If you are required to travel as part of your job, then you likely incur various costs. Whether making a short trip to attend a meeting or taking an overseas trip for an extended period, you can deduct your travel expenses. However, the laws surrounding travel expenses are complicated, and the Australia Taxation Office (ATO) keeps close tabs on travel expenses. So, it's vital to pay close attention to what you claim to avoid mistakes.
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taxes
Work Related Travel Expenses and Deductions
What is work-related travel expenses
Work-related travel expenses are expenses incurred while travelling for work. If you incur any expenses related to work-related travel, such as accommodation or meals, you may be able to claim them as travel expenses on your tax return.
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Using your car for work
If your job requires you to use a personal vehicle, you are entitled to deduct the motoring costs you incur while completing your job. This does not generally include the commute you make from your home to your place of work.
Eligibility
However, there are limited circumstances that may allow it. For example,
- An employee travelling between work sites throughout the day can claim their commute.
- If you travel directly from one job to a second job, as long as you do not return home in between.
- If you are travelling to a course or meeting for work, you can deduct expenses.
Methods to calculate work-related travel expenses
There are two options when it comes to vehicle travel for work tax deductions.
- As of April 2023, there is a flat rate of 78 cents per kilometre, and you can claim up to 5,000 km. You will need to keep a log of your travel to determine how far you travel for work purposes.
- Use a logbook if you travel and detail your running expenses, from mileage to fuel, servicing, repairs, insurance, and depreciation. If you use the logbook method, your logbook needs to show your work-related trips for a minimum continuous period of 12 weeks
Alternatively, you can use a reputable tax software that will provide you with mileage auto-tracking and a simple snap and store for all of the receipts related to your business expenses.
Ensure you maintain your logbook for a minimum of 12 weeks before relying on it for your income tax return. The log should include odometer readings to determine the proportion of time you use it for work purposes. Store all receipts and invoices noting your spending on your vehicle so that you can claim the correct percentage of vehicle expenses.
Travel to and from work is considered a private expenditure unless your employer requires you to transport bulky equipment and vehicles. That being said, the ATO pays close attention to these types of claims and may disallow them.
Other work-related transport expenses in Australia
There are other expenses that can also be claimed for work-related travel if they are for:
- Heavy vehicles and utes if they have a carrying capacity of more than one tonne
- Vans with a carrying capacity of 9 or more passengers
- Fees for hiring or renting a car
- Costs incurred while driving someone else's vehicle for work purposes, such as fuel expenses
- Public transportation fares, including air, bus, train, tram, ferry, taxi, ride-share or ride-sourcing fares
- Expenses associated with work-related transport expenses such as bridge tolls, road tolls, and car parking fees
Other travel expenses
You can claim additional work-related travel expenses for costs you incur that your employer doesn't reimburse. These travel expenses must be work-related rather than your daily commute to and from work.
- Airfare and taxi fares
- Tunnel or bridge tolls
- Car parking
- The cost of public transport
If you are fined for a motoring offence, whether it is for parking, speeding or otherwise, you cannot claim these.
Overnight meals & accommodation
If you are travelling away from home, you can claim accommodation, meals and entertainment. You cannot claim meal expenses if your employer reimburses you or provides you with a full allowance for these expenses. A number of businesses will provide an allowance, expenses included, so the employee doesn't need to cover the costs. You may be taxed for those allowances, in which case a deduction is possible for costs incurred.
The ATO provides a lengthy list of what is viewed as a reasonable spend on accommodation, meals, and incidental expenses. You won't need to produce detailed records with receipts or invoices if you claim below the specified ATO allowance. If you exceed the reasonable amounts as laid out by the ATO, or you don't receive an allowance, then you need to keep detailed records to show your spending wasn't extravagant.
The ATO established a reasonable amount to highlight when detailed records must be kept. Many people would assume that they can claim this maximum amount, but we don't recommend you do this. You must only claim the amount of money you spent.
Even if you claim below the reasonable amount, you should be able to prove the expenses you incurred. A bank or credit card statement is viewed as sufficient evidence should the need arise. It will help support your claim that you were in the particular area at the time you claimed.
As long as your travel includes an overnight stay, you can claim business meals, food and beverages. You can't claim meals when you work from home. You could claim tax travel expenses if you always work from home and need to travel to an office.
What you can’t claim
Travel for personal reasons or between your home and your workplace can’t be claimed Examples include:
- Travel between your home and regular place of work or vice versa
- Travel for personal reasons, like running errands on the way to or from work
- Travel for overtime or out-of-hours work
- Travel from your home (which is also your place of work for one job) to another location where you work for someone else
Read our guide to tax deductions to learn about other tax deductions.
Other situations that allow you to claim travel deductions
You may be able to claim work-related travel expenses tax if you attend a work conference or course. If it is local, you can claim transport or mileage. If it's interstate or overseas, you can claim accommodation, airfares and meals.
In all cases, your best bet is to visit a tax agent to ensure your travel deductions are above board.
Maximise your tax refund with QuickBooks
Are you tired of manually tracking your business mileage and keeping track of receipts for tax purposes? Look no further than QuickBooks tax software! With our advanced mileage auto-tracking feature, you can effortlessly keep track of the kilometres you drive for business purposes. Plus, our simple snap and store function allows you to easily capture and organise all of your business expense receipts in one place, making tax season a breeze.
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