Business owners with employees travelling away overnight on business may dramatically reduce their record keeping requirements by ensuring employees are paid a reasonable daily allowance, instead of asking employees to keep receipts for every expense.  The payment of the allowance is often an easier way to ensure business owners are meeting the rigid record keeping requirements associated with overnight business travel.  Doctors, other self employed health industry professionals, as well as other small business owners that travel away on business can benefit dramatically from the allowance.

Rob Giffard, A CPA and business advisor for GiffardSim Accountants, said that they advise many business owners to use a travel allowance instead of keeping receipts.  Mr Giffard said that a typical example of when a travel allowance would be paid is when a small family company owner, such as a medical practitioner, dentist, or other small business owner travels away overnight on business and wants to take cash instead of putting all their expenses on a family credit card. 

"Typically a company owner, who is also an employee of their own company, is required to travel away overnight on business.  The owner will incur expenses associated with that business travel, including accommodation, food, and incidentals.  To reduce the paperwork associated with the travel, the owner is often better off paying a reasonable travel allowance as per the Australian Tax Office (ATO) guidelines."  Mr Giffard said that many business owners are not using the generous concession allowed by the ATO.

Mr Giffard said the following points are relevant to the payment of a travel allowance:  

-  Ensure the amount you have paid does not exceed the reasonable ATO allowance amount.

-  You do not have to keep written evidence of your travel, or a travel diary if the allowance is for a period less than six nights in a row and within Australia.  If the travel is longer than six nights special rules apply.

-  Overseas travel has different requirements that need to be considered on a case-by-case basis.  

-  The allowance is not deductible if the trip is primarily private in nature.

-  The allowance does not need to be reported on the employee's annual payment summary if the allowance was fully expended. 

- The amount of the allowance that is considered reasonable is set annually by the ATO; however, the amount that is considered reasonable by the ATO is also dependent on the employee's salary at the time the allowance is paid. The higher the annual salary of the employee the higher the allowance that can be paid and considered reasonable.  

Mr Giffard advised that any person looking at paying a travel allowance to employees should seek more specific advice before making the change.  "It is quite normal to speak with our clients regularly throughout the year to advise them on the amounts that can be paid when travelling to different locations."

Mr Giffard said that people who are looking for advice from a tax specialist in relation to travel allowances, or small and medium business tax and business issues should contact GiffardSim Accountants.    

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