With the new financial year on the horizon, it is crucial to understand the ins and outs of claiming work-related travel expenses and the associated record keeping required for the Australian Taxation Office (ATO).

Many people need to travel for work, however it can often be confusing to determine the tax deductibility of these work-related trips. Before claiming a deduction there are a few key factors to consider:

• Is there a direct link between your travel and your employment? and
• What is the nature of your trip?

If you are travelling solely for work purposes 100% of the expenses outlined below can be deducted. However, if your travel involves some aspects of private enjoyment or you are travelling with your spouse or family, the expenses outlined below will need to be apportioned accordingly.

Apportioning for work-related travel can require different treatment depending on the type of travel you are undertaking. For example, if you travel for work for four nights and two of those are work-related, only half of your accommodation expenses will be deductible on a days-based apportionment. However, if you were travelling with your spouse and children which resulted in you booking a two-bedroom apartment, the deductible portion will be the costs incurred if you were travelling alone (e.g. a one-bedroom apartment), unless your spouse or family member is also travelling for work purposes.

Work-related travel expenses you can claim:

• Airfares are fully deductible if work is the primary purposes of your trip. However, if work is incidental to private travel, the airfares cost may need to be apportioned on a days basis.
• Transportation Costs (e.g., train, bus, taxi, or ride share fares) when travelling to a work-related event rather than for any private aspects of your trip.
• Car hire fees and the associated costs you incur (e.g. fuel, tolls, and car parking) when using the hire care for work-related purposes.
• Accommodation for the work-related portion of your trip.
• Meals if you are away overnight, subject to the reasonableness test.

The ATO releases a tax determination each year detailing a reasonableness test in relation to meal expenses, which differs based on your income. You can only claim a deduction for the expenses you actually incurred. Up to the reasonableness threshold you only need a record of the expense, but you will need to keep all receipts for any expenses incurred over the threshold.

Work-related travel expenses you cannot claim:

• A holiday or visit to family or friends that is combined with work-related travel.
• Souvenirs and gifts.
• Visas, passports, and travel insurance.
• Sightseeing and entertainment.
• Expenses associated with taking a family member.

Record Keeping

Whilst the ATO does not require you to provide receipts with your tax return, you do need to keep a record of any work-related travel expenses for five years to be able to substantiate your claim. A travel diary is required if you are a sole trader or partner in a partnership and your travel is for six or more consecutive nights. You must include the following information of each work-related activity:

• What the activity was.
• The date and time the work-related activity began.
• How long the work-related activity lasted.
• The name of the place where the work-related activity occurred.

In summary, when claiming a deduction for work-related travel, you should consider the nature of your travel, the work-related versus private percentages of your travel, and the records you are required to keep.

Contact Pilot

If you would like any assistance with your work-related travel expenses, contact Kristy Baxter or Angela Stavropoulos on taxmed@pilotpartners.com.au or 07 3023 1300.