What is a travel allowance?

Example: allowance not expected to cover costs

Josh is a server engineer who is travelling from Melbourne to Hobart for a week in order to oversee some upgrades to that office. He receives an allowance of $5 a day for his meal expenses.

The allowance Josh receives from his employer couldn't reasonably be expected to cover the costs of buying 3 meals per day. This means the allowance isn't a travel allowance.

As Josh is travelling away from his home overnight for work, Josh can claim a deduction for the amount he spends on meals while he is in Hobart. Josh must keep written evidence of all his meal expenses.

Example: not sleeping away overnight

Freya is a management consultant who works in Sydney. Under her work agreement she receives a meal allowance if she works away from the office for the day.

When Freya visits her clients interstate, she flies to the interstate location in the morning and returns home the same evening. In these circumstances, Freya receives a meal allowance from her employer.

As Freya doesn't sleep away from home overnight, the allowance she receives is not a travel allowance. Freya can't claim a deduction for any meals she buys, they are private expenses.

Example: allowance not paid for specific work journeys

Greg is the regional sales manager for a telecommunication company. As part of his employment duties, he needs to travel to all the stores in his region. When he travels, Greg often has to stay away from his home overnight.

In recognition of his travel, Greg's employer pays him an allowance of $3,000 a year regardless of how much travel he does.

This allowance is not a travel allowance. The amount is not paid to cover specific journeys and would be paid whether or not Greg does any overnight travel.

Greg can claim a deduction for the cost of his accommodation, meals and incidental expenses when he travels away from home overnight for work purposes, provided he keeps written evidence of his expenses (and a travel diary if he is away for 6 or more nights in a row).

Example: allowance rolled into salary and wages

Idris used to be paid a travel allowance under his employment contract, but he gave up the allowance 2 years ago for an increase in his base pay. The increase in his base pay is not a travel allowance.

Idris can claim a deduction for the cost of his accommodation, meals and incidental expenses when he travels away from home overnight for work purposes, provided he keeps written evidence of his expenses (and a travel diary if he is away for 6 or more nights in a row).

Example: allowance paid to cover food or drink

Helen is travelling from Perth to Darwin to facilitate corporate training for 3 days. She receives a travel allowance to cover her meal expenses (food and drink) but nothing for incidental expenses. Her employer pays for her accommodation directly.

The allowance Helen receives to cover her meal expenses is a travel allowance.

Helen can claim a deduction for her meals, and any incidental expenses she incurs, when she travels to Darwin for 3 days. If the amount Helen incurs on meals is within the reasonable amounts, she can claim a deduction for them without keeping written evidence.

As Helen's travel allowance doesn't cover incidental expenses, she needs to keep written evidence of her expenses.

Helen can't claim a deduction for the accommodation expenses her employer pays directly as she doesn't incur an expense.

Example: allowance not paid to cover travel allowance expenses

Minsun works as a salesperson and once a month she must go on a week-long sales tour of regional centres.

Minsun uses her personal car for this trip and receives an allowance from her employer to cover the costs of using her own car.

As the allowance she receives doesn't cover travel allowance expenses, it is not a travel allowance.