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Travel Allowances and Per Diems (Australia)

What can I claim as a travel allowance or per diems instead of reimbursing actual expenses incurred?

As an employer, you can pay any employees who are travelling a daily travel allowance (for overnight stays) as an alternative to reimbursing them for actual travel expenses incurred. This is administratively easier as it removes the need for handling receipts for actual expenses.

The ATO sets guidelines for Reasonable Allowances to cover these travel costs. If the allowance paid to the employee does not exceed the Reasonable Allowance, the travel allowance does not need to appear on an employee's payment summary (or if paid by payroll is not in any case required to withhold tax or pay super on these allowances) and employees can easily declare the travel allowance as both income and deduction (so zero net effect) in their tax return. If employers “simply” pay their employees the reasonable travel allowance, and it doesn’t appear on an employee's payment summary (aka group certificate) and the employee doesn’t want to claim a different amount in their individual tax return, then there is no need for it to be included in the individual's tax return at all.

Employer Perspective

The travel allowance does not need to appear on an employee's payment summary.

We would typically handle payment to employees by paying their employee’s the daily travel allowance via a separate Supplier Bill (with the “supplier” being the employee) to record the amount payable to the employee. This is usually specified as Description = Reference to the location travelling to and the Reasonable Allowance amount, Quantity = No. of Days. Note there is no GST payable.

Employee Perspective

If you receive (the reasonable) travel allowance as a payment processed per above, and you’re not claiming any different travel deduction expense in your individual tax return you’re done.

If you’ve been paid your travel allowance via payroll and it appears on your payment summary (aka group certificate) you will need to declare this as income. If you’re not wanting to claim any different travel deduction expense you would simply declare the travel allowance amount as a deduction (so zero net effect).

If you want to claim a different travel expense amount as a deduction, you necessarily then need to claim any travel allowance income you also receive. You can then proceed to claim any substantiated travel expenses.

Note that if you’re simply receiving the Reasonable Allowance amount, you are not required to keep a travel diary, however you are required to keep overseas accommodation records. It can also be useful to keep copies of itineraries and/or boarding passes as evidence of the period of travel.

ATO resources

Taxation Determination reasonable travel and overtime meal allowance expense amounts. Provides guidelines for the amounts that can be paid as a total allowance or broken down by accommodation, food & drinks and incidentals. These allowances vary based on travel destination and the salary of the employee.