Truck Drivers Expenses: Understanding Reasonable Costs
Understanding Reasonable Expenses for Employee Truck Drivers
Employee truck drivers often face unique challenges when it comes to claiming deductions for work-related travel expenses. The Australian Taxation Office (ATO) provides guidelines on what constitutes “reasonable amounts” for domestic travel expenses. This is particularly relevant for truck drivers who spend significant amounts of time on the road. They may incur costs for meals, accommodation, and other incidental expenses. Keeping accurate records is crucial for these employees to ensure compliance and maximise their deductions.
Reasonable Amounts for Meals
For the 2023-24 income year, the ATO has set out the reasonable amounts for employee truck drivers’ meals (food and drink) in Table 5a of its Determination. These amounts are as follows:
– Breakfast: $28.75
– Lunch: $32.80
– Dinner: $56.60
It’s important to note that these amounts are separate and cannot be aggregated into a single daily amount. This distinction is crucial, especially on days when travel commences or ends, as not all meals may be deductible if they are not consumed during the course of work travel. For instance, if a driver only travels part of the day, only the meals that fall within the travel period can be claimed.
Example: Glenn’s Travel Expense Calculation
To illustrate how these reasonable amounts are applied, let’s consider an example:
Scenario: Glenn is an employee truck driver who drives from Melbourne to Adelaide, staying overnight in his truck cab.
– Glenn leaves Melbourne at 9:00 PM and stops around midnight at a truck stop in Horsham, spending $25 on food and drink.
– The following morning, he spends $20 on breakfast at the truck stop where he parked overnight.
– Glenn then drives to Bordertown, where he spends $25 on lunch.
– Throughout his journey, he also snacks on items brought from home, such as a sandwich and almonds.
In total, Glenn spends $70 on meals during his trip. Since this amount is less than the combined reasonable amounts for dinner, breakfast, and lunch, he can claim a deduction for the full amount he spent without needing to keep all the receipts for these meals. However, it’s advisable for Glenn to retain some receipts to demonstrate a consistent spending pattern. This will assist the ATO should they require an explanation.
Importance of Record Keeping
While the formal substantiation requirements are relaxed for claims up to the reasonable amounts, maintaining accurate records is still essential. Truck drivers should keep a detailed work diary for fatigue management, which can also serve as evidence for meal breaks. Additionally, retaining bank statements and receipts can help substantiate the claim if the ATO requests further information.
Case Study: Duncan and Commissioner of Taxation (Taxation) [2024] AATA 974
The case of Duncan and Commissioner of Taxation (Taxation) [2024] AATA 974 highlights the importance of keeping proper records. John Duncan, a long-haul truck driver, claimed significant food and drink expenses for the 2020-21 tax year. However, he did not keep appropriate records to substantiate his claimed expenses, which led to the disallowance of a substantial portion of his deductions.
The Tribunal emphasised that Mr. Duncan bore the onus of proving the correct assessment should have been, under the Taxation Administration Act 1953. Despite his claim that he should not need to substantiate his expenses, the Tribunal found that without proper records or evidence, Mr. Duncan could not satisfy the requirements for claiming the substantiation exception.
What is the criteria to use the substantiation exemption?
To use the substantiation exemption in Australia, truck driver employees must meet specific criteria set by the Australian Taxation Office (ATO):
class=”yoast-text-mark”>style=”mso-list: Ignore;”>1.tyle=”font: 7.0pt ‘Times New Roman’;”> They must incur meal expenses during work-related travel and the claimed amounts must not exceed the reasonable limits specified for each meal (breakfast, lunch, and dinner – see rates above) for the income year.
2.The travel must necessitate being away from home overnight, as evidenced by their work diary or other travel records.
3. They must receive a travel allowance from their employer, which must be included in their tax return as income.
4. While formal receipts are not required for claims up to the reasonable amount, truck drivers should still keep sufficient evidence such as work diaries, bank statements, or a sample of receipts to demonstrate their typical spending patterns and substantiate their claims if audited by the ATO.
Key Takeaways
1. Keep Detailed Records: Even though formal substantiation isn’t required for amounts up to the ATO’s reasonable limits, maintaining a work diary, bank statements, and some receipts is critical.
2. Understand Deductible Amounts: Know the specific reasonable amounts for each meal type and ensure claims are within these limits.
3. Accurate Reporting: Ensure that any travel allowances received are declared as income and that corresponding deductions are accurately calculated.
By adhering to these guidelines, employee truck drivers can ensure their claims are compliant with ATO requirements and can maximise their eligible deductions for work-related travel expenses.