How to Track Travel Expenses and Maximise Tax Deductions

Managing travel expenses correctly is essential to ensure you maximise your tax deductions while remaining compliant with the Australian Taxation Office (ATO). However, the ATO only allows deductions for business-related expenses, making it crucial to separate work from personal activities accurately. This guide offers practical steps, FAQs, and real-world examples to help you manage your travel expenses effectively.

What Travel Expenses Can You Claim?

The ATO permits deductions only for work-related travel costs. These include any travel directly associated with your job, such as attending conferences, visiting clients, or working offsite. Personal activities—like holidays, sightseeing, or social outings—cannot be claimed.

Here are typical deductible travel expenses:

• Airfares and transport: Business flights, taxis, rideshares, or car hire for work purposes.
• Accommodation: If your trip requires an overnight stay for work.
• Meals and incidentals: Meals are deductible only if they’re incurred during business-related activities and aren’t reimbursed by your employer.
• Event or conference fees: Registration costs for professional events or meetings directly related to your work.

Understanding Travel Allowances

If you receive a travel allowance, you can claim the reasonable components without needing to keep receipts. This simplifies record-keeping, but it’s important to ensure your allowance is declared on your income statement for it to be deductible. Keep in mind that if your expenses exceed the allowance, you’ll need to provide supporting documentation for the difference.

Important Note

To claim these expenses, you must maintain proper documentation such as receipts and, in certain cases, a travel diary to differentiate between personal and business activities​

Claiming a tax deduction for business travel expenses

 Keeping travel expense records

Managing Travel Expense Records

What documents do I need to support my claims?

The ATO requires:

• Receipts or invoices: Proof of every business-related purchase.
• Travel diary or activity log: Necessary if the trip lasts six or more consecutive nights.

Keeping detailed records ensures transparency and can save you from compliance issues during an ATO audit​

myTax 2024 Work-related travel expenses

How to Organise Receipts and Proof of Expenses

What makes a receipt valid?

Receipts must contain:

• Vendor name and business details.
• Amount spent (with currency noted).
• Description of goods or services. If this is missing, annotate it before filing your return.
• Date of purchase and date of issue. Bank or credit card statements can also verify dates.

Digital Storage Tip

• Store digital copies by scanning or photographing your receipts to prevent loss. Apps like Expensify or Xero can help you track and organise these efficiently​
  Declaring your travel allowance and claiming expenses.

Do You Need to Keep a Travel Diary?

When does the ATO require a travel diary?

A travel diary is essential if your trip lasts more than six consecutive nights. The diary serves to separate personal time from work activities, ensuring only the business portions are claimed.

Even for shorter trips, maintaining a log can prevent confusion when filing your return. It also ensures you have accurate documentation if the ATO audits your claim​

Keeping travel expense records

What Should Be Included in Your Travel Diary?

For every activity on your trip, record:

• Where the activity took place.
• What the activity was (meeting, conference, site visit).
• Start and end times of each work activity.
• Breaks or personal time (these portions are not deductible).

Example Travel Diary Entry

• 7:00 am: Flight from Sydney to Melbourne
• 9:30 am – 5:00 pm: Industry workshop
• 6:30 pm: Dinner (non-deductible personal expense)

This log ensures that only work-related activities are included in your deductions​

How Long Should You Keep Travel Records?

What is the ATO’s record-keeping requirement?

You must keep all travel records for five years from the date you submit your tax return. This includes receipts, travel diaries, and any other documents used to support your claim. These records are crucial if the ATO audits your deductions​

Understanding Travel Allowances

Can I avoid record-keeping if I receive a travel allowance?

A travel allowance provided by your employer may reduce the need for detailed records—if it falls within ATO’s reasonable allowance amounts. However, the allowance must be declared on your income statement for it to be deductible.

If your employer doesn’t report the allowance, it can be used tax-free, but you won’t be eligible to claim further deductions unless your expenses exceed the allowance. In such cases, keeping receipts and records is essential to claim the difference​

D2 Work-related travel expenses 2024

Best Practices for Travel Expense Management

Tips for Staying Organised

1. Use tracking apps: Apps like Expensify, Xero, or MyDeductions allow real-time tracking and organisation of receipts.
2. Log activities daily: Update your diary immediately to avoid missing key details.
3. Keep physical and digital copies: Store both paper and digital versions of receipts to ensure nothing gets lost.

Pro Tip

Create separate folders for business and personal expenses to avoid mixing them up. This will save time when filing your return and reduce the risk of incorrect claims​.

Common Pitfalls to Avoid

Avoid these common mistakes to ensure your travel claims are compliant:

• Mixing personal and business expenses: Clearly separate your expenses to prevent issues with the ATO.
• Failing to keep receipts: If a receipt is lost, contact the vendor for a replacement or use a bank statement as proof.
• Neglecting to maintain a diary: Accurate logs are essential, especially for longer trips​

Real-World Example: Calculating Work-Related Travel Expenses

Noel’s Travel Case Study
Noel, a manager at a tool manufacturing company, travels to New Zealand for 10 days. During his trip:

• 7 days are spent attending meetings and visiting company sites.
• 3 days are personal, visiting friends and sightseeing.

Since Noel’s trip exceeds six nights, he maintains a detailed travel diary to document each day’s activities. He can claim 70% of the airfare and accommodation costs, while expenses for personal days are non-deductible. This example highlights the importance of separating personal activities from business-related travel to avoid complications during tax time​.

Get Expert Help Managing Travel Expenses and Tax Deductions

Navigating the complexities of ATO regulations can be challenging, especially for frequent travellers. Latitude Accountants can help you manage your travel expenses, ensure compliance, and maximise your deductions.

👉 Need advice? Contact Latitude Accountants today and let us simplify your travel expense management to keep your finances on track.

Disclaimer

The information provided in this blog, How to Track Travel Expenses and Maximise Tax Deductions, is intended for general informational purposes only and does not constitute professional financial or tax advice. The content is based on Australian Taxation Office (ATO) guidelines as of the date of publication and may not reflect changes in legislation or regulations.

Readers are advised to consult a qualified accountant or tax professional for advice tailored to their specific circumstances. Latitude Accountants disclaims all liability for any errors or omissions in this blog and any actions taken or not taken based on its content. For personalised advice or assistance with managing travel expenses and tax deductions, please contact Latitude Accountants directly.