o/s travel deductions

[NM]

end up wearing it mostly

Ahh, that is why I like Per Diems. Tips are mostly covered in that. But being an Aussie, I only tip for certain services.

 

[Kiwi Flyer]

Ahh, that is why I like Per Diems. Tips are mostly covered in that.

That depends on how generous or otherwise the per diem is.

 

[Kiwi Flyer]

But being an Aussie, I only tip for certain services.

Not only an issue for aussies. I have to keep reminding myself.

 

[Reggie]

Ahh, that is why I like Per Diems. Tips are mostly covered in that. But being an Aussie, I only tip for certain services.

I dont have the same problem as Kiwi Flyer, I just put in one line on expenses that says tips and it is the difference between what I cash I took over, minus spend, minus remainder and I get reimbursed.

I am unfortunately a conformist, I tip as the Yanks would, when in the US. I however rarely tip in Australia, because generally the service received isn't as good as that in the US.

 

[Reggie]

Not only an issue for aussies. I have to keep reminding myself.

The first time I met one of my US collegues, we were talking and somehow tipping came up and i said I was grateful it hadn't taken on in Aus. He said "what do you mean, when I was over in Aus on holidays I tipped the whole time and no one said anything :shock: " I laughed and said that the Aussies in the tourist industry love the Yanks as they come over and tip as tthey did at home, it is unlikely they were going to tell you otherwise.

 

[Kiwi Flyer]

but of course

 

[NM]

That depends on how generous or otherwise the per diem is.

In the USA it used to be very generous, but has been revised down significantly recently. Still ok and covers my living costs for sure. but not the windfall it used to be.

 

[vt]

Regarding the effects on Tax for Australians, I have put this together for myself. So this is in no way tax, legal or financial advice. Make your own mind. It also helps if your wife is a CPA and you have a macabre interest in trolling the CPA Library.

The relevant information can be found here:

Substantiation Ruling
On the issue of a travel diary, read paragraph 85 for the Substantiation requirements. Fairly self explanatory.

Reasonable Expenses 2006 2007 Determination
Also fairly self explanatory.

This is what I do.

Company pays standard perdiem of say $65 per day away from home.

Domestically, say Sydney, no written records or travel diary regardless of the number of days travelled, if I keep my deduction under $94.30. So a Salary of say $50,000, I add $65 on top and then deduct $94.30 from the total, which is then my taxable income.

Internationally, say USA, no written records or travel diary if less than 6 nights away and I keep my tax deduction under $250.00. So a Salary of say $50,000, I add $65 on top and then deduct $250.00 from the total, which is then my taxable income.

If you are required to have a travel diary, then the format posted earlier is suffice. You can also go to Office Works to look at ones in nice booklet form (overkill really).

Ofcourse there are numberous considerations and interpretations of these rulings and determinations. So again, this is not tax, legal or financial advice. Make up your own mind. I made up mine after an accountant I used did not even know about this ruling.

The spirit of the law here is to relieve the burden on the taxpayer come tax time. So you can choose to claim above the reasonable amounts if you put the time into providing all the required documentation. Or you can stay under the Reasonable Amounts and do a no questions asked approach.

Btw, I am a fan of Perdiems as it allows me to have 3 dinners at MacDonalds and then 1 dinner at Tetsuya's once a week.

 

[vt01]

Reasonable Expenses 2006 2007 Determination
Also fairly self explanatory.

This is what I do.

Company pays standard perdiem of say $65 per day away from home.

Domestically, say Sydney, no written records or travel diary regardless of the number of days travelled, if I keep my deduction under $94.30. So a Salary of say $50,000, I add $65 on top and then deduct $94.30 from the total, which is then my taxable income.

Internationally, say USA, no written records or travel diary if less than 6 nights away and I keep my tax deduction under $250.00. So a Salary of say $50,000, I add $65 on top and then deduct $250.00 from the total, which is then my taxable income.

If you are required to have a travel diary, then the format posted earlier is suffice. You can also go to Office Works to look at ones in nice booklet form (overkill really).

Ofcourse there are numberous considerations and interpretations of these rulings and determinations. So again, this is not tax, legal or financial advice. Make up your own mind. I made up mine after an accountant I used did not even know about this ruling.

The spirit of the law here is to relieve the burden on the taxpayer come tax time. So you can choose to claim above the reasonable amounts if you put the time into providing all the required documentation. Or you can stay under the Reasonable Amounts and do a no questions asked approach.

Btw, I am a fan of Perdiems as it allows me to have 3 dinners at MacDonalds and then 1 dinner at Tetsuya's once a week.

Same as myself and most of my colleagues that travel. One person discovered it, cleared it through his accountant and now we all use it. No more losing money on business trips.. Even had to explain it to my accountant! Now I just give my accountant the places I've travelled and number of days from my spreadsheet. He looks up the RBL's for the tax year and I give him the amount of per diem I have been paid.

In order to claim the difference between the per diem and the ATO's RBL, the per diem has to meet the definition set by the ATO for a travelling allowance. All of us have a letter from our employer verifying that we are paid a travelling allowance as per ATO policy. Oh, and of course, you must have spent the money in the first place.... Although I've heard that politicians claim the RBL without spending it (this is probably why there is no need for substatiation up to the RBL )

I have never completed a travel diary or have been required to which is good.

I'm also a huge fan of per diems. Especially the time it saves completing expense claims and keeping all those receipts!

I'm also not an accountant but I did read all the ATO rulings and acts which relate to travelling allowances and expenses claiming..

 

[Shano]

This is what I do.

Company pays standard perdiem of say $65 per day away from home.

Domestically, say Sydney, no written records or travel diary regardless of the number of days travelled, if I keep my deduction under $94.30. So a Salary of say $50,000, I add $65 on top and then deduct $94.30 from the total, which is then my taxable income.

Internationally, say USA, no written records or travel diary if less than 6 nights away and I keep my tax deduction under $250.00. So a Salary of say $50,000, I add $65 on top and then deduct $250.00 from the total, which is then my taxable income.

The only per diems I have received have been paid by my clients OS, or from our Pittsburgh office when I was doing some work in the US, so none of this appeared on my group certificate.

In your example above, it sounds like the $65 does not appear as assessable income on your group certificate, rather you declare it as additional income and then deduct the RBL? Is this correct?

 

[vt]

Yes...per diems should not appear on the group certificate.

 

[vt01]

The only per diems I have received have been paid by my clients OS, or from our Pittsburgh office when I was doing some work in the US, so none of this appeared on my group certificate.

In your example above, it sounds like the $65 does not appear as assessable income on your group certificate, rather you declare it as additional income and then deduct the RBL? Is this correct?

That's correct. That's because it's not supposed to be income. Mind you, if you don't spend all the per diem, then you are supposed to record it as income in your tax return. However, that has never been a problem for me!
When I first travelled to China, per diem was about A$60. Breakfast in the hotel was US$25. That didn't leave much for dinner.... Of course it was cheaper to eat out but in most cases I wouldn't get back to the hotel until it was too late so room service was all I would get..
Once I knew about the RBL's, I went back over my last 4 years tax returns and had my accountant lodge adjustments. Received a nice refund - including interest from the ATO . Of course the following year I had to declare the interest as income... give with one hand, take away with the other...

 

[Shano]

For my next assignment in Shanghai later this year I will receive a US$30 per diem from the client. This might not sound like much, but in outer suburban Shanghai I can buy dinner for about US$10 including a few beers. Lunch is in the company cafeteria and breakfast is included in the US$40 per night hotel room rate. As you can see I will be living in style . So essentially I have US$20 per day to spend at my discretion.

So by declaring the per diem, I can then claim back the RBL. Pity I did not know about this previoulsy either.

 

[vt]

You can get an accountant to go back up to 4 financial years to get adjustments to your tax return.

This is good if you have a large amount of travel as it generally means you get a large return.

Possibly not worth it if you have complex tax arrangements.

My tax is fairly simple income, health insurance, some negative gearing and travel and work deductions. So I have never used an accountant apart from my first year out of uni.

Dont know how true, but I was told that by suddenly having a large deduction may trigger an audit. So do at your own risk.

In my second year out of Uni, my deductions totalled about 30% of my income. I have yet to be audited (touch wood).

 

[vt01]

Dont know how true, but I was told that by suddenly having a large deduction may trigger an audit. So do at your own risk.

In my second year out of Uni, my deductions totalled about 30% of my income. I have yet to be audited (touch wood).

I've also heard of this. In fact the colleague who first told me about this claim was audited. But I think this was because of some investment property and other investments he had. But he did pass his audit with flying colours including all the deductions up to the RBL he had claimed..

I probably travel up to about 40 days per year and the claim is about $5k.. not really that big in the scheme of things.. But as vt said - touch wood...