Tax Advantaged Allowances

The following allowances receive specific tax treatment, which may be favorable, or at least reduce the tax that would otherwise be payable on income which is spent on deductions associated with earning taxable income.

ATO Reasonable Travel Allowances
Reasonable allowance expense amounts for each year are set out in an annually updated Tax Determination covering:

  • overtime meals
  • domestic travel
  • employee truck drivers
  • overseas travel
  • office holders covered by the Remuneration Tribunal
  • Federal Members of Parliament

The tax exempt components of a Living Away From Home Allowance are made up of reasonable food and accommodation costs less the statutory allowance amounts based on the members of your family

Award Transport Payments
Payments made under an industrial law or award that was in force on 29 October 1986

Overtime Meal Allowances
With some exceptions, an overtime meals allowance should be declared as income, and subject to conditions, may be claimable as a tax deduction.

PAYG Withholding Variation: Allowances
A regulation made under the Taxation Administration Act 1953 provides that there is no requirement to deduct tax from certain allowances associated with the tax deductible expenses of an employee.

Ruling: Travelling expenses for employees – TR 2017/D6

In updated guidance (June 2017), the Tax Office has issued a draft ruling on deductions for employees’ travel expenses (TR 2017/D6) which deals with deductibility of expenses relating to:

• transport by airline, train, car, bus or other vehicle; and
• accommodation, meal and incidental expenses of an employee when they travelling away from home for work.

The ruling is intended to apply to periods both before and after its date of issue, and is open for comment until  11 August 2017.

Coinciding with the issue of TR 2017/D6 was the withdrawal of the 1986 ruling MT 2030, including the so-called ’21-day’ rule, as the basis for determining whether a taxpayer is ‘living away from home’.

For an analysis of the draft ruling see here.

ATO Reasonable Travel AllowancesCar AllowanceOvertime Meals Allowance
Award Transport PaymentsLafhaPAYG Withholding Variation: Tax Free Allowances
Living Away From Home Allowance Fringe BenefitTravel between home and work


This page was last modified 2018-12-18