Tax Time : Crew Allowances (v3.1)

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. The one covering FY 2011/2012 is TD17/2011 and is urbanely titled “Income Tax : What are the reasonable travel and overtime meal allowance expense amounts for the 2011-12 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 $100,840 AUD
Mid : Between $100,840 and $179,350
High : Greater than $179,350

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.

Where is all the work done?

All the work is done to the right of this data entry are in the DutyLog tab. If you scroll across you’ll see the following columns:

 

Continuing in the column description from before:

(O) … (Q) Aust Brekky/Lunch/Dinner Rates – this is the rate breakfast is paid at for the nominated duty (whether or not you were on station for Brekky). There will be no figure here for Non-Australian layovers.

(R) ATO OS STN – this is the ATO overseas country classification (OS1 / OS2 / … / OS6) and is selected by the sheet based on what you entered (eg: AUH, LAX, KUL, etc).

(S) Non-Aust Daily Meal Rate – Overseas allowances are based on Meal Values, but paid daily instead of with time bands. As such this column has the daily rate that will be paid for the duty.

(T) ATO Incidentals Rate Per Day – this is the Incidentals rate (whether based on Domestic or International calculation).

(U)  … (W) Count of Brekky/Lunch/Dinner Paid – This counts the number of Breakfast/Lunch/Dinners that you were on station for during the layover. Your stay only has to touch the nominated period.

(V) … (Y) Totals and Cumulative Total – This totals up the Meals, Incidentals and Total Allowance for the period specified in this row of the spreadsheet. The Cumulative keeps a running total of ATO Allowance Calculation to date.Support Pages – ATO_Low / Mid / Upper.

Support Pages – Meal Time Bands

The meal time band tab contains the start and stop times for breakfast, lunch and dinner which is used in the calculation of Australia allowances only.

Support Pages – TD_O_Amount

This sheet contains a list of stations we fly to (domestic and OS) and stores the equivalent ATO allowance amounts from the Taxation Determination. If you want to compare TD17/2011 with the values I’ve entered in the spreadsheet (and fix them!) then you do so here – but let me know if you spot a mistake please!

Support Pages – Currency Sum & RBA Exchange

Since 02.May.2010 allowances have been paid in cash over the counter at hotels. In order to account for this, a currency conversion is required. I’ve used rates published by the Reserve Bank of Australia for the various countries as required. The company exchange rates (as reflected in the Payroll Report) do not reflect real-world value of the money we’re paid over on the day as closely as the current exchange rate on that day from the RBA.

And there you have it. If you have any questions, comments, suggestions – please leave them in the Comments area below this post. If corrections are required to the sheet, I’ll make the updates as necessary.