Let’s explain how to turn work-related travel expenses into dollars in your pocket at tax time.
What exactly is a work-related travel expense?
If you travel for work, any purchases you make related to that travel, can likely be claimed as a travel expense on your tax return.
As with most work-related expenses, travel expenses are usually tax deductible. Of course, there are a few restrictions on what you can claim and we’ll explain those a little later.
Travel expenses to boost your tax refund!
The following travel-related expenses are tax deductible if you are eligible to claim them (check eligibility rules further down this page):
- Incidental expenses (laundry, service tips etc.)
- Air, bus, train and taxi fares
- Bridge and road tolls
- Parking fees
- Car hire charges
- Meals (if your travel included an overnight stay)
- Bags used only for work travel
Can I claim driving in my car or public transport?
- Travel between two separate workplaces (or jobs).
- Travel from your workplace to offsite meetings or events.
- If you work from home for part of the day, then travel to your workplace for that same employer.
- Travel from your home to an alternative workplace if required.
- If you work at more than one location for the same employer, you can claim the cost of travelling between locations.
Travel you can’t you claim:
- The cost of travel from home to your everyday place of work (and back again).
- If you run an errand on the way to or from work. Eg. pick up the mail or a package.
- If you work overtime or out of hours.
- Your home is your place of work and you travel to a different location to work for somebody else.
Is car parking a travel expense?
You can claim for work-related parking expenses as long as the trip you took was also tax allowed (see the list above).
For example, if you are required to attend a company meeting or event and you use your own car to get there. You can also claim any parking costs associated with the trip.
However, you can’t claim the cost of normal, everyday parking if you drive to work and pay for parking near you workplace.
Important: You can’t claim any car or parking expenses if you are reimbursed by your employer.
Do I need to keep a travel diary?
If you are away from home for more than 6 consecutive nights, you should keep a travel diary to record where you were, what you were doing and the start and end times of your activities.
Example travel diary entries:
- 6:00am Flight to Sydney – arrive 8.30am
- 8.30am – 9:00am Uber from Sydney Airport to Darling Harbour
- 9:30am – 4:00pm Marketing Conference
- Overnight at The Hyatt, Darling Harbour.
If you don’t have a travel diary handy, no problem! Download a travel diary template from the Etax Downloadable Resources page.
It’s a good idea to keep a record of your travel and expenses, even when you aren’t required to keep a diary. It’s very easy to forget details about expenses months after they happen.
What if I receive a travel allowance?
If you receive a travel allowance from your employer it is usually considered taxable income and is listed on your income statement. As long as you spent the money you were paid as an allowance, you can claim a tax deduction against it at tax time.
A common mistake is to assume that you can claim the entire allowance as a tax deduction. This isn’t necessarily the case.
You can only claim the total of your actual expenses. For example if you received $1500 worth of travel allowances from your employer during the year, but the cost of your travel was $1,000, you can only claim $1,000 work of travel deductions on your return.
Only claim travel deductions you have evidence for as the ATO can require substantiation for any claims.
What travel records should I keep?
You should keep ALL travel expense records and receipts, even if you receive an allowance. It’ll help ensure you claim everything you’re entitled too at tax time.
Remember, if you’re not sure whether you can claim an expense, keep the receipt and ask your tax agent. Remember the motto: You can’t claim it if you can’t prove it!
Photograph your receipts and other purchase records, and keep everything in one folder. Create a back up folder too, just to be on the safe side.
Etax clients can upload travel expense receipts straight into their secure online account at etax.com.au. That way everything is ready and waiting in their account at tax time!
What travel expenses are not allowed?
There are certain travel expenses and circumstances where a travel cost is not deductible.
- Although you can claim the cost of travel between two different workplaces, you generally can’t claim your journey from home to work and from work to home each day. The exception is if your employer requires you to transport heavy goods and there is no safe place at work to leave them.
- You can’t claim a tax deduction for any travel expense that your employer reimburses you for.
What if I travel for work and then spend an extra few days on holidays at the end of the trip?
This is where it gets tricky. If travel you take is a split between work and leisure then all of your expenses also need be split between the work and leisure parts of your trip. There two a few key rules here:
- The primary purpose of your trip must be work related, and
- You can’t claim any part of a trip that is not work related.
Example: Work Conference In Another State
Julie travelled to Melbourne for a week long conference. She then stayed in Melbourne on Friday and Saturday night to see the sights and catch up with friends.
Julie can claim in full:
- Accommodation costs for Monday to Friday.
- Uber fares from the hotel to the conference and back each day.
- Meals during the week.
Julie was away for 7 days, of which 5 (or 71.5%) of the trip was work related. She can also claim 71.5% of:
- Her flights to and from Melbourne.
- Her Ubers to and from the airports.
Julie can’t claim leisure expenses:
- Accommodation costs for Friday and Saturday night.
- Meals from Friday night to Sunday.
- Uber trips to her friends house.
- Car hire for a trip she made to the Great Ocean Road.
Here are some additional examples of what is not allowed by the ATO:
- Like the example above, if you travel to a work-related conference in another city and stay an extra night to visit a friend, you can’t claim for any costs related to that extra night.
- If you travel with your partner or children, you can’t claim any travel or accommodation costs for them.
- You can’t claim an add-on flight that is not related to your work trip. For example: If you had a work trip in Mackay, you can’t claim a flight you took to the see the reef in Cairns.
- You add on a small work event while on holidays. For example: You are on holidays for 2 weeks in Europe and while you’re there you take the opportunity to attend a 2-day work related conference. You can claim the costs of the conference, however, you can’t claim any travel or accommodation costs related to the trip because the trip’s primary reason is a holiday, not business.
If you have any questions regarding your work-related travel expenses, feel free to get in touch. Our accountants are always happy to set you on the right track for the best possible tax refund!
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