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What is a Travel Allowance - Leigh Barker MWC Group

A travel allowance is paid to an employee who is travelling on business and is not thought of as living away from home. Generally, an employee travelling for business is not accompanied by their spouse or children.

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What is a Travel Allowance - Leigh Barker MWC Group

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  1. What is a Travel Allowance? Leigh Barker MWC Group

  2. A travel allowance is an amount paid to employees to compensate for out of pocket expenses incurred on behalf of the employer while you travel for work. • In the main a travel allowance will cover such expenses as accommodation, food, drink, transport, laundry and telecommunications. • A travel allowance is paid to an employee who is travelling on business and is not thought of as living away from home. Generally, an employee travelling for business is not accompanied by their spouse or children.

  3. While a travel allowance is considered to be assessable income which may attract PAYG withholding, any expenses incurred on meals and incidentals may be deducted against the allowance on the proviso that it meets the criteria. • Every year the Australian Tax Office (ATO) releases a tax determination listing all reasonable amounts that can be paid as a travel allowance covering accommodation, meals and incidentals.

  4. Thus, when the amount claimed by an employee for a domestic travel allowance does not exceed the ATO’s reasonable allowance amount there is generally no requirement to substantiate the claim by providing either written evidence or a travel diary. • If the expenses associated with the travel allowance exceed the reasonable travel allowance set by the ATO it would wise to retain documentary evidence to substantiate the expense.

  5. Conversely, claims for overseas expenses must be substantiated through written evidence inclusive of a travel diary. • If the travel allowance does not appear on the payment summary the allowance is not included in the return and in this instance, there is no ability to claim any deductions.

  6. Leigh Barker MWC Group • Prepared by Leigh Barker MWC Group, Accountant, Portfolio Finance, Gordon, West Pennant Hills and Tangible Assets. • Note that all content of this blog is general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstance.

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