The Ins-and-Outs of Travel and Tax

‍Travel can certainly be part of running a business, but what constitutes travel that you can claim at tax time? Holidays certainly don’t count, but many try to tie business in with pleasure, so where’s the line? 

Let’s start with the normal definitions of what you can claim as tax deductions when it comes to travel and go from there…

What can you claim as a work-related travel expense?

Costs like public transport, taxis and flights are generally the obvious ones but there’s certainly more to deduct that can make your travels work better for your financial situation at tax time:

• Accommodation
• Incidental expenses (laundry etc.)
• Air, bus, train and taxi/rideshare fares
• Car travel (with exceptions)
• Bridge and road tolls
• Parking fees
• Car hire charges
• Meals (if your travel included an overnight stay)
• Bags used only for work travel

Be aware though that there are some caveats with some of the above.

Transport expenses are one of the more common deductions but, be aware that work-related travel in your car or on public transport is only claimable if it isn’t your normal travel to-and-from work. This also applies to parking, where you can not claim parking at your normal place of work or home.

To make this clearer, here’s what. You can claim:

• Travel between two separate workplaces (or jobs)
• Travel from your workplace to offsite meetings or events
• If you work from home for part of the day, then travel to your workplace for that same employer
• Travel from your home to an alternative workplace if required
• If you work at more than one location for the same employer, you can claim the cost of travelling between locations.

Travel you can not you claim: 

• The cost of travel from home to your everyday place of work (and back again)
• If you run an errand on the way to or from work.Eg. pick up the mail or a package
• If you work overtime or out of hours
• When your home is your place of work for one job and you travel to a different location to work for somebody else.

Again, car parking is in line with this – you can claimparking costs if you’re attending a company meeting or event off-site and youuse your own transport to get there, but you can’t claim parking costs if youdrive to your normal workplace and pay for parking there.

This is a good time to mention, if your employer reimburses you for any travel expenses (parking, fuel or other), you can not claim that.

Keep a travel diary, especially for longer trips 

If you’re travelling for more than six consecutive nights, keep a travel diary to record where you are each day and what you’re doing each day. You’ll want to include start and end times of the work related activities you’re involved in too.

It doesn’t need to be a long story for each entry, simply something like:

– 7:00am flight to Melbourne –Arrival 8:30am

– 8:30am – 9:30am Taxi fromTullamarine Airport to St Kilda

– 10:00am – 5:00pm BusinessConference

– Overnight at Rydges St Kilda

Receipts 

As with any tax deduction, always keep your records for any travel. You can link them to your diary entries by day or simply take photos of receipts and store them in dated folders on your device. Either way, the ATO will need these as proof if they decide they’d like more information and without them you’ll be unable to claim the deductions.

How to treat a travel allowance

In most situations, if you receive a travel allowance from an employer, it’s considered taxable income and treated as such at tax-time, but if you spend that money on travel, you can claim the portion spent as a deduction.

This means you can only claim the portion of your allowance actually spent on work-related travel. So, if you receive $2,000 annually from your employer and you’ve spent $1,500 on work-related travel, you can only claim deductions for the $1,500 you spent, not the entire amount.

Once again, receipts will help you make the right deductions.

Travel that includes work and leisure

Here’s where the lines can get a little blurry, but by now your travel diary and keeping of receipts can be what helps you here.

The rules are pretty simple:

•     The primary purpose of your trip must be work-related

•     You can’t claim any part of the trip that isn’t work-related

For example, if you travelled interstate for a five-day conference and decided to stay on for an additional two days to enjoy yourself here’s what you can claim and what you can’t: 

•     Accommodation costs for the four nights or five days the conference was running

•     Taxi/uber/transport costs from the hotel to conference and back

•     Meals during the conference period

Claiming flights and travel to-and-from airports needs some calculations to understand what’s deductable … Out of the 7 days you’re away, 5of those were work-related meaning 71.5% of your trip is work related. This means you can claim:

•     71.5% of your flight cost

•     71.5% of the travel to-and-from the airport(s)

You cannot claim leisure expenses like the cost of accommodation, meals, transport or car hire for the two leisure days you spent while away. If you add a partner or child onto your trip, you can’t claim any of the expenses they incur, and you can’t claim extra flights that aren’t related to the work portion of the trip either.

This scenario is completely different if you’re away on a holiday and decide to go to a work conference. In that scenario, you can claim the costs related to the conference alone and none of your flights or travel that took you to your holiday destination. This is because, the primary purpose of the travel is NOT work-related.

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To ensure you’re staying on top of how you or your business treat travel expenses and any other tax-related matters, speak with the Attune team. Our tailored accounting services are designed to fit your situation, enabling you to keep doing what you do best. Give the team a call on 1300 866113 or send us an emailto start the conversation, you won’t regret it.

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