Tax treatment of travel costs

July 2017

The ATO has released updated guidance on the tax treatment of travel expenses for individual taxpayers as well as employers.

The ATO has released updated guidance on the tax treatment of travel expenses for individual taxpayers as well as employers who are seeking to apply the otherwise deductible rule to minimise FBT liabilities which relate to employee travel expenses. This draft ruling basically replaces a number of older tax rulings and determinations and consolidates much of the ATO's guidance in this area into a single document.

The ruling deals with a wide range of situations including:

  • Travel between home and a regular work location, including temporary alternative work locations;
  • Travel undertaken by fly-in fly-out workers;
  • Employees who might be required to travel to new locations every few weeks and who stay away from home during the projects;
  • Ongoing travel to an alternative work location; and
  • When someone would be regarded as living away from home.

As well as reviewing the draft ruling to identify clients who might be at risk of ATO review, there may also be clients who could seek to claim deductions that have not previously been claimed in the past. This is because in some instances the ATO has relaxed its approach to travel expenses, indicating that deductions can be claimed in situations which would previously have been treated as non-deductible.

For example, the ATO indicates that someone who has two normal work locations could potentially claim a deduction for travel costs incurred in travelling to and staying near an ongoing alternative place of work which is a considerable distance from their home and primary work location.

We recommend you speak to your accountant if you have any queries about how the ATO's guidance applies to you or your employees. Contact us on 02 9957 4033.

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This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.

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