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Taxing times: How to take the pain out of making a tax claim on work-related travel

Receipts

It’s that time of year again: tax time. When the challenge of filing personal taxes is compounded by the need to sift through work-related travel expenses, it’s no wonder many workers would rather visit the dentist. Knowing how to file business travel expenses can be one of the most confusing areas when submitting expenses to the Australian Taxation Office (ATO).

In a bid to end, once and for all, the confusion around business travel claims, here are four tips to simplify the process:

Who can claim what?

There’s a simple rule of thumb to determine what expenses can be claimed by employees: if you’ve paid for work-related travel with your own money and you weren’t reimbursed, then you’re entitled to deduct that.

However, if your company reimbursed you with any payments you incurred while travelling for business, then only the company can claim those taxes.

Another common practice among companies is to give employees travel allowances to cover any expenses they incur during business trips, including transport, accommodation, food, drinks and incidentals. When you receive a travel allowance, the company has to include these expenses in its tax declaration, rather than the employee’s.

What you can claim

Claimable work-related travel expenses include those incurred while away for one night or longer. These can comprise a variety of payments made while away from home such as: flights, accommodation, taxis, Ubers, car rentals and meals.

Here’s a tip to make tax time a bit less painful (and your tax accountant will thank you for it): use an expense software to track your expenses.

We’ve all experienced coming back to work after a business trip with receipts scattered between suitcases, wallets, jacket pockets and more. Using expense software, enables you to take photos of receipts and have them automatically saved on a single platform, making it easy to track. The best part is you can actually capture costs on the go, making the entire process more organised and saving time.

By the time you need to submit your taxes, you’ll have all the information and receipts you need on one place. This will speed up the otherwise long process of retrieving and collecting all your company travel receipts.

Keep written record of business trips

After five consecutive nights, the ATO requires corporate travellers to keep a detailed diary with all the expenses and work-related activities they undertake during this time — including date, time, place and duration. This diary, along with any receipts and boarding passes will help support your travel tax claims. At the same time, this will make it easier to keep track of your expenses.

When ‘bleisuring’, only include business trip expenses

In the last year, we’ve seen ‘bleisure’ travel — work related travel that is combined with a personal trip on the side — become increasingly popular. It’s always exciting to extend your stay in another city as a personal holiday. However, it can become somewhat confusing when lodging tax returns.

Make sure you are clear on your dates and the personal activities you undertake during a business trip, and exclude any receipts from non-business expenses. For example, while a company trip to London is tax deductible, the days spent in Dubai on the way back just to visit the city are not. This also includes any sightseeing expenses you may have incurred after business hours. To make sure you have your bases covered it is sound practice to keep a travel diary whenever mixing work with your own holiday.


About the author

Pip Spibey-Dodd is Chief Financial Officer at Locomote