Many people travel for work, and once the restraints of COVID-19 are over, many people will once again pack their suitcases, log out of their zoom account and physically head out of the office. If you’re one of the people who travel for work, it’s a good idea to brush up on the travel expenses you can claim. The difference could mean hundreds more back in your 2021 tax return.
Pro Tax Tip: If you are reimbursed by your employer for your travel, you can’t claim expenses on your tax return. Don’t be tempted to double dip. The ATO has sophisticated data matching programs that’ll catch you out.
What Are Travel Expenses?
Travel expenses are incurred when a person conducts business away from the home and away from their normal working office. This includes travelling to a client’s office for business or meeting somewhere off location for a client. Travel from home to work is not a claimable travel expense, neither is incidental travel between home and work. The Australian Taxation Office (ATO) considers that to be a private expense. There are exceptions to the rule, such as if you are a tradie for example, and you work at different jobsites in the one day.
Expenses can include transportation costs, vehicle expenses, road tolls, parking and accommodation and meals if you travel overnight or longer in the pursuit of business.
Pro Tax Tip: If you travel for an extended amount of time, you’ll need to keep a travel diary. The ATO may not let you claim 100% of your business trip if you incur a mix of business and private expenses.
Where Is Your Regular Place Of Work?
The ATO has rules and regulations surrounding what is a workplace and where and when it can be claimed as a travel expense. Knowing these rules can give you an edge at tax time.
As stated above, if you’re workplace is regularly at different locations as a normal part of conducting your job, you may be able to claim your travel expenses from home to those workplaces.
If your normal office location changes for a period of time, say for six months you’re asked to travel to an alternative location, the ATO sees this as a normal workplace because of the period of time spent there, and you will not be able to claim travel expenses from home to work. The ATO still defines this new location as your regular place of work.
The ATO states that ‘the full facts and circumstances of the specific working arrangement in place must always be considered in determining the nature and deductibility of the transport expenses incurred.’
Pro Tax Tip: Your ITP Tax Accountant will provide advice with what are reasonable travel expenses you can claim under this rule.
The ATO has outlined ‘Per Diem’ rates that are published by the ATO annually in which they set out the updated reasonable allowance each year for:
- Overtime meal expenses – this includes food and drink when working overtime Domestic travel expenses – this includes accommodation, food and drink and incidentals, air, bus, train, tram and taxi expenses, when working within Australia
- Overseas travel expenses – this includes food and drink as well as incidentals when travelling overseas
- Car costs – such as fuel, oil, repair and maintenance
(For the 2020-21 income year, the reasonable amount for overtime meal expenses is $31.23 per day, for example.)
Pro Tax Tip: Receive a fine when travelling for work? The ATO does not allow claims for fines such as speeding or parking infringements.
Work vs Private Travel
You’ll need to apportion your travel expenses if they are partly private in nature. You may not need to apportion expenses if there is a minor private expense, but it’s good to know when this rule applies.
Examples of when you’ll need to apportion your costs include:
- If you take your partner or children with you when you travel. Their expenses cannot be claimed
- Any extended travel expenses after your work trip has finished
- If your private trip includes a small business portion, say meeting up with a customer or visiting a related business
- If you stay on for an extra few days to do some sightseeing
- If you are already at a location and then decide to attend a seminar. Only the costs of the seminar can be claimed and not the travel or accommodation.
Pro Tax Tip: If you travel away from home, you’ll need to keep your travel records such as a travel diary in addition to your receipts.
What Is A Travel Diary?
A travel diary is a record of your travel movements and activities you undertake during your travel. The ATO will expect that you’ll use this to apportion your business and private costs – usually done as a percentage of your overall expenses.
You’ll need to keep a diary for each trip you take away from home for six or more nights in a row. As with any rule, there are exceptions:
- You travel within Australia and meet the requirement for the record keeping exception (receiving an allowance for your travel or deduction less than the reasonable travel amount)
- You are a crew member on an international flight and you claim a deduction for less than the allowance you received.
You’ll need to record your movements and activities in a format such as a diary or journal which can be paper or electronic.
Pro Tax Tip: Any evidence you use to claim your deductions, including tax invoices and receipts, must be in English.
You’ll need to record your travel movements and activities before they end or as soon as possible afterwards, in which you’ll need to record where you were, what you were doing and the times the activities started and ended.
ITP The Income Tax Professionals have been helping Australians with their personal and business tax for 50 years! There’s not a lot they don’t know about tax. Maximise your tax return with an ITP Tax Accountant who will know all the claims you can make. Your money. Your pocket!