Travel and Overtime Meal Allowances: What You Can Actually Claim in 2026–27Travel and Overtime Meal Allowances: What You Can Actually Claim in 2026–27
The ATO has released its updated reasonable travel and overtime meal allowance amounts for the 2026–27 income year in Taxation Determination TD 2026/4.
The reasonable amount for an overtime meal allowance has increased to $40.00, while domestic and overseas travel amounts have also been updated based on salary levels and travel destinations.
These figures are published each year, but there is often some confusion about what they actually mean. In particular, the ATO’s reasonable amounts don’t give employees an automatic deduction up to the published rate.
The rules are more specific than that, and getting them wrong could result in deductions being denied and potentially lead to interest and penalties.
It Starts With a Genuine Allowance
Before the ATO’s reasonable amounts become relevant, an employee generally needs to receive a genuine travel or overtime meal allowance from their employer.
An allowance should generally:
- Be paid specifically to cover work-related travel or overtime meal expenses
- Relate to particular work trips or overtime worked, rather than being a general additional payment
- Be separately identified from ordinary salary or wages
- Be intended to help cover expenses the employee is expected to incur
If the payment has simply been rolled into an employee’s normal salary package, or isn’t separately identified as an allowance, the ATO’s reasonable amounts will generally not apply.
The ATO Rates Aren’t an Automatic Deduction
This is one of the most important points to understand.
Receiving an allowance doesn’t mean you can simply claim the corresponding ATO reasonable amount as a tax deduction.
Generally, you can only claim deductible work-related travel or overtime meal expenses that you actually incur. The purpose of the ATO’s reasonable amounts is to provide relief from keeping receipts for every individual expense in certain circumstances — not to create a standard deduction.
You still need to have spent the money, and the expense must have been incurred in connection with your work.
For example, if your actual deductible expenses are below the ATO’s reasonable amount, you can’t simply claim the full published rate to increase your deduction.
You Still Need Evidence
Even where the reasonable allowance rules apply and individual receipts aren’t required, that doesn’t mean you can forget about record-keeping altogether.
You should still be able to show that the expenses were actually incurred and that the amount you’re claiming is reasonable.
Useful supporting records can include:
- A diary showing work trips and overnight travel
- Details of meals and incidental costs incurred while travelling
- Bank or credit card statements showing expenses you paid personally
- Any receipts or other records that help demonstrate the nature and amount of expenses incurred
- A travel diary recording dates, locations and the purpose of travel where you’re away from home for six or more consecutive nights
The important distinction is that the reasonable allowance rules can reduce the normal substantiation requirements in certain circumstances. They don’t remove the need to demonstrate that a genuine deductible expense was incurred.
What Should Employees and Employers Check?
If you receive or pay travel and overtime meal allowances, it’s worth checking how the arrangement works before tax time.
For employees, start with your payslip. Make sure the allowance is separately identified rather than simply included in your ordinary salary or wages.
It’s also a good idea to keep records as you go. A simple travel diary, together with relevant bank statements and some supporting receipts, is much easier to manage than trying to reconstruct months of travel after the end of the financial year.
Most importantly, only claim what you actually spend on deductible work-related expenses. The ATO’s reasonable amounts aren’t a target and shouldn’t be treated as a standard deduction.
Extra care should also be taken with longer trips. If you’re away from home for six or more consecutive nights, additional travel diary requirements will generally apply.
A Little Record-Keeping Can Make Tax Time Easier
The updated 2026–27 reasonable amounts can make record-keeping simpler for employees who receive qualifying travel and overtime meal allowances. But they don’t provide an automatic entitlement to a deduction.
The safest approach is to understand how your allowance is structured, keep enough evidence to support the expenses you’ve actually incurred and make sure any deduction relates to genuine work-related costs.
If you or your employees receive travel or overtime meal allowances, now is a good time to review the arrangements. The team at Bates Cosgrave can help you understand whether the allowances meet the ATO’s requirements and what records should be kept to support claims at tax time.