Travel expenses – what you can and cannot claim on your income tax return
Understanding which travel expenses are deductible can save you money and prevent disputes with the ATO. Recent court decisions and ATO guidance have clarified the boundaries, making it crucial to know where you stand.
What travel expenses are generally deductible?
Travel expenses incurred in the course of your work or business operations are deductible under general principles. These may include:
Motor vehicle expenses, including parking fees and tolls
Car rental costs
Air, bus, train, ferry and taxi fares
Accommodation and meal expenses when work duties require travel
Travel between different work locations that are not your home
The key requirement is that the travel must be undertaken while gaining assessable income and not be private or domestic in nature.
Travel between work locations
You can claim expenses for travelling between work locations, provided neither location is your home. This includes travel between:
Different workplaces of the same employer
Client premises
Other locations where you perform employment duties
However, you cannot claim deductions where you make a private decision to work from another location merely because it's convenient.
What you cannot claim
Several categories of travel expenses are specifically non-deductible:
Home to work travel
The fundamental rule is that expenses for travelling between home and work are not deductible.
Recent court decisions have significantly impacted fly-in fly-out workers. If your employment contract specifies the remote airport as your point of hire, you cannot deduct travel costs from your home airport to the remote workplace airport.
The expenses are considered getting to work, not working.
Job-seeking travel
Travel expenses incurred while looking for a job are not deductible, nor are travel expenses for acquiring tools and equipment.
Residential rental property travel
You cannot claim travel expenses related to residential rental properties, including travel to collect rent, inspect properties, or conduct maintenance.
This restriction applies unless you're carrying on a business or are an excluded entity such as a company.
Overseas travel complications
The ATO scrutinises overseas travel expenses carefully, particularly if you're accompanied by a spouse.
Generally, visa costs, passport expenses, and travel insurance are not deductible.
Accompanying relatives
If a relative accompanies you on business travel, their expenses are not deductible unless they're an employee undertaking separate work or work incidental to yours.
Limited exceptions to the home-work rule
Some exceptions allow deductions for home-work travel:
Transporting bulky equipment that cannot be securely stored at work
Itinerant workers who travel to various locations as part of their employment
Professionals with a recognised base at home, such as some musicians and footballers
A recent case involving a radio presenter working from home during COVID-19 restrictions allowed deductions for travel to studios, though the ATO has appealed this decision.
Substantiation requirements
Remember that claiming deductible travel expenses requires proper record-keeping.
For travel involving overnight stays, you'll need written evidence and potentially travel diaries for trips of six or more consecutive nights.
Get professional advice
Travel expense deductibility involves complex interactions between employment law, tax law, and your specific circumstances.
Recent court decisions show how contractual arrangements can significantly impact your tax position.
If you regularly incur travel expenses for work, it's worth reviewing your situation with a tax professional to ensure you're maximising legitimate deductions while avoiding potential disputes with the ATO.