Travelling for Work: Which Expenses can you Claim?

Blog
By DevPP
on 11-May-2020

With the ATO looking more diligently than ever at work-related deductions, it’s vital to understand exactly what expenses you can claim. Travel expenses are often contentious – read on for more information on what expenses you can claim, and what evidence you need to keep to claim them.

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Blog
11-May-2020 By DevPP

Work-related travel expenses can be claimed as a tax deduction, and reduce your taxable income for the year. According to the ATO, work-related travel expenses are any costs incurred because of travel, transportation or accommodation accrued during the course of your job. This does not include travel to and from home to your normal place of employment.

Work-related travel expenses may include use of your personal motor vehicle, overnight accommodation and meal charges, flights, other transport costs and ancillary travel expenses

It is important you keep all accommodation and work-related travel expenses records and receipts to substantiate your travel claims, including a travel diary for longer overnight trips. You can’t make the claim if you don’t have evidence of it.

When can you claim?

As is the case with all tax deductions, you can only claim deductions for travel expenses if they were directly related to your work. If you take a trip to a conference, and then decide to stay an extra night to see a friend, you must apportion your expenses to only include those directly related to the conference. Sometimes the amount you can claim can also depend on whether you receive a travel allowance from your employer – it also does not automatically entitle you to a deduction. You also cannot claim a deduction if you were reimbursed for your expenses.

What can you claim?

Potential expenses you could claim as deductions include:

Accommodation, meals & incidental expenses (for overnight stays)
Airplane, bus, train and taxi fares
Bridge & road tolls (you cannot use your car logbook business percentage to apportion these)
Parking fees
Car hire charges (including fuel, insurance, registration etc.)

You generally cannot claim travel between your home and workplace, or any private expenses incurred during work-related travel.

Required records

If you are a sole trader or a partner in a partnership and you travel for six or more consecutive nights, you must keep a travel diary or similar document before your travel ends, or as soon as possible afterwards. It is recommended that companies, trusts and individual taxpayers also keep a travel for longer trips. In your travel diary, record the detail of each business activity including:

what the activity was
the date and approximate time the business activity began
how long the business activity lasted
the name of the place where the business activity occurred.

Your travel diary can be in any format as long as it contains sufficient detail to justify what you are claiming. See example below.

Source: Australian Taxation Office

As with all documentation used to prepare your tax returns, you must keep any receipts, invoices, boarding passes, tickets, travel diaries and details of how you calculated private portions of your expenses for five years. You cannot make a claim if you do not have evidence to back it up.

Employee travel

Your business can claim a deduction for travel expenses related to your business, whether the travel is taken within a day, overnight, or for many nights. The expenses must form part of your business records.

Whatever your business structure, if you have employees who travel for your business, the business must actually incur the travel expense (by paying for it directly or reimbursing the employee) to be able to claim it as a deduction. Your business may be subject to FBT if it pays or reimburses your employees for their travel expenses or private activities. Certain exemptions and concessions may apply to reduce your FBT liability and if you pay your employees a travel allowance or a living-away-from home allowance, there are different considerations.

Claiming the deduction

Since you’ve kept records of all the travel expenses you want to claim, it’ll make it easy to prepare your tax return. Check out our handy infographic below.

These tips are general, designed to get you thinking about the different things you can and can’t claim, and why. If you have any questions about this, please feel free to contact us.