When is Travel and Accommodation Tax Deductable?

Travel expenses from home to work are generally not an allowable deduction.

Traveling expenses incurred in the course of the taxpayer's work or in traveling between one place of business and another will be deductible. For example motor vehicle expenses, air, bus, train or taxi fares, car rental costs etc.

Accommodation and meals on business trips away from home may also be deductible.

Special substantiation requirements exist in order to make a successful travel tax claim.

Travel Records/Substantiation

A separate travel diary is required if the travel involves being away from the taxpayer's ordinary residence for 6 or more consecutive nights.

The requirement to keep travel records in the form of a diary or similar document is a separate requirement to the requirement to obtain written evidence of travel expenses.

A travel diary is a separate record of activities undertaken during travel. Its purpose is to show which of the activities were related to income-producing purposes so that an appropriate allocation can be made between deductible and non-deductible expenses.

An activity is recorded by specifying in a diary or similar document:

   1. The nature of the activity
   2. The day and approximate time it began
   3. The duration of the activity; and
   4. Where it occurred

Methods available - Claiming Car Expenses

There are 4 specific methods available to individuals and partnerships to calculate deductions for car expenses:

   1. "Cents per km" method (5,000 kms or less);
   2. "12% of original value" method (greater than 5,000 kms);
   3. "One third of actual expenses" method (greater than 5,000 kms);
   4. "Log book" (12-week) method.

Full substantiation of car expenses is only required where the logbook or one-third of actual expenses methods are used.

Domestic Travel Allowance Expense

A travel allowance is an allowance paid by an employer to cover expenses for accommodation, food, drink or incidentals incurred by an employee in travel, away from the employee's ordinary residence overnight. If this allowance is less than the reasonable travel allowance published by the ATO, the traditional substantiation methods are not required.

However, if an employee claims an amount greater than the “reasonable amount”, the whole claim (not just the excess) must be substantiated.

Business Travel

A business travel expense is a travel expense incurred in producing assessable income (other than salary and wages), which involves traveling away from home for at least 1 night.

To deduct a business travel expense it must be substantiated by documentary evidence. In addition, a travel diary is required if the travel involves an absence from home for 6 or more consecutive nights.

Expenses incurred as part of travel in the course of earning non-salary or wage income not involving an overnight absence are subject to the general taxation substantiation requirements.

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