There is often a lot of confusion surrounding travel costs and whether or not they are deductible on a tax return.
Some clients believe a particular form of travel is deductible when it is not allowable. Others do not realise that they have travel expenses that could be claimed.
There are many twists and turns in the travel expenses area, but the following are some of the Do’s and Don’ts that can help you decide if your travel expenses may be claimable.
DO – know your base of work or employment.
Travel to and from this base is not claimable. The ATO makes no distinction whether you have to travel five stations on the train or take two plane rides to reach your base of work. This is considered going to and from work and is not claimable.
DON’T – forget that once you are at your place of work, that any costs of travelling from this base for work purposes could be tax deductible.
This could include work site visits, client meetings, off-site training courses or even trips to the airport to catch a flight for work purposes.
DO – keep good records of km travelled in your motor vehicle, tolls, parking, or other fares and make sure the dates on the receipts can be matched back to a diarised work event.
DON’T – assume if you travel and stay overnight for work purposes that all expenses related to that trip are automatically 100% claimable.
There could be portions of things like your meals and other incidentals that would be considered private in nature and need to be apportioned.
DO – keep a detailed diary if your work related travel extends for more than six nights.
DON’T – make the mistake of thinking that a private holiday that has only a vague connection with your work is going to be claimable.
For example, if you are in the airline industry, a holiday trip to Seattle is not claimable just because you decide to tour the Boeing factory. However, if you get the opportunity to do some training at the Boeing factory that is connected with your work and you use your holidays and private funds to do this, then this is much more likely to be considered a tax deductible expenses.
DO – be cautious about assuming that carrying any sort of tools in your motor vehicle is an automatic green light that makes all your travel deductible.
There are a number of conditions that need to be met before this type of travel is claimable.
DON’T – expect your accountant to just make the travel the same every year.
It may be similar every year, but it always needs to be justified against your diaries and/or records.
DO – keep records of any travel related to study courses that are connected with your work.
This travel is likely to be claimable.
DON’T – forget the Golden Rule of tax deductions.
If you are not sure whether something is deductible, keep the receipts and other records and discuss this with your accountant.
Further information on travel claims and the associated records is available on our annual tax checklist. To obtain a copy of our logbook template, click through here.
