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This is are particularly common with FIFO workers and certain itinerant workers. In some cases, the employee might also receive an allowance from their employer to cover their LAFH or travelling costs. Such expenditure is typically deductible.
The travel expenses are not private or domestic in nature. When an employee is “travelling” on business on behalf of an employer, travel expenses are incidental to carrying out the employment function. What is the distinction between “LAFH” and “travelling”? Whether the individual is considered to be “living away from home” (LAFH) or “travelling” (as part of their employment) is a critical consideration in determining the deductibility of travel costs. However, the tax treatment is less clear where an employee is required to work away from their usual place of residence for an extended time. related to the earning of exempt income.Īs a general rule, travel costs are deductible if it can be sufficiently demonstrated that the costs are incurred in the course of performing their employment duties and are not private or domestic in nature.Īccommodation cost from short business trips are mostly deductible.When are travel costs allowed as a deduction?Īs an employee, you are entitled to claim a deduction for travel costs, which can include accommodation, meals and transportation, to the extent the cost is incurred in gaining employment income and that it is not: In particular, tax agents such as ourselves have had enquiries about clients who work as academics, fly-in, fly-out (FIFO) workers and medical practitioners. In some cases the ATO is amending prior year assessments. We are seeing that the ATO has been particularly active in targeting excessive claims made by people whose professions require them to frequently travel and stay away from home.
The deductibility of overnight work-related travel expenses, which includes transport, accommodation and meals, is firmly in the sight of the Commissioner recently. The required receipts and documentation must be sourced and maintained to make a claim and the requirements relating to the use of the Commissioner of Taxation’s (the Commissioner) “reasonable travel amounts” without having to keep written substantiation can also be confusing. Often the deductibility of such costs can depend on the nature of employment, the amount of time spent away from home, and whether an allowance has been received to cover the costs. The absence of hard and fast rules can makes claiming travel expenses difficult. Many people, as employees, get their tax returns wrong in relation to claiming work-related travel expenses.