Travel Expenses: What You Can and Can't Claim

I see this all the time: a small business owner comes in with a spreadsheet of travel expenses, genuinely unsure whether they should claim them. They've done the work, they've got the receipts, but they're uncertain about the rules — and uncertainty leads to either aggressive claiming or nervous under-claiming, neither of which is ideal.

Travel expenses have more moving parts than most deductions. It's not just about whether the trip was business-related. There are GST implications, personal-use components, timing questions, and enough murkiness that your bookkeeper might need to chat with your accountant. Let me walk you through the real landscape.

What qualifies as business travel?

The basic test is straightforward: the travel must have been undertaken for the purpose of producing income for your business.

This means:

• Travel to meet with clients or customers
• Travel to attend work conferences or professional development
• Travel to conduct business at another location (e.g., a site visit for a contractor)
• Travel to attend meetings essential to your business operations
• Travel related to your trade or profession

The journey itself must be primarily for income-producing purposes. That's the threshold. But as soon as you introduce personal elements — which most business travel does — things get more complex.

The personal-use trap

Here's where most people get stuck. You might take a genuine business trip to Sydney, but you've added a weekend to visit friends or family. Or you're travelling to a conference in Spain and extending the trip to explore the country. These perfectly reasonable decisions create tax complications.

The ATO's position: you can only claim the costs that are genuinely attributable to the income-producing part of the journey.

In practice, this means:

• Flights: You can claim the full cost if it's a business trip. But if you've extended the trip for personal reasons, you need to split the cost between the business days and the personal days — which is complicated and rarely worth claiming the personal portion anyway.
• Accommodation: You can claim the nights where you were there for business. If you stayed extra nights for leisure, those are personal expenses.
• Meals: Business meals are deductible, but "meals while travelling" can be tricky. You can claim meal expenses that are incidental to your travel (i.e., you had to eat, you were away), but extravagant meals or entertainment might be classified differently.
• Local transport: Hire cars, taxis, and public transport during the trip can be claimed in full if used for business purposes.

What you definitely can't claim

Let me be clear on this: there are several categories of travel expense the ATO will not accept, regardless of how carefully you document them.

• Commuting: Travel between your home and your regular workplace is not deductible. This is the most common mistake. If you work from an office three days a week, that commute is your personal choice about where to work, not a business expense.
• Spouse or partner travel: If your spouse travels with you, their costs are not deductible to your business unless they have a genuine role in your business and are there for their own income-producing purposes.
• Recreation and leisure: Trips taken primarily for holiday or leisure, even if you do some work while away, aren't deductible.
• First home finder's trip: Travel to inspect residential property (unless you're in the real estate business) isn't deductible.
• Overseas travel with mixed purpose: This one's particularly important. If you're taking an overseas trip that's partly business and partly holiday, your documentation needs to be meticulous. The ATO is strict here, and getting the split wrong can cost you.

Overseas travel — the complexity layer

I mentioned Spain at the start for a reason. Overseas travel is where things get genuinely complicated, and I recommend talking to your accountant before claiming any portion of an overseas trip.

The question isn't just "was this business travel?" It's also "how much of this trip was business?" And the ATO's view on what's reasonable is stricter than you might expect.

If you're attending a conference overseas, the conference days are clearly business. The flights might be 100% deductible. But if you've added a week's holiday, the split becomes complicated. Some accountants will apportion the flight based on the proportion of business days. Others will take a more conservative approach and claim nothing if leisure is mixed in.

The risk of over-claiming overseas travel is higher than most other deductions — and the ATO audits these carefully.

Record-keeping essentials

Here's the non-negotiable part: your records need to show the business purpose of the trip, not just the expense amount.

Ideally, keep:

• Your flight and accommodation receipts (dated and with cost clearly shown)
• A brief note on the business purpose (e.g., "Client meeting with ABC Corporation" or "Annual industry conference")
• For multi-day trips, a quick travel diary noting which days were business and which (if any) were personal
• Receipts for meals, transport, and incidentals while travelling
• If there's a personal component, notes on how you've split the costs

If the ATO ever asks, you need to be able to explain: why you travelled, what the business benefit was, what portion (if any) was personal, and how you've calculated the claim. Good records make this conversation easy. No records make it impossible to defend your claim.

GST on travel — another variable

If you're GST-registered, there's also a GST angle. You can claim GST on most travel expenses (flights, accommodation, hire cars, meals), but only if the supplier is registered and you have a valid tax invoice. This generally works smoothly for Australian domestic travel and major overseas suppliers, but can be complicated for small overseas operators.

If you don't get a valid GST invoice, you can't claim the GST, even if you've paid it. This is another reason to keep meticulous records — a missing receipt not only makes the deduction harder to defend, it also costs you the GST component.

When to ask for help

Travel expenses are one of those areas where the "right answer" isn't always obvious, because it depends on the specifics of your situation. If you're regularly travelling for business, or if you've taken an overseas trip with mixed business-and-leisure components, I'd recommend having a conversation with your accountant before you lodge your tax return.

As a bookkeeper, I'll help you organize and categorize your travel expenses accurately. But for the final claim and the business-to-personal split on complex trips, an accountant's input is worth every penny.

The difference between aggressive claiming (and the risk that entails) and smart, defensible claiming often comes down to taking 20 minutes to get proper advice at the beginning.

Common questions