Travel SOS: What travel expenses are tax deductible?

Q. Angela
It’s that time of year again and I would like a clear answer on what travel expenses are tax-deductible and what evidence I need when completing my tax return.

A. Here are the travel-related expenses you’re actually allowed to claim and what kind of evidence you need to provide.

Using your own car for business travel
When using your own car for business-related trips, such as visiting clients, you can claim fuel and parking expenses.

Read more: ATO advises not to lodge your tax return before this date

There are two methods to claim car expenses: one is by keeping a logbook, the other is calculated by cents per kilometre.

You can claim $0.72 per kilometre for FY 2021, with a maximum of 5000 business kilometres per car. For anything above 5000km, you will need to use the logbook method.

Adding extra days to work travel
You need to apportion your travel expenses if they are partly private in nature. For example, if you add a holiday to the end of work-related travel, family or friends travel and stay with you when you travel overnight for work or you attend a work-related activity while you happen to be on holiday.

Personal expenses will not be deductible, and you will need to apportion your expenses to ensure you are only claiming for the work component.

Read more: How to share travel expenses

Claiming for meals
Each year, the ATO will set a reasonable daily travel allowance amount for overnight business trips, meal allowance is included in this reasonable amount.

If you spend less than the commissioner’s reasonable amount, you may not need to keep written evidence such as receipts, or a travel diary. But that doesn’t mean you can claim the reasonable amount in full, you can only claim what you actually spent.

Keeping evidence
If you received a travel allowance from your employer and want to claim less than the reasonable amount explained above, you don’t need to keep your receipts. You will need to provide evidence of any overseas accommodation. However, it’s advised to keep copies of all receipts in case you get audited.

What you can’t claim
Generally, you cannot claim work-related travel for travelling between home and your usual place of work as it is not considered a business expense.

The other common mistake is to claim the entire reasonable travel allowance without receipts. If you get audited, you’ll need to show that you actually incurred those expenses, although this can also be done by showing credit card statements.

Tax on travel allowances
Travel allowances will be added to your assessable income and you will be able to claim the actual expenses you spent on the business trip.

Read more: Money back for travel mishaps

Tax deductions and COVID-19
The ATO has taken in the consideration of quarantine expenses relating to COVID-19. You may be able to claim quarantine expenses if it was undertaken as part of your employment duties; you will likely need to carefully assess your situation with the help of a tax professional.

Do you often travel for work? Do you do your own tax returns or consult a professional? Why not share your tips in the comments section below?

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Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for the ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.

Written by Ellie Baxter



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