There is a lot of confusion between when a meal is just a tax deductible meal vs when it is not? When does a meal fall into entertainment and when is it classified just a meal expense, without any fringe benefits tax?
Ask yourself if you stayed overnight for business purposes?
The general consensus is that if you stay overnight for work purposes (like, you travel interstate and stay in a hotel) then there is a tax deductible consideration for the travel, accommodation and meals.
We always suggest substantiation in the form of receipts, but if you don't have any, there is an exemption to the substantiation rule if :
- The travel was for work related purposes AND
- The employer paid you an allowance that is connected to the relevant expense (did your employer pay you a specific allowance for this travel?)
If you do have the receipt or tax invoice to confirm the amount that you spent then you don't need to have received an allowance from your employer.
Whether you meet the exemption or not, always consider if YOU paid the expense, or if the employer paid it ON your behalf.
If you don't pay for it, you cannot claim it as a deduction
TOP TIP : Keep receipts for all your expenses when you are away for business purposes. Let us work out what's deductible and what's not.
Accommodation is pretty straight forward, and if you hold the receipt, we can claim the tax deduction. If you don't, then as long as you fall within the exemption rules, we can still claim an accommodation expense by an alternative method. (The ATO reasonable travel allowance)
Meals are a little more complicated....
If you hold the receipt, we can claim a tax deduction for it, but beware of claiming too much alcohol. (A Glass of wine with your meal will pass, but 4 beers may be considered entertainment)
As long as the meal is reasonable, we would claim it as a deduction.
IF, however, you don't have a receipt for each meal and the exemption applies, then there are alternative methods for claiming this expense.
Remember * The employer must have paid you an allowance in connection with the travel expense. This means, that you must be an employee of the business. You cannot just be the director, beneficiary, or be trading as a sole trader. You must genuinely be an employee of the business.
As an employee, and provided your employer has paid you an associated allowance, then even without receipts we will be able to claim a tax deduction for your accommodation, meals and incidentals in line with the ATO Reasonable Travel Allowances schedule.
The amount is determined by the place of travel and your annual salary.
For more information on how and what to claim for travelling for work, get in touch with us.
This articles intention is to inform rather than advise and is based on legislation at the time. Each Taxpayer’s circumstances vary so we strongly recommend that you discuss this information with your Tax Agent, Accountant or Bas Agent before implementation. If you take, or do not take action as a result of reading this article, we accept no responsibility for any financial loss incurred. This is general advice only.
Commentaires