If you are lucky enough to travel overnight, interstate or even overseas for your business or employment, here are some guidelines for getting your deductions right.
Knowing the Language
Travel Diary / Travel Records – a journal or diary (hard copy or electronic), recording your movements and activities while away; locations, start and end times of activities and meals, etc. This is best compiled as your trip unfolds or immediately after.
Reasonable Amounts – these are amounts set by the ATO for employees’ daily spending on hotel/motel accommodation, main meals and incidentals. The rates are updated each year and differ for three broad salary levels (excluding allowances) and also by the destination of travel.
Written Evidence – Essentially this means a receipt for your expense.
Travel Allowance – an amount from your employer paid to cover expenses while travelling for work, and shown in your payroll records as such.
Your Roadmap
Travel as an Employee
Note – if you are a flight crew member or a truck driver, there are slightly different provisions for your occupation, so you may wish to get in touch with us.
Receiving a Travel Allowance:
If you spent less than the “reasonable amounts” for your destination and income bracket, you don’t strictly need to keep your receipts, but the ATO may request more information about your trip and how your claim was calculated, so some form of notes or records may still be needed.
If the work-related travel spending was over the ‘reasonable amounts’, then all your receipts should be kept, and a travel diary also maintained if you are away 6 or more nights in a row.
No Travel Allowance:
One would hope that your employer would reimburse the costs of a trip undertaken as part of your employment. However, where this is not the case, why pay tax on what you paid to do your job!?
To back this up, you will need all your receipts as well as a travel diary.
Travelling for your own Business
A Travel Diary is compulsory for sole traders and partnership members for any overnight business travel, and “highly recommended for everyone else”. Receipts and travel tickets etc are also required.
The important thing is to exclude certain costs considered “personal”, including visas and passports, the cost of an accompanying family member, and costs for portions of the trip that were spent holidaying, on personal visits, or sightseeing. The travel diary is the primary tool for splitting out those non-work days while you’re away.
If you’re sending your staff off overnight for work, the business can claim the deduction via reimbursement, paying an allowance, or directly paying costs from a business account. Again there are tax consequences for the business paying for non-employee travellers (e.g. employees’ partner) and or non-work visits or holidaying.
"But a travel diary sounds like a burden..."
Think outside the box, or the oldschool book, and it doesn't need to be. Options to help may include:
Perhaps you have a timesheet or time billing system that could double as a travel record,
Keep some thorough notes in your phone's native app,
Email yourself what happened each day,
A Google Form to capture each activity on the go and send them all into a spreadsheet - we have even created a template for this.
Chat to us and we can help you create the best method; we promise it will be less burden than defending against the ATO!
The Highlights:
Employee allowances are best kept at or under the relevant "reasonable amounts"
Non-work travel companions and side trips are not deductible
If in doubt, keep receipts and a travel diary!
As with all deduction substantiation, travel evidence and diaries must be retained for 5 years.
This article covers overnight travel, and we are working on a separate summary of the transport expenses and car deductions rules, as well as some ideas for easily gathering and retaining expense receipts.
We always welcome questions and are happy to clarify this general information as it applies to your situation.
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