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Can the employee claim a tax deduction against a travel allowance?

Per diem payments for work related travel involving an overnight absence will not be included on the employee's group certificate and need not be declared when preparing a personal income tax return. This equates to declaring the allowance as income, but claiming a deduction for the same amount (ie a $nil effect on taxable income).

However, if the employee incurred work related expenses in excess of the travel allowance paid and wishes to claim a deduction for the excess, the entire allowance must be included as assessable income by the employee, even though it is not included on the group certificate. Any work related expenditure is then claimed as a deduction. The whole claim must be substantiated with written evidence (receipts etc.) not just the excess over the reasonable (allowance) amount.

Employees are entitled to claim a deduction for work-related expenses that might be incurred during part day travel. However, the deductions must be substantiated by appropriate documentation in all cases. The following are examples of deductible and non-deductible expenses that might be incurred:

• deductible expenses - business phone calls; taxi-fares, parking fees, tolls... Obviously, these expenses are not deductible if they are reimbursed in addition to the allowance paid.
• non-deductible expenses - food and drink, newspapers, private phone calls.

Where overseas or domestic travel involves being away for 6 or more nights in a row, travel records must also be kept. A travel record is a record of activities undertaken during the travel. It is not a record of expenses incurred during the travel. Any receipts etc. substantiating expenses must be kept in addition to the travel record. Taxation Law requires that work related activities are recorded by specifying in a diary or similar document:

• the nature of the activity;
• the day and approximate time when it began;
• how long it lasted;
• the location.