Income Tax: substantiation: can a taxpayer change the amount of an unsubstantiated claim for a transport expense which is in excess of the award transport allowance back to the award amount during the course of an audit?

No. Once the deduction claimed exceeds the amount of the transport allowance paid under an industrial award that was in force on 29 October 1986, the entire deduction must be substantiated.

Section 82KZBA of the Income Tax Assessment Act 1936 refers to the substantiation provisions that apply to eligible transport allowances. Paragraph 82KZBA(1)(b) establishes a precondition for the exemption from the substantiation provisions provided for under paragraph 82KZBA(1)(c). This precondition is that 'the total of the eligible expenses ...claimed by the taxpayer as deductions...does not exceed the amount of the eligible transport payment ...'. If this precondition is not satisfied then the exemption from the substantiation provisions does not apply.

An eligible expense is defined in subsection 82KT(1) to include (inter alia) a transport expense incurred against an eligible transport payment . Under the same subsection, a transport expense means an expense in connection with transport (e.g. train, bus, aeroplane, motor vehicle, etc.) but does not include an outgoing in respect of accommodation, food or drink or expenditure incidental to transport. An eligible transport payment is defined in subsection 82KT(1) to be the amount of the transport allowance payable under an industrial award that was in force on 29 October 1986.