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Many people are required to travel as part of their job. Work-related travel might be something as simple as a short trip to see a client for an hour or two or a prolonged trip lasting several days interstate or even overseas.
Costs which you incur in traveling for work are generally tax deductible. The law in this area is very complex, though, and with the ATO regularly keeping a close eye on people making incorrect travel claims, it pays to take care to get it right.
If you’re required to use your car for work, you are entitled to a deduction for the costs which you incur whilst at work. This specifically excludes the cost of the commute from home to work, except in very limited circumstances (see below).
Typical situations where you might be able to claim for using your car for work include:
There are two ways you can make this claim:
If you change your car part way through the year, you can claim 5,000km’s for both vehicles.
Generally, if you travel more than 5,000km’s per year in a particular vehicle, you’ll need to use the logbook method (below).
You can’t claim a deduction for home to work travel. This is regarded as private expenditure. The only exception to that rule is if you are required by your employer to carry bulky tools in your vehicle which cannot be safely secured at work. Take great care on that point – the ATO looks very closely at such claims and disallows lots of them.
To the extent you incur a cost which isn’t reimbursed by your employer, there are lots of other items you can claim. Remember all these must be work-related and mustn’t be connected to your journey from home to work:
You can’t claim the cost of fines for speeding, parking infringements or other motoring offences.
If you’re required to travel away from home overnight for work purposes, on an interstate trip perhaps, you can claim a deduction for any meals, accommodation or incidental expenses which you incur, to the extent you are not reimbursed by your employer.
Some people who travel extensively are paid an allowance by their employer to cover those costs. Those allowances are taxable but a deduction can then be claimed for costs incurred.
Each year, the ATO publishes lengthy lists of what it regards as reasonable amounts to spend on meals, accommodation and incidentals incurred on overnight trips. Provided you’ve received an allowance from your employer and you’ve claimed less than the amounts specified by the ATO, you don’t need to keep detailed records such as invoices and receipts. If you spend more than the ATO reasonable amounts (or you don’t get paid an allowance), you must keep detailed records.
This is an area that trips up many people with the ATO, who extensively audit these claims. Some people assume they can automatically claim the reasonable amounts specified by the ATO. That is not how it works. You can claim the amount you actually spent; the ATO reasonable amounts only dictate whether or not you need to keep detailed records.
Even if you haven’t kept detailed records (and aren’t obliged to keep them because of the exemption), you still need to be able to prove that you incurred the expense. That could involve keeping credit card statements or being able to prove that you were in a particular place at a particular time.
As well as work-related travel, you might also be able to claim travel (using the same rules outline above) in these situations:
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