How to Claim on International Travel
Travel and Work
There’s no question about it. People love to travel. The past 50 years has seen the rollout of travel for many in the western world. The development and frequency of flight now means that travel – once the domain of a select minority, is a common undertaking for many hardworking families.
That doesn’t mean it’s cheap. The cost of a family trip to Australia,the UK, Europe or Africa can blow out considerably. Food and accommodation expenditures can run into the thousands of dollars, so it’s important to know how to claim and what to claim in order to cut your losses and achieve some healthy savings.
If you’re a small business person or sole trader or professional, or want to combine work with a holiday as an employee, you can make this situation work to your advantage. So how can you get the best legitimate returns and make sure you’re earning the deductions and claims you’re entitled to?
Slater Chartered Accountants knows there’s a few clever little things you can do to maximise travel in terms of expenses claims. First off, think about combining work and holiday time. Is there a possible crossover of the two? Try to work it so there is.
Record Keeping and Deductions for International Travel
This is so often overlooked or put in the “too hard or annoying basket,” but we’ll stress it again. Keep your receipts!
Keeping the records and receipts that show the details of travel expenses are so important when you want to establish a case for “apportionment” where travel is conducted. This means you can claim a part of your travel costs, providing you can prove this by way of your receipts (expenditures.) Without the receipts you can’t claim.
Make sure you or your partner keeps all the receipts. If need be, assign someone who is good at detail to this task and put these in a bag or file at the end of each day while away.
The Inland Revenue Department will normally require the following in support of a claim for overseas travel expenses:
- Itinerary including business contacts visited and business conducted;
- Name or organisation which arranged the trip;
- Costs of fares, accommodation and other expenses;
- Extent of holiday or pleasure aspect of trip; and
- Whether the taxpayer was accompanied by a spouse and/or other relatives and if so, the total costs relating to the spouse and/or relatives.
Establish the Dominant Purpose of the Trip
Where some activity of a private nature is undertaken on what is primarily a business trip, for instance attending the Bledisloe Cup on a business trip to Australia, or in our case a Chartered Accounting Conference in Fiji, the dominant purpose of the trip determines the deductibility of primary costs. This means if the dominant purpose is business then you may be able to combine this with a Kiwi Rugby win on OZ soil that can be enjoyed by you, your partner and kids! Just do the preparation, record the details and you can get some of the costs back.
For each item of expenditure, e.g. airfares, hotel accommodation, meals, we are required to establish this “dominant purpose”.
Provided the dominant purpose is business/income-generating, a tax deduction will generally be available.
In simple language this means if it can be shown the costs would be incurred regardless of any private element and the dominant purpose was business, this test would be met. You would clearly have established the primary purpose was business and so you could claim.
There’s a host of other claims and deductions you can make as a business owner, professional or trader. Make sure your Chartered Accountant is doing the very best for you and producing quality accounting work that goes the extra distance. A mediocre accounting job can cost the client. Fees are still paid but the outcomes for you and your business may not be at an optimum level.
All Slater Chartered Accountants clients are given honest and frank advice (even when it’s painful) as well as personal care, free appointments and the best quality accounting work possible. If you have any questions about changing to one of the best accounting firms in New Zealand, you can speak to Brett via the message box on our website.
Or simply make an appointment to speak with Dinu from Slater Chartered Accountants today via the link provided here. You can also phone Reception on 07 8389700 or Brett direct on 07 8389701 to see if Slater Chartered Accountants is the right place for you.