If you incur deductible travel allowance expenses and the allowance you receive is a travel allowance, you can claim a deduction up to the reasonable amounts without keeping written evidence or a travel diary, even if:
- your travel allowance is less than the reasonable amounts
- your travel allowance is more than the reasonable amounts.
Example: allowance more than reasonable amount and expenses less than reasonable amount
Kylie travels for a week to work in Darwin. She receives a travel allowance of $250 for each night she is away to cover her accommodation costs. Her employer reports the allowance on her income statement.
For a person in Kylie’s circumstances, the reasonable amount for accommodation in Darwin is $220. Kylie spends $190 a night on accommodation while she is in Darwin for work.
As the accommodation expense is less than the reasonable amount, Kylie can rely on the travel allowance record keeping exception.
At the end of the income year, Kylie must declare her allowance of $250 as income in her tax return. She can also claim a deduction for the amount she spent ($190 per night) without keeping written evidence.
Although Kylie can rely on the travel allowance record keeping exception, if her claim is reviewed she will need to be able to show:
- when she travelled overnight for work
- that she spent the money on accommodation.
Records to keep if the exception applies
Even if the record keeping exception applies to you, we may still check your tax return and ask you to show:
- how you spent the money in the course of performing your work duties – for example, in travelling away from home overnight on a work trip
- how you worked out your deduction – for example, a diary showing the times you were away and how many meals you ate and where
- you spent the money yourself and were not reimbursed – for example, credit card statements or other banking records.
- you correctly declared your allowance as income in your tax return.
Example: relying on exception for domestic travel
Zoran works in Melbourne. His employer requires him to travel to the office in Sydney for a week to meet with a number of clients. Zoran leaves early on Monday morning and returns home on Friday evening.
For the 5 days he is in Sydney, Zoran's employer pays him a travel allowance of $1,030. He receives the allowance to cover:
- accommodation of $170 per night × 4 nights = $680
- food and drink of $70 per day × 5 days = $350
Based on his records, Zoran calculates that he spent $700 on his hotel accommodation and $400 on food and drinks over the 5 days. Zoran determines that the amount he incurred each night on accommodation and the amount he incurred on each meal were less than the reasonable amount set by the ATO.
As Zoran is away from home for less than 6 nights in a row, he doesn't have to keep travel records. He isn't required to keep receipts for his accommodation, food and drink expenses for the trip to Sydney because he meets the requirements for relying on the travel allowance record keeping exception for domestic travel.
However, Zoran keeps:
- records that show he was travelling for work
- his credit card statements to show he spent the amount he is claiming as a deduction
- a record to show he declared the $1,030 allowance in his tax return.
Zoran must keep receipts for any incidental expenses he has when in Sydney. As he didn't receive an allowance for incidental expenses, he can't rely on a travel allowance record keeping exception for incidental expenses.