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Thursday, 4 December 1986
Page: 3372


Senator AULICH —Yesterday Senator Parer asked the Minister for Finance a series of questions in relation to the taxation of travel allowances under the Fringe Benefits Tax Act. Will the Minister now surprise the Senate with additional information in relation to this matter?


Senator WALSH —I recall the question yesterday and I said at the time that I did not believe that fringe benefits tax would be applicable to a travel allowance paid in cash. I have now received some additional information from the Treasurer's office-additional to that which I supplied at Question Time yesterday. Senator Parer asked me whether it was a fact that from 1 July any tax liability arising from the receipt of travel allowances would be assessed under the Fringe Benefits Tax Act and the answer to that, as I suggested yesterday, is an unequivocal no. Travel allowances are not taxed under the Fringe Benefits Tax Act. Then Senator Parer asked me whether this meant that an excess of travel allowances remaining after reasonable travel expenses had been deducted would be taxed in the hands of the employer and not the employee. Implicit in that is that Senator Parer and, indeed, a number of Opposition front bench members who could have written that question for him are confused about the distinction between fringe benefits tax and substantiation under the Income Tax Assessment Act.

If one can make any sense at all of Senator Parer's question, it would have to be interpreted as a question which asked whether, if an employer paid an employee a travel allowance which exceeded reasonable expenses as defined in the relevant ruling, the excess would be subject to taxation under the Fringe Benefits Tax Act. As I have already said, the answer to that is no. Unreasonable travel allowances are subject to taxation in the hands of the employee as income if the employee cannot satisfy the Commissioner of Taxation with an acceptable degree of substantiation. Senator Parer then asked whether it would be true that an employer-specifically the Commonwealth-paying an excessive travelling allowance to an employee would then be liable to pay tax under the FBT legislation. The obvious answer to that is no.