FocusOn - Travel expenses

Travel expenses can be claimed as a deduction if those expenses 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, and other travel expenses including air, bus, train and tram travel, taxi fares, bridge and road tolls, parking, car hire fees and accommodation.

Home to work travel

Travel between home and work is usually considered private travel and is therefore not deductible. The exception to this is where the work duties begin at home and then the taxpayer travels on to perform other work duties.

Travelling to client’s premises

A business trip on the way to or from work may be deductible. This is the case if the taxpayer performs substantial employment duties at the destination. A lawyer dropping off files at a client’s premises on the way home would not be considered substantial duties. However, if the lawyer dropped off files and attended a business
meeting at the client’s premises, the entire trip from the office to the client’s premises to home would be deductible.

Stand-by duties

An employee on stand-by who is travelling to work in response to a call would not in itself allow the trip to be deductible. This is due to the employee on stand-by not commencing work duties until they arrive at the place of employment. However, the travel would be considered deductible if the employee could establish that work duties began when answering the call.

Teachers

Travelling to school after hours to attend meetings such as parent teacher interviews are not deductible as the work duties are performed when the teacher arrives at the school.

Itinerant travellers

Employees may claim the travel costs between a web of work places. This will apply where taxpayers regularly work at more than one work site during the day and there is no fixed place of work. However, a nurse who travels to several hospitals to relieve staff shortages and remains at one hospital until completion of her shift is not considered an itinerant traveller and no deduction is available.

Travel between two places of employment is deductible as long as the taxpayer does not live at either of the places and the purpose of the travel is to allow the taxpayer to perform income-producing activities. This applies even if one of the workplaces is a home based business.

Bulky equipment

Taxpayers who transport bulky or heavy equipment may be able to claim the travel costs for home to work travel. This claim can only be made if there is no secure storage area provided for the equipment at the workplace.

Purpose of the trip

Where a trip is undertaken partly for private purposes, the expenses will need to be apportioned. For trips between 1 – 5 nights written evidence must be maintained.

Airfare

If the predominant purpose of the trip was business, and a few days holiday was incidental, then the total airfare would be deductible. The airfare for a spouse is non-deductible.

Accommodation

Where a spouse accompanies the taxpayer, 50% of accommodation expenses will be allowed. Accommodation expenses during the part of the trip relating to a holiday are not deductible. For example, you pay accommodation for 10 nights for a one week conference. The expenses for the seven nights of the conference are deductible and the three nights for the holiday are not.

Maintaining a travel diary

Travel for 6 nights or more requires written evidence and the completion of a travel diary, which must be retained for five years. For each trip you must record:

	The exact nature of the activity
	The day and approximate time it began and how long it lasted (before the activity ends or as soon as possible afterwards)
	Where you engaged in it

Note that only expenses in relation to work-related activities are eligible for deductions. The Australian Taxation Office also requires appropriate records to substantiate these deductions. For trips overseas, written evidence of accommodation costs is required regardless of whether you received an overseas allowance or the length of stay. A travel diary can be obtained from our office if required.

Reasonable travel allowances

The requirement to keep travel records does not apply where you receive a travel allowance that does not exceed the Commissioner's reasonable allowance guidelines. These guidelines are based on public service rates and cover accommodation, food, drink and incidentals (eg laundry, taxi fares, telephone calls etc.) for domestic travel allowances. For overseas travel only food, drink and incidentals are covered. International travellers must still substantiate their accommodation expenses. If you require the reasonable travel allowance rates, please contact us.

Published : 6 July 2007