New ruling: When are deductions allowed for employees’ travel expenses?
New ruling: deductions for employees' travel expenses
Dan Hodgson and Hayley Lock examine the ATO's new draft ruling regarding employee travel expenses.
Yesterday, the Australian Taxation Office (ATO) released Draft TR 2017/D6
Nothing like a nice meaty and universally applicable tax ruling to end the financial year with!
The draft ruling consolidates and updates a plethora of former ATO guidance for recent Court decisions, such as the John Holland case (John Holland Group Pty Ltd & Anor v FCT 2015 ATC 20-510), and contemporary work practices such as fly-in-fly-out (FIFO) and working from home arrangements.
The ATO bifurcates the analysis of deductibility between transport and other travel costs outlining four key considerations under each. See the table below.
| Transport expenses | Accommodation, meal and incidental expenses |
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Other points of note include:
- Introduction of the concept of ‘special demands travel’ considering the remoteness of the work location or the requirement to move continuously between changing work locations – this is a welcome acknowledgement of tricky issues raised by modern day work practices (eg FIFO)
- Miscellaneous Taxation Ruling 2030 (about the difference between Living Away From Home and travelling in the course of employment) will be withdrawn – the safe harbor, 21-day distinction is not a feature of the new ruling.
- The ruling will not replace TR 95/34 about the deductibility of transport expenses for employees carrying out itinerant work
While still lengthy, the ruling is well-drafted and the simplified language and structural format reflects a welcome improvement on previous rulings.
Almost all employers will have some form of staff travel expenditure. It will be critical to consider the implications of the draft ruling for your business in the context of the profile of your mobile population.
The ATO is accepting submissions. Please contact us if you would like to provide feedback on this draft ruling.
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