New ATO Travel and Meal Rates: What You Can Actually Claim

Each year, the ATO updates its reasonable travel and overtime meal allowance rates, and each year the same misunderstanding pops up. For the 2026-27 income year, the overtime meal allowance has increased to $40.00, with updated domestic and overseas travel rates published in Taxation Determination TD 2026/4.

The rates themselves aren't the tricky part. What trips people up is assuming that receiving an allowance means they can automatically claim a deduction up to the published figure. That's not how it works, and getting it wrong can mean a denied deduction, plus interest and penalties if the ATO takes a closer look.

A travel allowance has to be genuine first

Before the ATO's reasonable rates come into play at all, an employee needs to have actually received a genuine travel or overtime meal allowance from their employer.

• Be paid specifically to cover work-related travel or overtime meal expenses
• Relate to particular trips or overtime worked, not just a general extra payment
• Be shown separately from normal salary or wages
• Be intended to help cover expenses the employee is expected to incur

If an amount has simply been folded into a salary package, or isn't identified separately on a payslip, the reasonable rates generally don't apply. The usual substantiation rules take over instead.

If your allowance isn't listed as its own line item on your payslip, it's worth checking with your payroll team before assuming the reasonable rates apply to you.

The reasonable rate isn't a free pass

This is the misconception worth repeating. Getting a travel allowance doesn't mean an employee can claim the ATO's published rate regardless of what they actually spent.

You can only claim what you actually spent on deductible work-related travel or overtime meal expenses. What the reasonable rates do is remove the need to keep a receipt for every single expense in certain circumstances, provided the spending genuinely happened and relates to work.

Records still matter, even without receipts

• A simple diary of work trips and nights away
• Notes on meals and incidental costs while travelling
• Bank or card statements showing the payments were made personally
• A sample of receipts here and there
• For trips of six or more consecutive nights, a full travel diary covering dates, locations and purpose

Relying on the published rate with nothing to back it up is exactly the kind of thing that draws attention if a return is reviewed.

None of this needs to be complicated. It's the same discipline that makes good bookkeeping for small business worthwhile in the first place, a little consistency during the year saves a lot of stress if anyone ever asks questions later.

A few practical checks

• Check the payslip. Is the allowance separately identified, or buried in ordinary wages?
• Keep records as you go. A running diary is far easier than trying to reconstruct months of travel after the fact.
• Only claim what was actually spent. The reasonable rate is a benchmark, not a target.
• Take extra care on longer trips. Six or more consecutive nights away triggers additional diary requirements.

Businesses that already run tidy books tend to find this part straightforward, since expense tracking and cash flow visibility are usually second nature by this point. If your current setup makes this kind of check harder than it should be, it might be a sign your bookkeeping or accounting processes could use a tune-up.

A little preparation goes a long way

The updated rates are a useful benchmark for the year ahead, but they're not an automatic entitlement. Understanding how the rules actually work, keeping reasonable records, and claiming only genuine expenses will keep things straightforward if the ATO ever asks questions.

If you're not sure whether your current travel allowance arrangements meet the ATO's requirements, it's a good time to check, before it becomes a bigger issue at tax time. Contact Trekk Advisory to talk through your arrangements.

This article is general information only and does not take into account your personal circumstances. Please contact Trekk Advisory to discuss how these rules may apply to you or your business.