A strong Australian dollar makes overseas travel more affordable so it comes as no surprise that many companies are staging their annual conferences on foreign shores. This is great for employees who use their conference attendance as a tax deduction for a nice holiday – or is it? The Australian Tax Office (ATO) takes a strict view of what, if any, travel-related expenses are tax-deductible.
If you are planning to claim a conference attendance in this year’s tax return, be aware that there must be a direct connection between your current employment and your work-related activities (WRA, such as a conference). For example, if you are employed as a medical practitioner going to a conference focused on wealth creation you will not be eligible to claim the costs. However, if your employer specifically requested that you visit a registered clinic at the same destination and write a report when you return, then some of your expenses would be tax-deductible.
Usually the fares to and from the location of the WRA are fully tax-deductible. Costs of accommodation, meals and incidentals for the days you attend the WRA are tax-deductible and when possible you should keep receipts. To claim accommodation costs at a location, the WRA must extend over two consecutive days. If you decide to tack on a holiday while you’re away, those costs are private and not tax-deductible. So make sure these fares are clearly defined on your documentation.
The “reasonable” amount employees can claim for an expense is set out on the ATO website and is broken down into accommodation, meals and incidentals components. These amounts vary according to your salary level and where you go as some countries are more expensive than others.
If your employer pays you a travel allowance for the days you are involved in the WRA and you do not plan to claim anything more than that allowance, you do not need to keep any further records unless your trip lasts more than six days. In that case you will need to keep a travel diary showing the dates travelled, places visited, the people you met with, times and duration of the activities or appointments, and the purpose of the travel.
By all means, enjoy your next overseas work-related activity but make sure your paperwork substantiates any tax deductions you might claim.
www.ato.gov.au Overseas travel expenses; Travel allowance and PAYG withholding