Need advice regarding Per Diem travel allowance
 

Hi QFF forum,

I have recently started working for a company that pays no Per Diem travel allowances, even for lengthy (3 weeks+) overseas assignments. They pay for hotels and expenses of course.

Is this something that is common in the corporate world, or would I have a strong case in arguing for a change in the company policy?

Sounds strange, and Welcome to the forums Roger!

The company I work for has per diem rates depending on countries for general expenses but no allowance for food.

We have travel, accommodation and expenses such as taxis/hire cars covered, with an allowance per day for food and other minor expenses. All the companies I've ever worked for have similar policies, ranging from big corporates like AT&T to little companies with a few staff. Maybe best to have a word with management on that one, as it's not the norm that I know of. Perhaps they're happy to refund expenses instead?

My previous employers - two major banks and a smaller financial services company never paid per diems, but paid for all expenses. I thought per diems belonged to the public service.

Most of the places I've worked have a per diem for food/incidentals just to save hassle when doing expense reports. We'll usually do straight expenses for short trips of a day or two then use the per diem when they start getting longer.

The ATO allows a travel allowance to be paid to employees by the employer which is essentially a per diem basis, claim it as an expense and is non-taxable for the employee so it doesnt need to be taken as a wage*.

So while there is a way for them to give you what is almost free money, I don't see why any company would give you something for nothing if you know what I mean...

Does your company give you free lunch at work usually? If so then I'd be looking to have the policy changed or some significant benefit for extended travel. At the end of the day you're working for them on the entire trip - it's not like you're on a holiday.

* Confirm with your accountant

If your expense are paid, why would you expect a per diem payment? I thought a 'per diem' payment is to cover for expenses incurred, what other 'expenses' were you referring to?

Have you checked with the company regarding claiming back any additional expenses afterwards?

If your company has a corporate credit card and your job requires you to travel regularly, maybe you should get one?

I've worked for a company which stated a daily limit, but it's something you have to claim afterwards and not pre-paid to you. Otherwise, I'd get paid $50/day for meals, but only get a sandwich and pocket the rest.

My first question was exactly the same. If a company is paying all expenses then why would they give you extra money? Unless you don't have a corporate CC and are wanting a per diem allowance upfront?

When I travel on work (usually to countries in Central/Eastern Europe) my per diem is £32 which goes a very long way in some of those countries. Actually for extended stays it's quite a nice profit turner ;).

I guess if your not happy with the current arrangement you could talk to your manager, but being the new guy it may not be the right thing to do.

My employers allowed me to claim all legitimate expenses, so they and I foresaw no need for a per diem.
Small cash items such as taxis could be claimed in bulk if a receipt was not available.

It varies - some pay actuals, some pay per diem
 

I've worked for companies that paid actual expenses before - you just need to make sure you get a receipt for everything (and then waste a full day doing your expenses when you get back) - you should check if they have a limit on how much you can expensed each day. A colleague who was being paid actuals used it to his advantage and often ate at VERY expensive restaurants - unlike what he does now working in my current company. My current company pays per diems which varies in amount depending on which country(or even city in some cases).

So - depending on how you look at it, actuals (while more of a hassle to claim later) can allow you to eat better, but per diems can allow you to make a bit of extra cash for yourself if you eat frugally.

I assmuming from your post that your company will pay actual expenses rather than not cover your costs at all.

No company or client I have worked for pays per diem, and this is my experience both in Europe & Australia. Everything is expenses based.

Generally there your company will have a policy which then states what class of travel, type of hotel, corporate rates etc will be paid out against.

It all depends. In Germany, almost everything is per diem as this is a requirement of the Tax office. You will only be able to claim extra expenses if you have to entertain people.
My current employer is only reimbursing actual cost with the MD checking that all is reasonable.

In banking I have only had per diem allowances not expenses and that goes for most people I know who also work in banking.

Having travelled extensively for the last 15 years I have never had a per diem rate (or if I did I never knew about it).

Now that I run my own firm I still use the same approach. This is because a day rate for Hotel in New York in July is a fortune for a hotel room in Ballarat for the same day.

We find it simpler to pay expenses than keep extensive rates list updated for cities and seasons

Chandi

I suspect consulting is probably more expense based because at the end of the day, the client gets billed and often even requires receipts to back up any charges.

Thanks for all the replies.

Yes, my employer reimburses travel expenses. In my past jobs for European companies and Government related corporations, there have been a per diem allowance from which you pay for the travel related expenses.

I think the per diem method is more convenient as there is no need to keep lots of receipts and then having to spend a good part of a day to account for them all when you get back from longer trips.

The issue is not trying to profit from an allowance, but having it set at a reasonable level that reduces unnecessary paperwork.

From the responses here, it seems there are companies in each camp with no clear dominant policy position in industry regarding this issue?

Every financial year, the ATO sets a maximum figure that business can claim without providing documentary evidence for work related travel expenses.

This varies between location and the employees pay band.

Within Domestic Oz, the rates are for food & drink, incidentals and accommodation; internationally it's meals & incidentals; accommodation costs must be documented.

For the 2007/08 financial year, these rates are listed here:

• Income tax: what are the reasonable travel and meal allowance expense amounts for 2007-2008?

This is my experience as well when I have worked for larger companies. This method is easy to track from an employer perspective and generally ensures the employee is not out of pocket on expenses during the trip.

I will agree that you tend to spend on things you would not buy at home and not all of these things are able to be claimed back to your employer. However, I have found the system works well apart from all the paper work involved with filling out the claim forms when you get back home.

My understanding on Per Diem travel allowance was that this system was in place in companies that were unionised and was part of the award conditions - Government Departments, and the like

Filling in my expense claim form right now.
Minor problem for me is that I use my OZ based CC when I am there and have to work out exchange rates for the day, even though I will not be paid on those rates.
Of course I could just use my NZ CC but you know slave to points schemes....;)

My company pays expenses which has led to some great dinners out. I personally prefer actuals rather than Per Diem and don't find it takes that much longer to account for. Often I have taxis and food and Per Diems don't generally cover taxis.

However given a lot of my travel has been to the US/UK/Japan/Hong Kong I think I could have made a decent "profit" on the ATO guidelines.

Another Actuals
 

Another "vote" for the actuals method, though my employer has a list of values they refer to as "reasonable" for the major cities within AUS and then another for OS travel.

Can be a bit of a pain when travelling OS and having to do a claim in AUD within a timeframe that is shorter than the CC bill :rolleyes:

Cheers

GB

The ATO has a listing of what they consider reasonable for various cities/countries, and some employers give employees the choice of using that amount or claiming actual expenses:

http://law.ato.gov.au/atolaw/view.ht.../NAT/ATO/00001

serfty made us aware of this link in post #16.

And when my place of work is in another city, can I get a living away from home allowance for that?

For the last year thats exactly the position I've been in.

I work for a consulting company. We get reimbursed travel (airfares, taxies etc), and hotel bills on an expenses basis. We also get a per diem to cover meals and incidentals. The per diem being, obviously, much lower than what some other consulting firms pay, due to the major costs being covered.

I will ask my accountant but ....

Does that mean that if I'm in the US on business, and hypothetically my salary was $100,000, I can claim $260 on my tax (I'm self employed) without providing documentation?

I work for a consulting company that reimburses actuals for travel & hotel as you state, and gives a per diem for meals & incidentals as per the US govt rate. For my current project (UK), it's $US104 a day. Probably the highest I've had, including weekends (since I'm based in the US - aussie though). *shrug*

From that document:So,

1. You must have incurred the expenses &
2. If these expenses are no more than the specified reasonable limit for you circumstance, you do not have to prove it with documentation.
3. You must show allowances as being paid - Being self employed myself, this is shown on my annual PAYG summary (nee "Group Certificate").

You must have also been paid a per-diem allowance by your employer for the travel period. You can them claim the difference between what your employer paid you and the actual expenses you incurred up to a maximum of the amount of that noted by the ATO ruling. You can claim a higher amount but must have full documentary justification for the entire claim amount.

Updated as per NM's post.
Note, this may only be relevant if your claim is higher than the RBL:

My understanding of the Tax Office ruling is that Travel Allowances do not appear on the Payment Summary (aka "group certificate"). The ATO assume that provided the Travel Allowance is paid at the specificed rate then not to appear on payment summary so employee doesn't need to claim a deduction.

This can also be a good little loop hole. If travel commences at 11pm and the returning flight home arrives 6am, then my understanding is that the Incidentals can also be paid for a complete day on the first and last day of travel.

Great topic BTW.