It is that time of year when travel is quite likely to be on your mind. You might be considering a bit of a get-away overseas and potentially offset a bit of the cost by building a bit of business into the trip. Typically, if you are going on a holiday, you are likely to be taking your spouse or other family members.
From a tax perspective, travel expenses can be claimed as a deduction if they relate to earning your income. The types of travel expenses that may be claimed include motor vehicle running expenses where the car is not your own (e.g. rental car), air fares, bus and train travel, taxi fares, road tolls, and parking fees. Expenses for meals, accommodation and other incidental related costs may be claimable if incurred for overnight work-related travel. These are the sorts of expenses that would typically be incurred during an overseas trip.
Combining business and pleasure
However, it is very important to understand the rules for claiming travel expenses when your trip combines both business and a holiday.
Airfares: If the predominant reason for the trip is business, and some portion of the trip is also a holiday, then your total airfare would be deductible. This is likely to be the case for when you go to a conference and you stayed over for some additional time. You could prove the reason for the trip was the conference. However, the airfare for your spouse would not be tax deductible.
Accommodation: Where your spouse accompanies you, their portion of accommodation expenses cannot be claimed. Nor can you claim the portion of accommodation expenses for the time you are on holiday.
However, in the case of a conference starting on a Friday and then you take two days over the weekend for sightseeing before the conference finishes mid the following week, it is easy to demonstrate that weekend accommodation was in fact necessary as part of the conference.
For trips between one and five nights, written evidence such as invoices and receipts must be kept. For longer trips, a travel diary must be maintained in addition to written evidence.
Only work-related expenses are eligible for tax deductions and records must be kept. When travelling overseas, written evidence of accommodation costs is required.
If, as part of your business trip, you receive a travel allowance, you may not need to maintain stringent records for some items if you claim less than the Taxation Office’s reasonable allowance guidelines.
However, the rules are different for domestic and international travel. We suggest that if you are considering that overseas combination of business and pleasure, you call Saward Dawson just to check what you need to know in advance.