02 Feb 2010

Australian Incidental Travel Expenses

by Darren

Incidental travel expenses which are related to earning income are generally deductible under Australian Tax Law. An example would be the expenses incurred in traveling in a taxi between your office and your clients office for a business meeting. This is a business related reason and thus deductible. However, travel between your home and work place are not deductible as your home is not used for generating revenue. There are exceptional circumstances that have been identified as being deductible. If your business is classified as Itinerant, that is, travel is fundamental for your work, you have a 'web of work places' and no fixed place of employment, there is continual travel in order to carry out your duties and your home is considered your base of operations, then a deduction is available for travel expenses incurred from your home and work place(s). An example of the type of business would be a teacher who is involved in teaching at multiple schools and uses their home as a base for preparation and storage of materials. In addition your business is entitled to a deduction if an employee travels from their home to a client's premises and then on to the office. To be entitled to this deduction 3 criteria must be met:

  • Your employee must have a regular place of employment and travel to it habitually
  • The travel is undertaken to an alternative destination which is not a regular place of employment (this would not apply, for example, to an employee of a consultancy firm who is placed on assignment for a period with a client)
  • The journey is undertaken to a location at which your employee performs substantial employment duties.

When preparing your business' expense policy and procedures consider the tax implications of the above before committing to any reimbursement of employees travel.

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