ATO Reasonable Travel Allowance as a business owner

[albatross710]

As a business owner for determining my travel allowance I have been using the annual version of the ATO ruling tax determination : what are the reasonable travel and overtime meal allowance expense amounts for the 2023–24 income year?

I thought it might be a good idea to put my assumptions on how it works to the brain trust test.

I have always been conservative. I use Tripit to meet the requirement for "Travel records may include ticketing information, diary entries or other information setting out the nature of your travel, the day and time it began, how long it lasted and where you travelled

For an upcoming trip to the USA this is how I calculate it

Depart Saturday 10am
Land back the following Sunday 7am

I'm thinking that is 8 days of travel. I will attend a conference arriving Saturday with the conference starting Monday. I will depart the morning after it finishes. Some food is provided on 3 of the travel days 6 meals.

The ATO identifies USA as Cost Group 5 and for my income from this company I use $240/day for meals and $40 for incidentals.

Therefore prior to travel I pay to myself 8 x $280 = $2,240

I will not retain any receipts for food and incidentals as it is the allowable amount. Separately I will process accommodation at invoiced cost.

How does this look as a calculation?

 

[cove]

We just kept our actual receipts when we did our US travel. Mostly theair fares were low because we redeemed points and miles. The US tipping at about 20% would get picked up on our US credit cards.
We are now out of being business owners but as consultants we can recover our expenses.

 

[serfty]

There are plenty of threads here regarding "reasonable travel expenses", I’ll try to dig some up.

Given your international travel is of 8 days you will need to keep a log of your travel - interesting that a tripit itinery could suffice.

Doesnt such a diary require records of meetings, attendances etc.?

 

[bussyboy]

Is your question about what your business' policy should be about what it pays to employees, the allowance?

Or what you should claim as a deduction in your personal tax return?

These should be fairly independent determinations.

 

[SYD]

Given your international travel is of 8 days you will need to keep a log of your travel - interesting that a tripit itinery could suffice.

Useful to bookend start/finish (duration and locations, travel and accomm etc).

You can also add “meetings” and “activities” that probably tick the box for FBT requirements.

My concern would be “What if TripIt.com folds?” during the mandatory record keeping period. So you’d still want to print/PDF a copy.

Doesnt such a diary require records of meetings, attendances etc.?

Yes. But doesn’t need to account for every waking moment. A simple table / spreadsheet or again, print / PDF an extract from your electronic diary/calendar app would suffice. TripIt if “meetings” are entered is probably ok.

Is your question about what your business' policy should be about what it pays to employees, the allowance?

Or what the company can claim as reasonable expenses.

Apart from the additional admin, I would have thought actual costs are fine. Accounting for cash tips can be a PITA but there are rules (thresholds) for receipts.

Or what you should claim as a deduction in your personal tax return?

Presumably nothing if you have been paid an allowance and not out of pocket?

 

[albatross710]

Is your question about what your business' policy should be about what it pays to employees, the allowance?

Or what you should claim as a deduction in your personal tax return?

These should be fairly independent determinations.

Good question. My question is that if I (as a pty ltd company) pays the reasonable travel allowance and me as the employee accepts that then I am aiming to :

like point 44 of the ruling:
If Albatross’s travel allowance for meals and incidentals were not shown on his payment summary and he fully spent the allowance, he can choose to leave this allowance out of his tax return and not claim any deductions for the meals and incidentals he purchases when travelling and working in USA.

a) Not have to include the amount on any payment summary
b) Not declare anything on my personal return


For tripit, I can print the various itineraries as PDF and attach them in my accounting software