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When you undertake substantial travel away from home, even if only one of the reasons for undertaking the trip is for business purposes, some of the travel expenses you incur may nonetheless be able to be claimed as income tax deductions. This is because the tax law allows travellers to make claims for travel expenses, to the extent to which they have a purpose connected with their income earning activities. Thus, travel to conferences; travel to business meetings, or travel to inspect a rental property all qualify for some income tax relief.

In this report we discuss a range of issues which arise in relation to claiming tax deductions for travel

expenses incurred when you travel away from home for at least one night. In these cases, the type of expenditure you will have incurred will include transport costs such as airfares, train fares or hire car; accommodation; meals and other incidental expenses.

The report briefly reviews the tax law in relation to:

• When can you claim a tax deduction for some or all of your travel expenses?
• How should you apportion the claim where you have mixed reasons for taking the trip or you are travelling with another person who is not associated with the business?
• What type of expenses can be included in the claim?
• What records must you keep in relation to the trip?

When can you claim a tax deduction for travel expenses?
Where travel is undertaken for a purpose connected with your business, a deduction can be claimed for the costs of the travel. Thus, if you travel to attend a conference and this takes you away from home for a night, the cost of the travel, the overnight accommodation and meals will be allowable deductions because they directly relate to the attendance at the conference for business purposes.

Even if the travel is only partly for business purpose, a deduction may be allowable. For example, if you travel overseas to attend a conference, the fact that you might take advantage of this opportunity to do some sightseeing, will not detract from the deductions available for the travel to the conference. Of course, you would not be entitled to deduct the costs associated with the sightseeing expeditions, but the balance attributed to attendance at the conference, including the full cost of getting there, would be deductible.

To claim the tax deduction you must simply be able to establish some nexus between why you travelled to the particular place and your income earning activities. The travel does not have to be compulsory in order to qualify for a deduction, but it must have a clear connection with your ability to earn income from either your business, investments or employment.

Travel in relation to developing the business in a new region will also qualify for a deduction as long as the dominant purpose of the trip is to increase your current business activities. Such travel would be non-deductible if you were establishing a new type of business in that area.

How should you apportion the claim where you have mixed reasons for taking the trip or you are travelling with another person who is not associated with the business?
Because you are only allowed a deduction to the extent that the outgoings relates to income earnings activities, it will be necessary to apportion any claim where the travel includes some private element. This can arise in any of the following situations: