Show download pdf controls
  • Claiming a tax deduction for business travel expenses

    As a business owner, the general rule is that you can claim deductions for expenses if you or your employee are travelling for business purposes. A travel diary is:

    • compulsory for sole traders and partners in a partnership to record overnight business travel expenses
    • highly recommended for everyone else.

    On this page:

    Expenses you can claim

    Expenses you can claim include:

    • airfares
    • train, bus, taxi, or ride-sourcing fares
    • accommodation
    • meals.

    Expenses you can't claim

    You can only claim the business portion of business travel expenses. You must exclude any private expenses, such as:

    • a holiday or visit to family or friends that is combined with the business travel
    • the expenses associated with you or your employee taking a family member on the trip
    • souvenirs and gifts
    • sightseeing and entertainment
    • visas, passports or travel insurance.

    Watch:

    Media: Business deductions - Travel expenses: Tax basics for small business
    http://tv.ato.gov.au/ato-tv/media?v=bd1bdiubfw7bqpExternal Link (Duration: 01:23)

    How to claim employee travel expenses

    If your employees travel for your business, the business must actually pay for the travel expense to be able to claim it as a deduction. The business can pay for the expense by:

    • paying directly for the expense from the business account
    • paying a travel allowance to the employee
    • reimbursing the employee for their expenses.

    Fringe benefits tax (FBT) may apply if your business pays for or reimburses your employees for their travel expenses. Certain exemptions and concessions may apply to reduce your FBT liability. For example, your business may not have an FBT liability if it reimburses an employee for their travel expenses to attend a work conference, which the employee would have been able to claim as an income tax deduction if you hadn't reimbursed them.

    You will be liable for FBT if your employee extended their travel for private purposes and you reimburse the employee for these private costs. If your business provides benefits to your employees, you may need to obtain some records from the employee.

    If you are the director of a company and the business pays for private portions of your travel expenses, there may also be Division 7A implications.

    See also:

    Travel diaries

    Sole traders and partners in a partnership

    If you are a sole trader or a partner in a partnership and you travel for six or more consecutive nights, you must keep a travel diary or similar document before your travel ends, or as soon as possible afterwards. In your travel diary, record the detail of each business activity including:

    • what the activity was
    • the date and approximate time the business activity began
    • how long the business activity lasted
    • the name of the place where the business activity occurred.

    Your travel diary can be in any format as long as it contains sufficient detail to justify what you are claiming.

    Companies and trusts

    If your business is a company or a trust, we highly recommend you use a travel diary as it will help you work out the proportion of the travel that was for private purposes.

    See also:

    Records for business travel expenses

    Keep records for five years to substantiate your business travel expenses, including:

    • tax invoices
    • boarding passes
    • tickets
    • travel diaries.

    Find out about:

     

    Last modified: 24 Jun 2019QC 44448