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
Outlined below is more of an outline:
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
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
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
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
• 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.