Consider Elizabeth, a sale representative for an industrial spares company in Sydney.  Elizabeth has to attend a product convention in Melbourne, and since the convention finishes late that evening, she has no option but to spend one night at a motel, at a cost of $140. Elizabeth’s travel allowance agreement with her employer makes provision for $173 per night to cover the expense of her stay. Even though the expense is under the Tax Office’s reasonable allowance threshold allowance of $173, Elizabeth is required to include the $173 as assessable income in her tax return, and claim $140 as a deductible expense for the expense of her accommodation.

Bear in mind that travel allowances provided to employees for accommodation expenses are not subject to substantiation if the expense does not exceed the allowance provided for an overnight stay. If Elizabeth’s motel room had cost $250 for a night, she would have had to provide proof of the expense to claim a deduction for the total expenditure.

However, if Elizabeth was a politician, she would have received between $271 and $470 per night for her work-related journey. Parliamentarians are awarded a greater reasonable amount from substantiation for tax purposes.  There is no clear legal reason or justification for the discrepancy between parliamentary thresholds and reasonable amounts.

Now let’s say Elizabeth has made a career change and needs to travel from her home in Sydney to Melbourne for a work-related summit as a parliamentary office holder. One night’s stay in a central hotel costs $350. Elizabeth is given $435 to cover that accommodation expense in terms of the Remuneration Tribunal’s travel allowance rates. She is still entitled to claim a deduction on the amount of the accommodation costs without substantiation, like she could in her old job, but she must include $435 in her assessable income.

However, Elizabeth’s new job has perks she only dreamed of in her old position in the private sector.  She now has access to both parliamentary ‘allowances’ and parliamentary ‘entitlements’, for travel expenses, as a parliamentarian.

Given the example of Elizabeth above, it is not hard to see why parliamentary entitlements and allowances are so contentious. Parliamentary work mandates frequent travel, and frequent living out of home and no one is disputing that, but some people question why parliamentarians are rewarded so much more than the average taxpayer.  Irrespective of your view on this issue it is the law, and despite these benefits, politicians are subject to the same tax law as other Australian taxpayers.