Travel Expenses: What You Can and Cannot Claim on Your Income Tax Return
Understanding which travel expenses are deductible can help you save money and avoid disputes with the Australian Taxation Office (ATO).
Recent court decisions and updated ATO guidance have clarified the rules, making it more important than ever to know where you stand.
What Travel Expenses Are Generally Deductible?
Travel expenses are typically deductible when they are incurred in the course of earning your assessable income. Common deductible expenses include:
- Motor vehicle expenses (including parking fees and tolls)
- Car rental costs
- Air, bus, train, ferry, and taxi fares
- Accommodation and meals (when work requires overnight travel)
- Travel between different work locations (excluding your home)
To qualify, the expense must be directly related to your work and not private or domestic in nature.
Travel Between Work Locations
You can claim travel expenses when moving between work locations, provided neither location is your home. This includes travel between:
- Different workplaces for the same employer
- Client or customer premises
- Other locations where you perform employment duties
However, if you choose to work from a different location for convenience, the travel is considered private and not deductible.
What You Cannot Claim
Home-to-Work Travel
As a general rule, travel between your home and your regular workplace is not deductible.
Recent court decisions have particularly impacted fly-in fly-out (FIFO) workers.
If your employment contract states that the remote airport is your point of hire, travel from your home airport to that location is considered a private expense.
Job-Seeking Travel
You cannot claim travel expenses related to:
- Looking for a new job
- Attending interviews
- Purchasing tools or equipment
Residential Rental Property Travel
Travel expenses related to residential rental properties are generally not deductible. This includes travel for the purpose of:
- Collecting rent
- Inspecting properties
- Performing maintenance
Exceptions may apply if you operate a rental property business or are an excluded entity (e.g. a company).
Overseas Travel Expenses
The ATO closely scrutinises overseas travel claims, especially where there is a mix of business and personal activities.
Generally non-deductible expenses include:
- Visa costs
- Passport fees
- Travel insurance
Accompanying Relatives
If a spouse or relative travels with you, their expenses are not deductible unless:
- They are your employee, and
- They are performing their own work duties during the trip
Exceptions to the Home-to-Work Rule
In limited cases, home-to-work travel may be deductible, including:
- Transporting bulky equipment that cannot be stored securely at work
- Itinerant workers who travel to multiple job sites
- Professionals with a recognised base of operations at home (e.g. some musicians or athletes)
A recent case involving a radio presenter working from home during COVID-19 restrictions allowed deductions for travel to studios. However, this decision is currently under appeal.
Record Keeping Requirements
To claim travel expenses, you must maintain proper records. This includes:
- Receipts or written evidence for all expenses
- Travel diaries for trips lasting six or more consecutive nights
- Clear documentation showing the work-related purpose of travel
Get Professional Advice
Travel expense deductions can be complex, especially with evolving court decisions and ATO interpretations.
Your employment contract and individual circumstances can significantly affect what you can claim.
If you regularly incur work-related travel expenses, consider seeking advice from a qualified tax professional to ensure you maximise legitimate deductions while staying compliant.