Every time you get on a plane, nearly half your fellow passengers are business travellers. Business travel is big business for airlines, hotels, car hire companies and restaurants. Increasingly, however, in this time-poor age, travellers are choosing to mix business with pleasure. After all, if your business is going to take you somewhere sunny and scenic – perhaps to meet customers, or as part of a conference – you might as well make the most of it, maybe staying on a few days afterwards to relax on the beach, or bringing your family along to enjoy some leisure time while you go about your business duties.
Those who travel for business need to know what expenses are tax-deductible.
What can you claim?
If you are required to travel as part of your business, profession or job, any costs incurred by you or your business are potentially tax-deductible. Small business owners can deduct these costs as operating expenses. Employees who are not reimbursed for these expenses can deduct them as work-related travel expenses. The kinds of expenses that you might incur, and which might be deductible, include:
- Transport – costs of flights, trains, buses, car hire, taxis, etc.
- Accommodation and meals – rooms, meals, laundry, and telephone and internet services.
You know what they say about all work, no play…
Statistics indicate that two out of three business travellers mix business with pleasure by adding some ‘me time’ to at least one business trip each year, which might be an economical option when following these guidelines:
- The primary purpose of the trip must be business-related for the business portion of the expenses to be tax-deductible. So, if you spend two weeks in far north Queensland but the only business element is a one-hour meeting with a customer, you might struggle to claim anything!
- Doing some work on holiday is not the same thing as bringing a partner or your family on a business trip. The only expenses deductible are those that would have been incurred if the business owner or employee had travelled alone and not extended the trip for leisure.
- If you stay on after a work assignment for a few days, the cost of your return flight will be tax-deductible, because you would have had to take that return flight even if you had come home as soon as the work part of the trip ended. But any accommodation or other expenses that you incur after the work-related element ends, such as meals or car hire, won’t be claimable.
- The nightly rate for a room that could accommodate one person is the amount that can be deducted. The cost of a family-sized suite to accommodate your spouse and kids who have travelled with you doesn’t qualify.
- Meals, travel and other expenses incurred can only be claimed for the employee or business owner, not travelling companions.
Still not sure what might be a deductible expense? When on a business trip, keep all your receipts and a travel diary, and talk to your accountant to help you determine what is deductible.
Mark Chapman is the director of tax communications at H&R Block.