Claiming a tax deduction for travel-related accommodation and meal expenditure
A question that we are commonly asked at CNS Partners is “Can I claim for a deduction for accommodation and/or meals while away for work?”. This applies to both self- employed people and employees.
As a general rule accommodation and meals will only be deductible where the individual is found to be travelling overnight on work. This type of expenditure will not be deductible where the individual is found to be ‘living away from home’. The ATO tends to apply the 21-day rule of thumb. Specifically, where an individual is away from home for a brief period and it is difficult to conclude whether they are travelling overnight or living away from home, the taxpayer will generally be take to be travelling overnight on work where they are away for 21 days or less.
Evidence to support expense
If you incurred work-related overnight travel expenses and want to claim these expenses as a deduction, the nexus has to be established. If you are selected for a review or an audit, you may be asked to provide the following records to the ATO:
- Details of employment duties, including information about the requirements to undertake overnight travel for work-related purposes
- A letter from your employer, including contact name and telephone number, to confirm:
- why you were required to undertake overnight travel in the course of carrying on your employment duties
- details of any relevant reportable fringe benefits, or reimbursement to compensate your client for expenses incurred
- details of specific travel allowances paid to you
In order to claim deductions for meals and accommodation expenditure in relation to work-related travel, taxpayers are generally required to substantiate this expenditure by providing receipts and/or maintaining a travel diary.
As an exception, these substantiation requirements do not apply to meals and accommodation where an employee is paid a ‘bona fide’ travel allowance to cover such travel costs, and the amount claimed by the employee does not exceed the Commissioner’s prescribed reasonable amount.
For more information on claiming travel expenses please contact CNS Partners.
Note: We at Notch Above Bookkeeping are BAS Agents and can’t provide tax advice. This information is general purpose only from Tax Agents, CNS Partners.