Claiming work trips for business owners

Do you sometimes take work trips for your business – perhaps to overseas conferences or interstate clients? When a trip is clearly for business purposes only, the rules for deducting your expenses are fairly straightforward. You can claim airfares, taxis and car hire (and fuel). You can also deduct accommodation and meal costs for overnight travel if the business requires you to be away from your home overnight.

But if you’ve planned a holiday to coincide with your work trip, you must keep records showing which expenses are business-related and which are private.

If you combine business and private travel, can you claim your full return airfares?

The ATO says that if the primary purpose of the trip is for business, you can claim the whole cost of the return airfares as a business deduction, as well as related costs like travel to and from the airport.

If the primary purpose of the trip is not just the business activity, you may need to apportion your airfares. And if the primary purpose is clearly private with some incidental work activities, you generally couldn’t deduct the airfares.

How is accommodation treated?

Your deductions for accommodation are limited to those nights that you’re required to be away for the business purpose. So, if you stay some extra nights after a long conference for some brief sightseeing, you couldn’t claim your accommodation for those extra nights, even though you might be able to deduct your full airfares.

On the other hand, if you have to be away for an extended period and some days within that period don’t involve work activities, you may still be able to claim your full accommodation costs. Of course, personal activities during that private time would not be deductible.

Watch out!

Other expenses that are not allowed as deductions include: travel before you start carrying on your business; visas, passports and travel insurance; and the costs of family members on your trip.

Record-keeping requirements

If you’re a sole trader or partner you must keep a travel diary if you travel for six or more consecutive nights to record all details about each business activity undertaken. If your business is run through a company or trust structure, the ATO says it’s not compulsory to keep a diary, but it’s strongly recommended.

Don’t attract unwanted ATO attention to your business. Talk to us to ensure you’re getting the maximum deduction for your business trips while staying within the ATO guidelines.