Travel expense claims for small businesses

19 August 2019

Tax time tips: the ins and outs of business related travel expense claims.

If you operate a small business, chances are you’ve incurred travel expenses as part of your day to day business activities.

In most cases, these expenses will be tax deductible, but before you add them to your tax return, you need to make sure they meet some key criteria.

The ATO offers comprehensive guidelines to follow when it comes to making travel expense claims, you can download their factsheet here.

Below is a general summary of key points based on this information.

Types of eligible expenses:

• The cost of travel via bus, train, airline, taxi etc.

• The cost of hiring a car, including fuel, road tolls and parking

• The cost of accommodation and meals if you are required to stay overnight.

Remember: when lodging a claim, you must ensure you only include the portion of expenses that relate directly to your business activities.

If you incur personal expenses as part of your trip, you must separate those out from the claim. Personal expenses may include leisure activities, extra travel not associated with business, or additional expenses incurred if a family member travels with you.

There may be Division 7A and FBT implications if your business operates as a company and pays for your private travel expenses.

What about employees?

If your business has employees that travel for work purposes, your businesses must have paid for the eligible travel costs to be able to claim it back as a deduction at tax time.

If your business reimburses employees for their travel expenses then FBT may apply.

Travel or living-away-from-home allowances paid to employees are treated differently, you can find more info here.

Record keeping is essential

To make a claim, you must be able to prove the expense. Records need to be kept for 5 years. Types of records may include:

• Tax invoices

• Travel tickets / boarding passes / tax receipts

• A diary / schedule of business activity carried out

• If you incurred private expenses, keep the records of how you worked out the appropriate portion of expenses.

For more information on the types of records you may be required to keep, visit the ATO website

Contact the team at Shakespeare on 08 9321 2111 if you’d like to discuss how the above information may apply to your individual circumstances.

Sources:

ATO Small Business Newsroom “Travelling for your business?” August 2019

Factsheet: Small Business Travel Expenses. ATO 2019

General disclaimer:

Our firm provides the information on this website for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation.

Tax articles on this website are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose .