Do you have an upcoming business trip? Here’s a tax outlook to make it easier
Travelling for business can involve various expenses, and understanding how taxes apply can be confusing. The below key points clarify how travel expenses are treated for tax purposes, clarify deductibility for business owners and highlight any requirements.
Key Points:
- Business Travel:
- All travel expenses, including meals with or without alcohol, are deductible for both you and your employees when travelling overnight for business.
- It’s essential to keep a travel diary for documentation purposes.
- Private Travel:
- Paying for private travel for your employees or their associates is considered a Fringe Benefit, subject to FBT.
- Non-deductible expense: Any private travel paid for non-employees falls under this category.
- Combined Business and Leisure Trips:
- If a trip has both business and leisure components, you need to apportion the costs.
- Only the expenses that would have been incurred solely for business are deductible.
- Any costs related to the leisure portion are either Fringe Benefits (for employees) or non-deductible expenses (for non-employees).
For travel to be considered “business”, it must be undertaken to:
- Generate income for your business.
- Fulfil a contractual obligation related to your business.
- Attend a conference or meeting relevant to your business.
- Maintain or improve your skills relevant to your business.
Bear in mind that this is a general overview guide. For specific guidance regarding your circumstances, we recommend reaching out to your dedicated accountant.
If you’re keen to explore changing accountants, we have a non-obligation process to do that. The first step is booking a strategy call with one of our accounting team. It’s a free 20-minute zoom or phone call where you get to meet us to manage your questions.
From that point, you can consider doing a “Look Under The Hood” with us. There is no obligation to change accountants, but we give you a second opinion if you’re paying too much tax.
Throughout that process, we can identify any problems we see with your current setup. Anything that your current accountant hasn’t claimed, or tax you may have overpaid, and strategies of how we might fix that going forward. We can run through with you once you book with us.
Get Cashed Up
