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Tuesday, 14 February 2012

Claiming reasonable meal expenses - be careful

  • Each year, the Tax Office revises the amounts they consider reasonable in relation to claims for:
    §         Overtime meal allowances;
    §         Domestic travel allowances;
    §         Travel allowance expenses for employee truck drivers; and
    §         Overseas travel allowance expenses.
  • Expense claims made in relation to such allowances receive concessional substantiation treatment. Where the claim for such expenses is less than the reasonable amount prescribed, substantiation of the claim is generally not required.
  • A recent case has however highlighted the dangers of claiming unsubstantiated meal expenses. In this case:

    §         The taxpayer was a long distance truck driver incurring various expenses;
    §         His tax agent claimed the work-related travel expenses for meal allowances for when he was travelling away from home;
    §         The amounts claimed for meals were by reference to the Tax Office's daily rates; and
    §         The taxpayer received from his employer an allowance under an agreement.
     
  • The Court rejected the argument that the applicant incurred the amounts in deriving the allowance, as the amounts were more of a 'loading', which was payable in recognition of the inconvenience or hardship involved in long-distance driving.
  • As the payment was neither a 'travel allowance' nor a 'bona fide travel allowance' and no documents could be produced to substantiate the costs, the deductions were disallowed.
  • The court also considered the 25 per cent tax shortfall penalty appropriate, even though it was the tax agent, and not the tax payer, who failed to take reasonable care in claiming the deductions. Nevertheless it was remitted on the basis that the penalty was 'harsh'.

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