Tax Time : Crew Allowances (v3.4) [14Sep18]

It’s Tax time again and as since I’m one of those lazy people who does all the work at the end, instead of keeping up with it as it goes along – the first thing I need to do is update my Allowance calculator spreadsheet. I’m posting a copy of the sheet here for you guys to download because each year more and more crew ask for a copy and I can’t remember who’s asked for it and who hasn’t. In this post, I’ll discuss the basis for the tax refund, and how to use the spreadsheet.

Disclaimer

Sorry – but this Excel spreadsheet is all care and no responsibility on my part. I’m using it myself and so I have certainly checked it as best I can to determine if there are any errors – but I can’t promise there aren’t any. Feel free to look through all the tabs at the tables of values I’ve taken from the current TD to make sure there aren’t any entry errors – please let me know if there are via the comments at the bottom of this post and I’ll fix it and re-upload.

Background

Essentially the Australian Tax Office produces a Tax Determination each year which covers this issue. There’s a new one each year and it’s urbanely titled “Income Tax : What are the reasonable travel and overtime meal allowance expense amounts for the 20XX-YY income year?“.

The TD determines the maximum reasonable amount for overnight allowances (without receipts). The amount is determined by location (separate listings for Australia Cities vs Overseas Countries/Currencies) and are also affected by salary level – the concept being that if you earn a lot more, you are allowed to spend a lot more when you’re on a trip. I wish.

Salary cutoff’s for the salary bandings are as follows (all values are AUD) :

Low : Less than $110,650 AUD
Mid : Between $119,650 and $212,950
High : Greater than $212.950

Typical ATO maximum claim values are values for our trips are:

LAX (Short)  => Lo: $660 / Med: $860 / Hi: $1,020
AUH (Long) => Lo: $1,075 / Med: $1,400 / Hi: $1,725

As you can see – the ATO values are in excess of the allowances typically paid to crew, irrespective of salary band.

I would encourage you to read through the TD in detail, but basically it says that if your company pays less than the ATO allowance for overnight expenses (Meals and other Incidentals) you are entitled to claim the difference between what the Company pays and what you actually spend, up to a maximum threshold which is the ATO allowance.

Notice that you can claim the difference up to what you actually spend – which may be less than the ATO allowance. That said – the TD says that while you can’t claim what you don’t actually spend – you don’t have to provide receipts either.

For Australian Stations, how much the ATO allows is a combination of a meal allowance (eg: if you’re “on station” anywhere between 0600am-0800am, you get a breakfast allowance) and an “incidental allowance”. The incidental allowance is paid for each day you touch while you are on station. Note that the actual meal time bands are not published anywhere in TD 017/2011. I’m still hunting down an ATO reference, but apparently the ones the Company uses are based on the ATO time bands.

For International Stations, while there is a concept of Meals – time bands are not applied and instead for each day (or part thereof) you are “on station” a combination of all the meal allowances (brekky, lunch, dinner) and the incidental allowances is paid.

In the past there’s been a lot of too-ing and fro-ing about this (as you can imagine). My accountant has allowed me to claim this for four years now and since he worked for the ATO for many years – he’s is extremely conscious of what is and isn’t kosher when it comes to income tax deductions. owever I’ve had a number of pilots and cabin crew tell me their accountant has said it’s not kosher.

If your accountant has issues, and you want to persist with it – I suggest you talk to my accountant about it. He’s had extensive discussions with the ATO and two years ago obtained a judgement/ruling in this area. He can be reached via his web site. As an aside – he’s been my accountant for about 9 years now and I have no hesitation in recommending him.

Geoff Taylor http://www.majenda.com/ +61 (2) 9904 6933

Cash Allowances – Report from Payroll

The cash allowances we now receive down route complicates things a little. You will need to provide the details of this money to your accountant and the ATO. This can be done in one of two ways.

  • [CASH] Go back in time and note down how much you were paid (in local currency) on each layover; or
  • [REPORT] Get a report from Payroll (payroll.queries@virginaustralia.com) which will give you a total in Australia dollars.

The former method has the advantage of being highly accurate. The latter (report from payroll) is difficult to check for accuracy. Please note I have labelled the two methods above CASH and REPORT – this is because the spreadsheet allows you to do either of these methods, and later I’ll show you how.

The Spreadsheet

Ok, so onto the spreadsheet. As an overview:

  • Enter some basic parameters in the Summary sheet (approximate Salary, etc);
  • Enter the Payslip and Cash Allowances paid to you via Salary in the Summary sheet;
  • Enter the details of your layovers (both domestic and international) in the DutyLog sheet; then
  • The Summary sheet will advise the totals – but I just give the whole sheet to my accountant.

Summary Page – Company Payslip (domestic) Allowances

The spreadsheet is protected against accidentally overriding the formula’s – the green cells are where you can enter values.

Basically, you need to log onto the portal and run V-Claim and look at your past payslips. For each two week pay period – take the value you were paid in allowances by the company (“Meal/Incidental Allowances”) and enter it against the correct date in the spreadsheet. Where you were docked overpayments (or paid extra) – these are to be entered too, even if it means entering negative allowances for that payslip.

Note this amount will NOT include allowances paid in cash over the hotel check-in desk. That’s handled elsewhere.

Summary Page – Basic Variables.

Now there are some global numbers to enter on the Summary Sheet. The major one is Gross Salary, which is used to determine which Salary Range you are in and therefore which allowance band will be used. All of the following values are required:

  • Enter your approx Gross Salary into the green box.
  • If you are using the [REPORT] method to determine cash allowances paid down route – enter the total from the report provided by Payroll into the Hotel Cash Allowances (Report) green box. Otherwise – leave it blank.
  • ATO Tax Rate : when you look at how much tax you paid last year, divided into your Gross Income – you can get an approximate percentage figure. Based on this, the spreadsheet can estimate what you’re allowance refund should be – which is Allowance Difference x (1 – %Approx Tax Rate). This will give a “best guess” at how much you can expect to get back on your allowances.

Once you have completed the Duty Log section of the sheet, you’ll get the following values on the Summary Sheet.

  • Payslip Allowances : Summed from the table (on the left) you entered them into.
  • Hotel Cash Allowances (as paid) : If you enter all the local currency cash paid down route onto the Duty Log sheet – it’ll be summed here.
  • Total Company Allowance : The addition of the Payslip plus Hotel Allowances.
  • ATO Allowance : This is how much the ATO calculates Crew Allowances at for Tax Purposes – based on your roster entered on Duty Log.
  • Difference – the gap that you can claim.
  • Approx Tax Refund : Based on your ATO Tax Rate this is a general stab at what you should get back.

The Duty Log (Where it All Happens) Example : SYD – MEL – LAX – BNE – SYD

The Duty Log tab is where you enter in all the details of the flights you have operated during 01.Jul.2011 -> 30.Jun.2012

While the data you enter is based on the flights you operate – in fact for the most part is is the off duty periods between flights while away from home that you are claiming. This is an important distinction when entering the information. For the trip pictured below, you’re claiming:

  1. The time from getting on the flight SYD to MEL until the next day when you sign on for the MEL-LAX flight; and
  2. The time between arriving (sign off) into LAX and departing (sign on) LAX for BNE; and
  3. The time between arriving (sign off) into BNE and arriving back into SYD after the domestic flight.

Note : It doesn’t matter where your domicile is – all these calculations are to be Sydney based, as your roster is.

Note : All Dates/Times are Local Time, wherever you are.

Remember that you are only addressing periods of time between flights or during ground duties such as SEP or CRM, which are NOT at your home base. Thus you can’t claim anything for SEP in Sydney – but you can if you are flown to BNE for SEP training. In which case you would claim against the time away from SYD : From the time you go on the flight in SYD; until when you got off the plane again back in SYD.

The headings of the spreadsheet are reasonably self explanatory and if you place the mouse cursor over each of them, a popup comment (cells with little red triangle in the corner) provides additional detail … However … using the picture here as a sample :

(A) Date : The Date column is pre-filled with a Date for each day of the tax financial year. For each FLT or GND duty – you place it on the date that the allowance claim period started. So you start claiming an LAX layover period on the day the LAX flight departed Australia. However if you land after midnight after flying into AUH – you would start your claim on the day after the flight departed SYD – does that make sense?

(B) Duty Type : Duty Type is either FLT (Flight); GND (Ground Duty – Meetings, SEP, etc); or SIM (Simulator Training). You can enter it or choose it from a dropdown box.

(C) Station : This is the three letter code for the layover airport. This determines whether the station is Domestic or Overseas, as well as linking into the exchange rate later on. You can enter it or choose it from a dropdown box.

(D) Start Time : This is a time (entered in 24 hours time with a colon, eg 23:40) which denotes the start of the period for which allowances are to be paid. For LAX/AUH flights – this is the Sign Off time after you arrive into LAX/AUH.

(E) Start Date : The date is automatically filled in from the first date column and is only repeated for convenience. Again – watch out for AUH flights that get in late after midnight.

(F) Stop Time : This is the time at which the paid layover period ends. For LAX/AUH flights – this should be the Sign On time for the return flight.

(G) Stop Date : Since our layovers will end on a different date to the arrival time – a separate date is entered alongside the Stop Time to help with the calculation of how many days you were on station. Dates can be entered into Excel in a number of ways (12.3.12   12.mar.12  12.mar  12.3  etc) but always check after you’ve entered one that it’s worked correctly. Also look in the Days column to see if the calculation has worked. Remember that you lose a full day on the way back from LAX (which you can’t claim for – nice try!)

(H+I) Start / Stop Date/Time : These two columns are the calculated start and stop date/time based on what you entered. Have a quick look at these two after you enter in your values to make sure you’ve done it correctly.

(J) Cash Allowances Hotel Paid (Local $) : If you are going to use the [CASH] method for down route allowances, enter the amount in local currency you were given here. This will be converted to AUD using the RBA exchange rate on that day.

(K) Cash Allowances Hotel Paid (AUD $) : If for some strange reason you want to enter your [CASH] Hotel paid allowances in Australian Dollars (Why? Why?) – you can do that here. If you enter both $Local and $AUD – the sheet will get grumpy at you. Be warned.

(L) Total Cash Allowances (AUD$) : The sheet will calculate the AUD amount of allowance paid over the counter by the hotel based on what you entered into the previous twe columns. But you only used one of those columns – correct?

(M) Done : If the spreadsheet has enough information to calculate – there will be an Ok in this column. Otherwise it will be blank and you should go back and see what has been done wrong.

(N) Days : This is the number of days you were on station, rounded up to the next whole day. This number forms the basis for the Incidental Allowance calculation, and the Day of Meals calculation for International Layovers.

Ground Duty not in SYD.

Here is an example of how a ground duty somewhere other than SYD is claimed. Basically you claim from the time you board the flight in SYD, until the time you get off the flight back into SYD after ground training in BNE, three days later, or whatever.

[Read more…]

Tax Time : Crew Allowances 2017/2018 {UPDATED 13AUG18)

It’s Tax Time again 2017/2018 and as since I’m one of those lazy people who does all the work at the end, instead of keeping up with it as it goes along – the first thing I need to do is update my Allowance calculator spreadsheet. I’m posting a copy of the sheet here for you guys to download because each year more and more crew ask for a copy and I can’t remember who’s asked for it and who hasn’t. This years’s ATO Taxation Determination is here.

Note : I’ve updated the sheet to greatly expand the list of available stations (both OZ and OS); and corrected a few issues that have popped up with initial use.

Note that this article is a follow on from the original article which covers the basics of the relevant legislation – and more importantly, how to use the spreadsheet.

EBA Allowance Calculator (Domestic Only) UPDATE

I recently developed a spreadsheet to check the domestic allowances I was being paid. The process was educational, to say the least. This initial version only checks domestic allowances – I will develop further to facilitate the checking of rostered vs actual international allowances as well.

Update : Recently Payroll have been paying correctly the meal allowances; but still persist on under paying the incidental allowance. I’ve also discovered they are unable to backpay correctly based on what was agreed was in error (hence V1.4 to allow you to enter backpay and highlight further discrepancies).

  • Version 1.4 (02Apr16) : Added a column on the RHS of the calculator to allow backpaid allowances to be entered and checked.
  • Version 1.3 (10Jul15) : Added allowances for post 01Jul15 (to be updated); unlocked the green allowances section for user edit.
  • Version 1.2 (14-Apr-15) : Bugfix Release (Dinner using Lunch Allowance in Duty Periods sheet).
  • Version 1.1 (05.Apr.15) : Initial Issue

Background

Having only recently come to the EBA, I’ve started seeing the additional payments that come into my salary associated with Overtime, Callout and Allowances. The first of these two I track and check using my EBA Overtime Calculator, which you can get from the linked post. Certainly the comparison of what I believe I should be paid as compared with what I have been paid has been an educational process, illuminating for me both the detail of the EBA and inner working of the rostering and payroll systems, occasionally requiring follow up redress. I encourage everyone to check their overtime/callout when it’s paid every 8 weeks.

Allowances however are a different story. The process of calculating how much should be paid across a series of meal windows and an associated incidental period is relatively simple and I used such a process extensively in my Crew Allowance Tax Calculator (the latest of which can be downloaded from the link).

As such I figured it would be easy to develop a sheet to check my domestic allowances. To make sure I was doing it right, I started with the EBA, which is where I struck my first problem. The paucity of detail in this document covering a moderately complicated issue such as crew allowances at domestic and international ports was manifestly inadequate for my purposes. I fired off a couple of emails with comprehensive questions to the responsible line management, so far without a reply. In the end I reverted to the Short Haul EBA for the basis of calculation, the premise of which is basically that from the time you sign on at home Base for the purpose of operating Duty(ies) which include an overnight away from home base, you’re continuously paid Meal/Incidental Allowances until you sign off again back at home Base. This happens irrespective of whether meals are provided associated with your duties or not – or so my fellow domestic pilots advise.

I would like to give credit here to Dean Young, who provided the original formulae for the Allowance Checker. He was looking at this issue at the time as I was, and developed the formulae to assess the presence of a duty period over a meal window.

Dean was using a spreadsheet to fact check paid allowances, I used it for a different purpose (Tax) but the formula requirement was the same. His solution was elegant and with his permission I used it in my own sheet. Dean was responsible for much behind the scenes work in the early days of V Australia (we didn’t call it Volunteer Australia for nothing …), for which many will never appreciate.

Thanks Dean.

In any case I thought I had a handle on it so I started a sheet based on my Tax Calculator. It took me an afternoon to get a sheet I was happy with, which looked substantially like the following:

Allowance1

As always with my spreadsheets, the green cells are where you enter your information, the other cells are where you shouldn’t change things unless you want the calculations to go wrong. The Clear button deletes your entries in the green cells.

Basically you enter the periods away from home in green. On the 15th March I reported at 15:55 for a flight to BNE, to undertake a few days of simulator training, before returning to Melbourne, signing off at 18:50 on the 17th March after the flight home. The calculation is relatively simple where Incidental is purely based on hours away from home at a fixed rate; Breakfast, Lunch and Dinner meal allowances paid when your time away from Base touches any of the allocated meal windows. Or so I thought.

Allowance2However when it comes to checking the allowance you were paid – it’s a different story.

You see we are paid on a two week basis, covering a two week period, and we receive that pay about 4 working days after the close of that two week window. This payroll fortnight takes no account of your comings and goings and as such you can be paid for half of your time away in one pay check, and the rest of your time away in the next.

As such I was now confronted with the requirement to turn the fairly easy to enter blocks of time away from home base to a meal/date specific result that would be easy to check against the payslip. After much effort – I finally realised I couldn’t do it without code.

I therefore built a custom function in Visual Basic (Applications) for Excel, called:

Payslip (PaySlipDate As Date, Meal As String, Payrate As Currency) As Currency

This is certainly not my best piece of programming, it’s pretty quick and dirty, but it does the job. This formula requires three variables:

  • A Date – the date during the payslip period which is to be examined for possible allowances;
  • a Meal – the name of the meal band (“Breakfast”, “Lunch”, “Dinner”) which the calculation is to look for; and
  • a Rate – the rate of the particular meal allowance to be paid.

The value returned is either Zero (no allowance paid); in the case of Brekky, Lunch or Dinner the PayRate of the particular allowance if there is one on the date requested; or in the case of Incidentals – how much is to be paid in the way of an Incidental amount for that date.

This formula is incorporated into another sheet that looks like this:

Allowance3

  • The Payslip Date is Entered/Selected at the top.
  • The Start/End date of the related period fill in at the top, and down the LHS of the calculating area
  • Based on these dates, each Meal Period (and Incidental) for each date is reviewed in the context of duty periods away from base entered previously on the other sheet. If you were on station during a meal period on a particular date – this sheet detects that and fills in the amount. The incidental amount depends on how many hours you were away from Base (up to 24) and calculates it accordingly.
  • Once the sheet has calculated where you should have been paid something – the green cell next to the required payment value turns yellow.
  • The yellow cells are where you are required to enter something (one of the following):
    • Yes : You were paid the full amount. (enter the word “Yes”)
    • No : You were paid nothing against this meal/incidental allowance (enter the word “No”); or
    • $##.## : The amount you were paid (this is reserved for the Incidental figure as printed on your payslip).

The result?

Allowance4

As can be shown here, there is a missing meal, and the incidentals are rarely paid in full. From a review of the last 6 months of allowances calculated vs paid:

  • No incidentals are being paid on the first day of a duty (neither positioning up to BNE for simulator nor positioning up the day prior to simulator)
  • Incidentals are never paid in full for full days away from Base (my suspicion is that when I sign on to teach simulator in BNE, I stop being paid the incidental allowance).
  • The odd occasional meal drops out of the Company’s calculation. I originally postulated that when I signed on to teach Simulator, I was no longer being paid a meal allowance, hence the odd meal on most days there would be a meal allowance missing. However this turns out not to be the case – I can’t see any rhyme or reason as to why I’m missing a meal every now and then. Perhaps they’re not paying me when I skip meals?

Over the past 6 months the difference I’ve calculated comes to over $600. I have yet to claims these and will be doing so early next week. Many years ago I detected an error in the way I was being paid an allowance at Emirates, my previous employer. This error affected a small number of pilots several times a week (depending on them operating a particular flight pairing); but went back a couple of years. The solution was for the company to change the wording of our “contracts” so that the manner in which the allowance had previously been paid was correct. I don’t think that’s going to happen here .. but it will no doubt be interesting, especially given the vague wording of our agreement.

Tax Time : Crew Allowances 2012/2013

It’s Tax Time again 2012/2013 and as since I’m one of those lazy people who does all the work at the end, instead of keeping up with it as it goes along – the first thing I need to do is update my Allowance calculator spreadsheet. I’m posting a copy of the sheet here for?you guys to download because each year more and more crew ask for a copy and I can’t remember who’s asked for it and who hasn’t. Note the Taxation Determination for FY2013-14 can be found here.

Note : My accountant is now saying that after discussions with the ATO, he is not recommending claiming more than the Company pays in allowances?without receipts. Therefore while I’ve still prepared

Note that this article is a follow on from the original article which covers the basics of the relevant legislation – and more importantly, how to use the spreadsheet.