One of the issues that Tax & Super Australia finds frequently raised by members is the tax treatment of work related travel expenses, as well as the reliance on the “reasonable amounts” prescribed by the Commissioner. Substantiation exception for travel allowance claims: What needs to change
Last month we put out a “call to arms” inviting members to tell us their views (or relate their battle stories). Following up this with a member survey allowed Tax & Super Australia to gain a constructive, and well-informed, view on the wants and needs of tax practitioners and other professionals — the ones who are at the coalface.
On the back of this information, we were able to put together a submission to the ATO based on informed member considerations (you can download our submission paper from this page). As part of our submission process, we surveyed our membership on the salient issues that they encounter in obtaining the necessary guidance and how they approach the application of the substantiation exception.
From our survey results, the top five industries/professions that clients of our survey respondents work in and who rely on the substantiation exception include:
Road transport (eg. long distance truck drivers): 51.3%Sales people: 47.4%Building and construction: 46.1%Fly-in, fly-out, drive-in, drive-out workers: 27.6%Academia: 21.1%.
Another fact unearthed by our survey was the divergence of sources of information that tax practitioners rely on, with 50.6% of survey respondents indicated that they refer to TR 2004/6 while 74% referred to TD 2016/13 as their primary sources of information.
Less emphasis was placed by respondents on obtaining other information from the ATO website. Nonetheless, 27.3% of respondents said that they sourced their information from the ATO legal database, 19.5% from the online tax return instructions and 22.1% from the general ATO website.
As to non-ATO sources of information, 71% of respondents rely on Tax & Superannuation Australia’s Tax Summary publication, which contains the ATO’s reasonable amounts and some general information on the substantiation exception.
Our recommendations contained in the submission (they are listed below) have been driven by the priorities, concerns and ideas of our members, while being premised on an overarching objective of achieving a suitable balance of fairness, efficiency and simplicity in the administration of the taxation system.
That the full text of both Taxation Ruling TR 2004/6 and Taxation Determination TD 2016/13 be either amalgamated into one single document or housed in one place on ato.gov.au – with the objective that the guidance documents be in one spot for accessibility and readily available to be read in conjunction.That TR 2004/6 and/or TD 2016/13 contain more practical examples of how the substantiation exception should be applied.That the ATO release a comprehensive annual reference guide that deals with the deductibility of work-related travel expenses, travel allowances, PAYG withholding for employers and the application of the substantiation exception.That all work-related travel allowances be subject to PAYG withholding and included in the taxpayer’s assessable income regardless of the quantum.That the substantiation exception continues to be available to help taxpayers claim their work-related travel expenditure at this juncture with the view to introducing a singular safe harbour amount (in lieu of the reasonable amounts). The ultimate objective is for taxpayers to substantiate for all their travel claims using technology such as myDeductions.That the substantiation for accommodation be removed given the ease to obtain, store and retrieve receipts electronically in respect of such expenditure.That the reasonable amounts for meals are simplified by removing the salary factors only (with location factors retained).That the ATO explore the merits of a representative diary for meal expenditure in order to ease the compliance burden on taxpayers.
# [ATO], [substantiation], [tax], [travel claims], [travel tax]
Comments