now i know this isn't property tax related but had a few calls recently from forum readers who are on a Fly-In-Fly-Out arrangement and incurring flight costs. Question is the travel deductible. Well it's actually complex and in many circumstances the answer is no. In a case called John Holland's case the flight travel was held to be deductible BUT this was due to - employees being required to report to Perth airport under their employment agreement - employees were remunerated from Perth airport - employees were bound to adhere to directives from Perth airport so check-in point for work was Perth airport. So flights from Perth to Geraldon were deductible. HOWEVER flights to Perth airport would NOT be deductible as the employee would be travelling to work not on work. so remember FIFO workers not all your flight costs are deductible and in most cases very rarely.
agreed don't know if the employees have much leveraging opportunity. more for something to the Head of tax of these large companies to discuss with the head of HR. however im finding many people are being advised by their accountants that ALL flight costs to the site are deductible. this has never been the case. Many private rulings to confirm the position that generally flights from home to mine site are generally not deductible. even had one new client told that parking at the airport was also deductible. its funny when you then ask for confirmation via email and reference to private binding rulings with similar facts that refute the proposition you never hear back from the accountant.
That's interesting. I'm doing a FIFO contract from NZ but my employer only pays for the flights within oz. I'm paying for the first leg from nz and back into nz myself and assumed this would be deductable. May be less inclined to bother in future if it's not.
Don't know of any FIFO workers that have to pay for their own flights to the worksite. The only instances I can think of are those that are doing out-of-state FIFO, and paying for their flights to and from the Airport (point of hire). Interesting that some people think that they can claim these costs as tax deductions... if that were the case, I'd be claiming my bus fares
Most employers will not pay the employee while flying to site. Sadly the John Holland case had little relevant application. I have spoken to a few of my clients about changing the way they pay and they are reluctant to do it. The staff all talk between sites as to their hourly rates and a lot of the contracts for the on-hire of staff are linked to the employees hourly rate.
Good post Mike. I also see many FIFO enquiries seeking to claim costs of travel to and from work !! Especially where they maintain a home (and family etc) in another city and the flights a mere commute to get to work. The other one that gets a load of errors is allowances. Just because a employer pays a meal, accom, overnight or other allowance doesnt mean a taxpayer has an automatic right to a deduction. The deduction itself must always comply with rules and meet the general principles of deductibility (ie necessarily incurred in earning income) . A good example - Employer pays Fred a car allowance. Fred maintains a car and uses it basically to travel between home and work. . Can Fred claim a deduction for this ? No. Its private. This error exposes two problems : - Freds employer should have withheld tax on the allowance. Many dont exposing Fred to a tax bill and also the employer is exposed to penalties - Fred is misled thinking there is a tax benefit when there isnt one. And in some cases an allowance cannot even have any deductible eg army hard landing allowance, navy submariners allowance, construction heights allowance, parachute allowance etc. The taxpayer s merely paid an additional sum for hardship etc but incurs no costs. Thus no deduction. The general rule is that an allowance must be spent. Then rules address how a taxpayer calculates the deductible and the methods available. Many tax advisers have given bad advice on allowances and it can lead to the taxpayer facing penalties AND the tax agent being subject to penalties too. A common one is truck drivers claiming award overnight rates based on a ATO set rate per night but they sleep in the cab. This isnt correct. Or even worse is a truckie paid a cents per km rate for work who is paid a higher rate for overnight runs. NO deduction is allowed under this basis.
ahh allowances. a favourite topic of mine now many assume because they were paid a travel allowance they are automatically entitled to a deduction up to the Commissioner's reasonable allowance amount. Wrong !! McIntosh v FCT says you can only claim a deduction for expenses actually incurred. The per diem amounts issued by the ATO are for substantiation purposes ONLY. In other words you dont need to provide proof up to those amounts. So if you decided to live in a tent during that time then you can't claim up to the accomodation allowance amounts as you never spent that amount. Same if you stayed with your aunt for a few nights and didnt pay anything to stay there. this very one came up during a voluntary disclsoure i did.
Or no allowance and then want to bypass substantiation of every dollar and use the high per diem rate. An allowance MUST be received. And expended...Doesnt have to be accounted for but taxpayer may still need to demonstrate they incurred cost in the right type of accom. The tent issue is a good one. Hotels, motels and similiar accomodation. I had to get a ruling and they agreed caravan parks are OK provided its a cabin or room and not a tent site.
