One of the hot topics from the ATO during this busy tax season is travel expenses claims for individuals and businesses.  As an individual, you are entitled to claim any work-related travel expenses you incurred during the financial year.  This can include accommodation, incidental expenses, air, bus and taxi fares, road tolls, parking fees, car hire charges and meals (if your travel is overnight).  The exception to this is you are not able to claim the travel between your home and work.  If you have to travel between different work sites or offices you are able to claim that.  It is vital you keep receipts to justify your claim and if you are travelling overnight a travel diary is recommended.

For a business, the travel expense debate can be more complicated.  In order to establish if a business can claim the travel expense, you need to understand whether the travel was necessary to earn an income.  For a business, this means there must be a direct link between the travel and the earning of business income.  Again, documentation is the key.  There need to be accurate records of what meetings were attended and what was discussed.  You can do this by keeping a diary entry of the meeting or even a follow-up email with the person you had the meeting detailing the points discussed.  The three main items that can be claimed are travel, accommodation and food.  Speak with your tax professional but it may be a better option for business owners who are also employees to be paid a travel allowance.  This allowance is then tax-deductible and the employee are able to claim a tax deduction against the allowance.

It is also important that only the business-related expenses are claimed if the business owner combines the travel with a holiday.  Say for example the owner attends meetings that will mean they are away from home for three days but they decided to extend that stay for a further two days as leisure it is only the expenses relating to the first three days that will be claimable for the business.  In this case, the travel to and from will need to be apportioned as business and personal.

The ATO publishes a list of reasonable amounts that can be paid for the travel allowance based on where the employee is travelling.  This list will include those three main components of travel, accommodation, meals and incidentals.  This list is based on what the employee would earn and where they are travelling to.  It is also accompanied by a list of high-cost country centres, also tier 2 country centres and cost categories for overseas travel.

The overwhelming message from the ATO is record keeping is vital in making any claim as an individual or a business.  Always talk to your tax professional about what records you need to keep and try and do this before 30 June each year so you are not missing out on deductions you may not have kept receipts for but have incurred.

Please note this article provides general advice only and has not taken your personal, business or financial circumstances into consideration. If you would like more tailored advice, please contact us today.