Tax Planning 101 - Travel Expenses

A little while ago James posted a blog about the traps to avoid when claiming travel expenses in relation to investment property. I’d just like to quickly go through some of the different types of travel you could be thinking about claiming on your next tax return, and how to prepare yourself now.

Firstly, if you own an interstate property, you can claim a deduction for a trip to that property so long as the main purpose for that trip is to inspect / maintain the property. If you are heading interstate for another purpose, but wish to inspect a property while up there, you will still be able to claim a portion of that trip on your return. Make sure you take a travel diary with you that states how long you were away for and how much of the trip was relating to your property. Also, even if you are travelling next financial year, you are often able to claim the flights and accommodation this year so long as you book and pay for them before the end of June.

If you are running your investment activities through a company or a trust, you can usually afford to be a little more creative with your deduction for interstate travel. You can have the investment entity pay you a “travel allowance”, using rates based on the ATO’s reasonable travel allowance rates. If you send us details of how much you spent with receipts, and also how long you were away, we will be able to calculate the way to get the best deduction for you.

Also, don’t forget you can claim a deduction for travelling to more local properties in your car. You can also claim travel to your property manager, accountants and travel to a property that doesn’t have a tenant as long as it isn’t the first time it’s being rented out. If you have a kept a logbook then you can use this to claim your expenses.  Don’t forget that for a logbook to be valid it needs to cover at least 12 consecutive weeks and be less than 5 years old. If you don’t have a logbook, don’t worry. We can claim a deduction for the kms you think you travelled in relation to the property, so long as it’s reasonable. We can only claim up to 5,000kms per car though.

I hope this helps you see where you are in relation to your own properties as tax time approaches, and gives you some ideas on how to maximise those claims.