On June 28, 2017, the Australian Taxation Office (ATO) published Draft Taxation Ruling (TR) 2017/D6, outlining initial perspectives on the deductibility of employee travel expenses under Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997). This draft ruling combined insights from various previous rulings, focusing on two main areas:
- Transport expenses, covering costs like airfare, train tickets, taxi fares, car rentals, and other travel-related expenses.
- Accommodation, meals, and other incidental expenses incurred by employees during work-related travel.
Later, the ATO announced that TR 2017/D6 would be split into two separate parts. Consequently, two new draft rulings would be issued: one addressing the deductibility of transport expenses, and the other addressing accommodation, meals, and incidental expenses.
The first of these new draft rulings, Draft TR 2019/D7, was released on December 13, 2019, offering guidance on the deductibility of employee transport expenses. This ruling also applies to Fringe Benefits Tax (FBT) situations, particularly in determining if the "otherwise deductible" rule applies when an employer provides transport-related fringe benefits to an employee. However, it doesn't cover substantiation rules for claiming deductions on transport expenses, employees engaged in itinerant work traveling between home and a regular workplace, or other specific matters.
In cases where TR 2019/D7 contradicts TR 2017/D6 (the older draft ruling), the ATO advises following the principles outlined in the new draft ruling, as it reflects their current stance.
For completeness, it's worth noting that the ATO plans to release a second draft ruling in 2020, focusing on the deductibility of employee accommodation, meals, and incidental expenses during work-related travel. Until then, the ATO generally accepts that employees away from home overnight for work for 21 days or less are usually traveling for work purposes, not living away from home. Expenses like accommodation, meals, and incidentals incurred by these employees are typically deductible, and any allowances from employers are treated as assessable travel allowances.
Should you have any questions or need assistance, feel free to reach out to Tax Ideas Accountants & Advisers at +61 2 83181545 or book an appointment through our live calendar.
- Deductibility of Employee Transport Expenses (2) – General Deduction Principles
- Deductibility of Employee Transport Expenses (3) – Key Principles of TR 2019/D7
- Deductibility of Employee Transport Expenses (4) – Between Home and a Regular Place of Work
- Deductibility of Employee Transport Expenses (5) – Geographically Distant Places of Work
- Deductibility of Employee Transport Expenses (6) – Changing Regular Place of Work
- Deductibility of Employee Transport Expenses (7) – Exceptions
- Deductibility of Employee Transport Expenses (8) – Alternative Work Location
- Deductibility of Employee Transport Expenses (9) – Between Home and a ‘Transit Point’
