Each year, the Australian Taxation Office (ATO) publishes updated “reasonable” rates for travel and overtime meal allowances. These rates determine how much an employer can pay an employee for work-related meals and travel without the employee needing to keep detailed receipts — and they’re refreshed for every new income year.
What Is a “Reasonable” Allowance?
When your employer pays you an allowance to cover overtime meals or work travel, the ATO sets a benchmark amount it considers “reasonable” for that expense. If your allowance is at or below the reasonable rate, you generally don’t need to keep receipts to claim a deduction for that expense — you simply need to show you actually spent the money on the relevant item and that you received and declared the allowance.
If you’re paid more than the reasonable rate, the ATO expects you to keep written evidence (like receipts) for the full amount you’re claiming, not just the portion above the benchmark.
Overtime Meal Allowances
An overtime meal allowance is generally paid when you work overtime under an industrial award or agreement and buy food or drink during that overtime period. The reasonable amount is reviewed and updated by the ATO each income year.
- The allowance must be paid under an industrial instrument (award, agreement, or contract) for it to qualify.
- You must have actually incurred the expense — a token allowance that isn’t spent on a meal isn’t deductible.
- The specific dollar rate is updated annually, so it’s worth checking the current determination each year rather than relying on last year’s figure.
Travel Allowances (Domestic and Overseas)
Similarly, the ATO publishes reasonable daily rates for domestic and overseas travel allowances, covering accommodation, meals, and incidentals. These rates vary depending on your salary level and the city or country you’re travelling to, and they’re also updated each year.
What This Means for You
Because these rates change every income year, the safest approach is to confirm the current figures before relying on them for payroll setup or your own tax return — rather than assuming last year’s numbers still apply. If you’re an employer setting overtime meal or travel allowances into your payroll, or an employee wanting to check whether your allowance is being treated correctly, our team can review your specific situation and confirm the applicable rates for the current financial year.
Get in touch with us to make sure your allowances — and your record-keeping — are set up correctly for 2025–26.