Taxation Determination

TD 2023/3

Income tax: what are the reasonable travel and overtime meal allowance expense amounts for the 2023-24 income year?

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What this Determination is about

1. This Determination sets out the amounts that the Commissioner considers are reasonable (reasonable amounts) for the substantiation exception in Subdivision 900-B of the Income Tax Assessment Act 1997 for the 2023-24 income year in relation to claims made by employees for:

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overtime meal expenses - for food and drink when working overtime

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domestic travel expenses - for accommodation, food and drink, and incidentals when travelling away from home overnight for work (particular reasonable amounts are given for employee truck drivers, office holders covered by the Remuneration Tribunal and Federal Members of Parliament), and

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overseas travel expenses - for food and drink, and incidentals when travelling overseas for work.

2. This Determination should be read together with Taxation Ruling TR 2004/6 Income tax: substantiation exception for reasonable travel and overtime meal allowance expenses, which explains the substantiation exception and the way in which these expenses are able to be claimed.

3. The approach outlined in this Determination can only be used where you receive an allowance to cover the particular expenses you are claiming - for example, you received an accommodation allowance and are claiming accommodation expenses. This Determination is not relevant to you where you do not receive an allowance to cover your expenses.

4. The reasonable amounts only provide the maximum amount you can claim without being required to substantiate your expenditure (refer to paragraph 33 of TR 2004/6). If you rely on the reasonable amounts and the ATO checks your tax return, you will still be required to show:

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you spent the money in performing your work duties (for example, in travelling away from home overnight on a work trip)

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how you worked out your claim (for example, you kept a diary)

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you spent the money yourself (for example, using your credit card statement or other banking records) and were not reimbursed (for example, a letter from your employer), and

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you correctly declared your allowance as income in your tax return.

Reasonable amount for overtime meal expenses

5. For the 2023-24 income year, the reasonable amount for overtime meal expenses is $35.65.

Example 1 - calculation of reasonable amount for overtime meal expenses

6. Samantha works for the local government. She is asked to work overtime one night to complete an urgent task. Samantha works her 8-hour day followed by 4 hours of overtime. Samantha receives an overtime meal allowance of $25 pursuant to her agreement, which is shown on her payment summary. During the overtime, Samantha takes a rest break to get a meal and returns to continue her overtime. Samantha spends $30 on her meal.

7. Because Samantha has spent less than the reasonable amount for overtime meal expenses, she can claim a deduction for the $30 she spends and she is not required to substantiate the expenditure (for example, get and keep the receipt for the meal).

8. If Samantha's tax return is checked by the ATO, she may be asked to explain her claim for a deduction. To do this, Samantha would show that she:

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worked overtime

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was paid an overtime meal allowance under an industrial instrument

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correctly declared this allowance as income in her tax return, and

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costed her meal at $30 based on the cost of the curry and drink she purchased from a nearby Thai restaurant.

9. If Samantha had spent more than the reasonable amount and wanted to claim the higher amount she spent, she would need to get and keep the receipt for the meal.

10. If Samantha's overtime meal allowance was not shown on her payment summary and she fully spent the allowance, she can choose to leave it out of her tax return and not claim a deduction for the meal she purchases when working overtime.

Reasonable amounts for domestic travel expenses

11. The following reasonable amounts for domestic travel expenses do not apply to employee truck drivers^[1], office holders covered by the Remuneration Tribunal^[2] or Federal Members of Parliament.^[3]

12. Reasonable amounts are provided for 3 salary levels. Salary excludes any allowances received. Use Table 1 of this Determination if your salary is $138,790 or less. Use Table 2 of this Determination if your salary is between $138,791 and $247,020. Use Table 3 of this Determination if your salary is $247,021 or more.

13. Reasonable amounts are given for:

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accommodation at daily rates (for domestic travel only)

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meals (showing breakfast, lunch and dinner), and

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expenses incidental to travel.

14. These amounts are shown for the following travel destinations:

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each Australian State and Territory capital city (see Tables 1 to 3 of this Determination)

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certain specified high-cost regional and country centres (see Table 4 of this Determination for individual amounts)

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other specified regional and country centres (a common amount is given for locations listed in Table 5 of this Determination), and

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all other regional and country centres (a common amount is given for all locations not listed in Tables 4 or 5 of this Determination).

15. The reasonable amount for accommodation applies only for short stays in commercial establishments like hotels, motels and serviced apartments. If a different type of accommodation is used (for example, a hostel or caravan park), the reasonable amount cannot be used even if you receive an allowance.

16. The reasonable amount for meals depends on the period and time of travel. That is, the reasonable amounts only apply to meals (that is, breakfast, lunch and dinner) that fall within the time of day from the commencement of your travel to the end of your travel that is covered by the allowance. For example, if you leave at 10:00 am on Monday and return home at 3:00 pm on Tuesday, you can apply the reasonable amounts for lunch and dinner on Monday and breakfast and lunch on Tuesday.

17. The reasonable amount for incidentals applies in full to each day of travel covered by the allowance, without the need to apportion for any part-day travel on the first and last day.

18. The reasonable amounts for domestic travel expenses, according to salary levels and destinations, for the 2023-24 income year, are shown in Tables 1 to 5 of this Determination as follows:

Example 2 - calculation of reasonable amount for meals and incidental expenses - domestic

19. Svetlana is an accountant earning $145,000 a year. As part of her duties, she is required to travel to and work in Sale for 4 days and 3 nights each month. Svetlana's employer pays for her accommodation directly and gives her a meal and incidental allowance of $120 per day for the 4 days of travel. This allowance is shown on her payment summary. Svetlana's usual pattern is to eat 3 times a day, spending $20 on breakfast, $25 on lunch and $40 on dinner (that is, a total of $85 per day). Svetlana calculates the daily reasonable amount for meals and incidentals as follows:

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Table 2 of this Determination applies because Svetlana's salary is between $138,791 and $247,020.

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Sale is listed as a Tier 2 country centre in Table 5 of this Determination.

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Table 2 of this Determination provides reasonable amounts for Tier 2 country centres as $128.85 per day for meals and $32.90 per day for incidentals (that is, a total of $161.75 per day).

20. Because Svetlana has spent less than the reasonable amount on meals and incidentals, she can claim a deduction for the $85 per day that she spends on meals and she is not required to substantiate the expenditure (for example, get and keep all of the receipts for the meals). Svetlana cannot claim anything for accommodation because her employer paid for it.

21. If Svetlana's tax return is checked by the ATO, she may be asked to explain her claim for a deduction. To do this, Svetlana would show that she:

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travelled to and worked in Sale for 4 days each month

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received an allowance for the meals and incidentals for each day she travelled

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correctly declared this allowance as income in her tax return, and

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typically spent $85 a day on meals and incidental expenses (for example, by reference to diary entries, bank records and receipts that she kept for some of the trips).

22. If Svetlana had spent more than the reasonable amount on meals and incidentals and wanted to claim the higher amount that she spent, she would need to get and keep all of the receipts.

23. If Svetlana's meal and incidental allowance was not shown on her payment summary and she fully spent the allowance, she can choose to leave it out of her tax return and not claim any deductions for the meals and incidentals that she purchases while travelling and working in Sale.

Reasonable amounts for domestic travel expenses for employee truck drivers

24. Reasonable amounts for domestic travel expenses for employee truck drivers^[4] are given for meals (breakfast, lunch and dinner). The amounts are for all domestic travel destinations (that is, capital cities, regional and country centres). For the 2023-24 income year, the relevant amounts are as set out in Table 5a of this Determination:

25. The amounts for each of these meal breaks are separate and cannot be aggregated into a single daily amount. This is of particular importance for the days on which travel commences and ends, when some meals may not be deductible because they are not consumed in the course of work travel. A driver's work diary (as maintained for fatigue-management purposes) can be used to demonstrate when meal breaks were taken, since employee truck drivers may take meal breaks at different times of the day compared to other taxpayers. It should also be noted that amounts cannot be moved from one meal to another (for example, if the full amount for breakfast is not expended, it cannot be carried over to lunch or dinner).

26. The deduction allowed for each meal is the amount actually spent and not simply the reasonable amount specified in Table 5a of this Determination. Although the formal substantiation requirements do not apply for claims up to the reasonable amount, taxpayers should still be able to demonstrate the basis for their claims. Example 3 of this Determination shows how this can be done.

27. All accommodation expenses and incidental expenses (for example, the cost of a shower) incurred by employee truck drivers as part of work-related travel must be substantiated with written evidence (for example, a receipt).

Example 3 - calculation of reasonable amount for meals - employee truck drivers

28. Glenn is an employee truck driver. He is required to drive from Melbourne to Adelaide. Glenn leaves Melbourne at 9:00 pm, sleeps away from home overnight in his truck cab, then drives back to Melbourne the following day. Glenn is paid a travel allowance of $55 for each day. These amounts are shown on his payment summary.

29. Glenn stops around midnight at a 24-hour truck stop in Horsham and spends $25 on food and drink. He then continues to Adelaide where he snacks on a sandwich and fruit that he brought from home, before having a sleep in the truck cab. In the morning, Glenn spends $20 on food and drink at the truck stop where he parked overnight. After the truck is unloaded and reloaded, Glenn heads to Bordertown where he stops for lunch. Here he spends $25 on food and drink. He then continues to Melbourne arriving at 5:00 pm, snacking on almonds and water that he brought from home as he drives.

30. Because Glenn spent less than the reasonable amount for each of dinner, breakfast and lunch, he can claim a deduction for the full amount that he spent on those meals ($70) and is not required to obtain and keep all of the receipts for these meals. He may still need to provide a reasonable explanation of the expenses and so the receipts could be useful in demonstrating a pattern (see paragraph 30 of this Determination).

31. If Glenn's tax return is checked by the ATO, he may be asked to explain his claim for these amounts. He would need to:

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show that he travelled to and from Adelaide (for example, his work diary)

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show that he received an allowance for the meals for each day that he travelled

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show that he correctly declared this allowance as income in his tax return, and

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demonstrate his typical spending pattern on meals. This could be by reference to diary entries, bank records and receipts kept for some (a representative sample) of his trips.

Reasonable amounts for overseas travel expenses

32. If you are travelling overseas and are away from your usual residence for 6 or more nights in a row, you must still keep travel records even if you rely on the reasonable amounts and do not have to substantiate your expenses. Travel records may include ticketing information, diary entries or other information setting out the nature of your travel, the day and time it began, how long it lasted and where you travelled.

33. Reasonable amounts are provided for 3 salary levels. Salary excludes any allowances received.

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Use Table 6 of this Determination if your salary is $138,790 or less.

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Use Table 7 of this Determination if your salary is between $138,791 and $247,020.

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Use Table 8 of this Determination if your salary is $247,021 or more.

34. Reasonable amounts are given for:

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meals (showing breakfast, lunch and dinner), and

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expenses incidental to travel.

35. Any expenditure on accommodation overseas must be fully substantiated.

36. Reasonable amounts are shown for cost groups to which a country has been allocated. Table 9 of this Determination sets out the cost group to which a country has been allocated.

37. If you travel to a country that is not shown in Table 9 of this Determination, use the reasonable amount for Cost Group 1 in the table relevant to your salary range.

38. If you travel to 2 or more countries in the same day, use the cost group of the country that is in the higher cost group in determining the reasonable amount for that day.

39. The reasonable amount for incidentals applies in full to each day of travel covered by the allowance, without the need to apportion for any part-day travel on the first and last day.

40. The reasonable amounts for overseas travel expenses per day according to salary levels and cost groups for the 2023-24 income year are shown in Tables 6 to 9 of this Determination as follows:

Example 4 - calculation of reasonable amount for meals and incidental expenses - overseas

41. Prashant travels to China on business for 2 weeks and is paid a travel allowance of $500 per day (made up of $250 for meals and incidentals and $250 for accommodation). Prashant's annual salary is $191,000. Prashant usually spends $250 per day on meals and incidentals and $300 per night on accommodation when travelling in China. Prashant calculates the daily reasonable amount for his overseas travel as follows:

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Table 7 of this Determination applies because Prashant's salary is between $138,791 and $247,020.

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Table 9 of this Determination lists China as Cost Group 5.

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Table 7 of this Determination provides reasonable amounts for meals and incidental expenses for Cost Group 5 as $240 per day for meals and $50 per day for incidentals (that is, a total of $290 per day).

42. Because Prashant has spent less than the reasonable amount on meals and incidentals, he can claim a deduction for the $250 per day that he spends and he is not required to substantiate the expenditure (for example, get and keep all of the receipts for the meals and incidentals). However because he has spent more than 6 nights away in a row, Prashant must keep travel records (such as a travel diary) for the 2 weeks he is in China. Prashant can claim a deduction for the $300 per day he spends on accommodation but he must fully substantiate this expenditure (by getting and keeping a receipt or other documentary evidence of the expenditure).

43. If Prashant's tax return is checked by the ATO, he may be asked to explain his claim for a deduction. To do this, Prashant would show he:

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travelled to China for work

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received an allowance for the meals and incidentals for each day he travelled

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correctly declared this allowance as income in his tax return, and

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typically spent $250 a day on meals and incidental expenses (for example, by reference to diary entries, bank records and some receipts that he kept).

44. If Prashant's travel allowance for meals and incidentals were not shown on his payment summary and he fully spent the allowance, he can choose to leave this allowance out of his tax return and not claim any deductions for the meals and incidentals he purchases when travelling and working in China. His accommodation allowance will have been included on his payment summary as Prashant's employer must withhold from the accommodation allowance.^[5]

Date of effect

45. This Determination applies to the 2023-24 income year only. However, this Determination will not apply to taxpayers to the extent that it conflicts with the terms of settlement of a dispute agreed to before the date of issue of this Determination (see paragraphs 75 to 76 of Taxation Ruling TR 2006/10 Public Rulings).

Commissioner of Taxation
28 June 2023

© AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA

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References

ATO references:
NO 1-Y4CDKRD

Previous Rulings/Determinations:
TD 2018/11
TD 2019/11
TD 2020/5
TD 2021/6
TD 2022/10

Related Rulings/Determinations:

TR 95/18
TR 2004/6
TR 2006/10

Business Line:  IAI

Legislative References:
ITAA 1997 Subdiv 900-B