Are you travelling for work or for business?

Do you know what the travel records and the travel diary requirements are? You might consider that if the majority of your trip is for pleasure then you are not entitled to a tax deduction and you’re probably right. But what if the predominant purpose of the trip was for business?  After all no-one is expected to work all the time.  Have you wondered whether you are entitled to claim part for your travel as a tax deduction?

In this article we consider whether you can claim a tax deduction for your travel and what are the requirements to satisfy the Tax Commissioner.

Basic Requirements

If you are traveling for work or for your own business, then you are entitled to a tax deduction provided you are able to substantiate your claim. To substantiate your claim, you will need to keep written evidence of all your expenses. This is particularly so, if you travelled and were away for one night or more.

It is best to keep any receipts for accommodation, meals and any incidentals that you have whilst away. However, this is not always possible. As an alternative if you don’t have the receipts you may need to keep a diary or journal as evidence. It is so easy these days to just add an appointment in the calendar on your tablet or mobile phone and synchronise with your computer when you return to the office.

What you can claim

The most obvious travel expenses are for the cost of your flights, accommodation, meals and incidentals. However, you may also be able to claim the costs of hiring a car. During your time away you will also be able to claim the hire car running expenses such are fuel, insurance and toll fees.

Don’t forget your main purpose for travelling in the first place. If the main purpose of your travel is to attend a conference or to meet with clients, then the full cost of the travel will be deductible. However, if the main purpose was for a holiday, then the travel costs will not be deductible. So if your main purpose was for a holiday and whilst there you attended a conference, you would only be entitled to claim the additional costs associated with going to the seminar or conference, such as the attendance fees, taxi fare to and from the seminar.

Naturally, you can only claim the business or work related portion of your travel. So, if your travel is for both business and private purposes, you cannot claim a deduction for the private portion of your trip.

Reasonable travel allowance expense amounts

There are specific record-keeping requirements for travel expenses, depending on:

  • whether you receive a  travel allowance;
  • whether your travel was within Australia or overseas; and
  • the length of your travel.

If you receive a travel allowance the Australian Taxation Office sets out the reasonable amounts for accommodation, meals and incidentals. These rules set the amount that the Australian Tax Office consider reasonable for different salary earners and for different cities and regions in Australia, and also overseas. If you received a travel allowance you should speak with a tax professional to find out more about the reasonable expense amounts.

Record keeping

The record keeping requirements depend on whether you received a travel allowance, whether the travel was for 6 or more nights and whether the travel was within Australia or overseas. The following outlines what you travel records and the travel diary requirements for the ATO.

If you did not receive a travel allowance:

If you do not claim more than the reasonable allowance amount:

Note different rules apply to international air crew.  Members of an international air crew  are not required to keep at travel diary for travel of 6 or more days if the tax deduction is limited to the amount of allowance received.

If you do claim more than the reasonable allowance amount:

Note different rules apply to international air crew.  Members of an international air crew are not required to keep at travel diary for travel of 6 or more days if the tax deduction is limited to the amount of allowance received.

What to include in the Travel Diary

If your travel is for six or more consecutive nights, you must keep a diary or travel journal to record the details of each business activity before your travel ends, or as soon as possible afterwards. The diary must include the following:

  • the nature of the activity
  • the day and approximate time the business activity began
  • how long the business activity lasted
  • the name of the place where you engaged in the business activity.

You might think it burdensome to maintain travel records and the travel diary, but if you want to claim your travel as a tax deduction it is necessary.

Our best advice to you is seek advice before you travel so that you understand the tax issues in advance and not miss out on any tax deductions for the trip.

Final Words

HQ Financial Group is here to help your small business. If you require any assistance with government grants, accounting or business tax returns please contact our office on 1300474829 or email info@hqfinancialgroup.com.au