Travel Expenditure Claims


Hi All 


Just thought I would drop a note about when travel expenditure is tax deductible and when it is not.

Generally and costs associated with travel out of town for business purposes are tax deductible, including fuel, accomodation and food.

Outlined below is more of an outline:


Travel Expenditure
Again and again, we come across queries on the deductibility of travel expenditure. Travel expenses are deductible for tax purposes when they are incurred in connection with the business and generating income.
In reality, people often tag on a private holiday to a business trip especially when it is an overseas business trip. Where the trip includes both the business and holiday elements, the holiday component needs to be identified because private expenditure is not deductible.
There are no set rules to extract the private expenditure from a business trip; therefore it is important to keep sufficient records of the trip to support a claim for the business element of an overseas trip. In order to validate a claim, the Inland Revenue may request the following:
• Reason for the trip;
• Business conducted;
• Business contacts visited;
• Invoices detailing expenditure; and
• Itinerary
If the trip is primarily for business purposes, and the private component is incidental, the full cost of airfares, accommodation and meals is generally deductible.
However, if there is a clear holiday element to the trip, it needs to be apportioned. Apportionment of the airfare is normally based on the number of business days over the total length of the trip.
Cost of accommodation and meals for only the business days will be deductible. However, if an extra night or two is required after the business is over due to the airline timetables, the cost of that accommodation would be deductible.
Quite often, the issue of deductibility arises for the costs of an accompanying spouse, companion or other family member.
The Inland Revenue will allow a deduction for the costs of an accompanying person under the following circumstances:
• The taxpayer on business must be accompanied by someone because of ill-health;
• The accompanying person is also engaged full-time in the business;
• The accompanying person contributes in some integral way to the business trip; or
• If an overseas organisation expects the taxpayer to be accompanied by a spouse e.g. for conferences.