As Accountants, Walker Hill are often asked questions in relation to work related travel expenses. Whether you are a sole trader, employer, employee or run a small business, these questions tend to be amongst our most frequently asked during tax time. Following are some tax tips around work related travel expenses.
Work related expenses, travel and otherwise, can boost your tax refund. If you travel for work, you can claim expenses on purchases you make related to that travel. These are to be claimed as work related travel expenses on your tax return.
Like most work related costs, a travel allowance and most travel expenses are usually tax deductible. Of course, there are a few restrictions on what you can claim for a better tax refund.
So, what can you claim a deduction for? Here are a few examples of a work related travel expense:
- Bridge/road tolls
- Air, bus, train and taxi fares
- Parking fees
- Car hire charges
- Meals (only if travel is included an overnight stay)
- Bags or suitcases used specifically for work travel
Travel expenses vs transport expenses
Determining the difference between a work related travel expense and a transport expense can be tricky, as often these two overlap.
Transport costs are one of the most popular tax deductions. Generally, work related travel in your car or on public transport is claimable with the exception of travel from home to work and back again.
Generally, you can claim a transport deduction for travel done:
- from your workplace/place of business to meetings or events offsite
- between two separate workplaces for different jobs
- from one job to your second job/an alternative workplace if and when required (you can claim the cost of travelling between locations)
Costs incurred that you cannot claim include the cost of travel from home to your everyday place of work and back, if you run an errand on the way to or from work like picking up mail or dropping client documents off physically or if your home is your place of work for one job and you travel to a different location for separate work.
What about car parking?
You can claim for work related parking expenses as long as the trip you took was also allowable as a deduction (for more on deductions, see above!). Normally, every day parking if you drive to work and pay for parking isn’t eligible to claim as a tax deduction, but this would be different if you were to, for example, carry bulky tools, or pay for parking where you have attended a meeting in a different location outside of your usual workplace.
Do I need a log book?
If you are away from home/your regular work location for more than six nights in a row, as an employee or business owner you should be keeping a travel diary to record locations, start and end times of your activities and what they were. This also allows you to track and recall incidental expenses like road tolls and meals.
If you don’t have a travel diary handy, no problem! There are plenty of templates online and we love the ease of ATO compliant logbook apps available for free to track travel and associated costs incurred. You can even pre-fill aspects of the trip and where the ATO require proof for any of your expenses, you can use this tool to keep a record of everything. Receipts or invoices detailing travel expenses can ensure that the details of your work related travel will be easy to remember, and prove, months later.
A travel allowance from your employer it is usually considered taxable income and is listed on your payment summary. As long as you spent the money you were paid as an allowance, you can claim it as a tax deduction. Remember you can only claim the total of your actual expenses, and not necessarily the entire allowance, as work related travel expenses.
Accommodation tends to be the easiest to prove and record. Provide detailed records of all accommodation and any extra expenses incurred when travelling for work.
What documentation of work related travel expenses should I keep for my tax return?
Supply anything you think might be relevant to you tax return. Work related car expenses can be claimed through receipts or tax invoices – these act as written evidence of the specific purchase.
Walker Hill has seen our fair share of paper records and receipts (especially our Bookkeepers!), but remember, these can fade or be lost over time. We recommend an app like HubDoc to keep your receipts and tax invoices all in one place and ready for your Tax Agent.
A log book is also highly recommended to claim work related travel.
What expenses are not allowed to be claimed?
There are certain travel expenses and circumstances where travel costs are not deductible on tax returns.
For example, you can’t claim a tax deduction for any travel expense incurred that your employer has already reimbursed you for. Although you can claim the cost of travel between two different workplaces, as mentioned above you generally can’t claim your journey from home to work and back again (although there are exceptions involving the transport of bulky tools).
How do I claim travel deductions?
Travel expense deductions, travel allowances and travel records can seem confusing to keep track of, but simply put, you cannot claim any part of a work trip that is not directly related to your work. The primary purpose of your trip must be work related to claim it on your tax return. If you travel with your partner, friends or family, you can’t claim any travel or accommodation costs for them. Similarly, you can’t claim a flight, meal expenses or accommodation unrelated to your work purposes that you have paid.
If you still have questions regarding your work related travel expenses, do not hesitate to contact Walker Hill. We are passionate about clarifying all things tax for you and are always happy to set you on the right track for the best possible refunds for you, your business and your family.