Each year, the Australian Taxation Office (ATO) publishes a ruling on what it considers a “reasonable travel allowance.” If your employer pays you a travel allowance and your claim doesn’t exceed this reasonable amount, you generally aren’t required to keep written evidence like receipts or a travel diary.
Sounds convenient? Not so fast. In reality, if you’re ever audited by the ATO, you may still be required to prove that you actually spent the money — and the burden of proof placed on employee taxpayers is often so high that you’re better off keeping all your receipts anyway.
A Real-World Case: “You Didn’t Eat?”
In a recent case heard by the Administrative Appeals Tribunal (AAT), a long-distance truck driver named Daniel Shaw said he spent more than the ATO’s reasonable rate of $105.75 per day, but followed his accountant’s advice and only claimed that amount — thinking that would exempt him from keeping written records.
However, during an audit, the ATO wasn’t satisfied with the records Shaw provided and denied all of his deductions for food and drink while traveling. This was despite the fact that Shaw was away from home 310 days in the year, clearly documented in his work logbook and backed by travel allowances paid by his employer.
The ATO’s reasoning? Since Shaw didn’t have receipts for every single meal, he wasn’t entitled to claim anything — as if he didn’t eat during his weeks on the road.
Tribunal: Common Sense Must Apply
On objection, the ATO grudgingly allowed a deduction of just $19 per day, far below the official reasonable amount. Shaw provided a year’s worth of bank statements, along with a logbook documenting rest stops and breaks, to support his claim.
While many taxpayers might have given up, Shaw didn’t. And the Tribunal took note. It criticised the ATO’s approach as “absurdly inadequate”, acknowledging that expecting itemised records for every meal five years later was unrealistic.
Importantly, the Tribunal ruled that the evidence provided by Shaw — such as bank statements, photos of food stored in the truck, receipts from a representative period, and travel logs — was sufficient to estimate his total expenses. The legal standard is based on the balance of probabilities, not absolute certainty.
What This Means for You
If you travel overnight for work, now is the perfect time to prepare a representative sample of meal and travel expense records. This could include:
- Meal and grocery receipts
- Clear evidence of food in your vehicle (e.g. dated photos)
- Bank statements showing related transactions
- Travel logs, diaries, or other documentation showing days away and meal breaks
This doesn’t mean you need to keep every receipt for the entire year, but maintaining full records for a short representative period can protect you if the ATO comes knocking.
Bonus Tip: If your travel allowance does not exceed the ATO’s reasonable amount, your employer may choose not to report it on your PAYG summary — as long as they believe you spent the full amount.
Also worth noting: the Tribunal accepted that some food purchases may be made in cash, and that buying groceries before a trip to stock the truck is also a deductible expense.
But don’t celebrate just yet — the ATO is appealing the decision. Still, this case offers valuable insight into how you can protect yourself during tax time.
Need help managing travel deductions or preparing for tax time? At Boa & Co. Chartered Accountants, we specialise in making complex tax rules simple and working hard to get you the deductions you’re entitled to. Whether you’re an employee, self-employed or run a business with frequent travel, we’re here to help.
Call us today at 1300 952 286,
Email us at [email protected],
Or visit www.boanco.com.au for a free consultation.
Let’s make tax time easier — together.