The key reason is that under Australian tax law, normal trips between home and your regular place of work are considered private commuting travel expense rather than work-related travel. In this article, I will introduce the right way to claim a deduction for transport expenses in tax return.
Claiming a deduction for travel expense
In Australia, to claim a deduction for the work-related travel expense in tax return, the expenses must be incurred when carrying out income-earning activities. So you can’t claim the trip between an employee’s home and work place because it counted as a private trip. However, there are also some exceptions(see limited circumstances).
Deductible transport costs can include trips between separate workplaces to undertake employment duties or assignments. The taxpayer must have paid for eligible expenses out of pocket without reimbursement to claim a deduction. If your travel serves both work and private purposes, you only can claim the work-related portion.
To successfully claim this deduction in tax return, you must retain records substantiating payment of deducted transport costs. Receipts should evidence amounts spent on eligible fares, tolls or vehicle hire.
There are some circumstances where you can claim a deduction for the cost of trips between home and work. You must check that you meet the eligibility conditions:
- Home is a base of employment.
- The purpose of trip is to transport bulky tools and equipment.
- You have itinerant or shifting places of work.
You may also be able to claim a deduction for a trip that includes an alternative place of work that isn’t a regular place of work, which includes:
- perform your work duties – for example, if you travel from your regular place of work to meet with a client
- attend work-related conferences or meetings away from your regular place of work
- deliver items or collect supplies
- go between 2 or more separate places of employment, such as if you have more than one job (but not if one of the places is your home)
- go from your
- regular place of work to an alternative place of work that isn’t a regular place of work (for example, a client’s premises) while still on duty, and back to your regular place of work or directly home
- home to an alternative place of work that isn’t a regular place of work to perform your duties, and then to your regular place of work or directly home (this doesn’t apply if the alternative place of work has become a regular workplace).
Types of travel expense you can claim in tax return
- Public transport fares – This includes train, bus, ferry, tram and taxi fares where travel is for work purposes.
- Ridesharing and ride-sourcing apps – Work related costs from services such as Uber or Ola.
- Vehicle expenses – Expenses relating to operating a vehicle for work like fuel, servicing and repairs may be deductible.
- Flights – Airfares for income-earning activities.
- Car hire – Short-term vehicle rental costs can be deducted if the hire car is used only for trips that are work-related.
- Tolls and parking – Road tolls, bridge tolls and temporary parking fees incurred while traveling for work purposes qualify.
How to keep a record for transport expense
If you want to claim a deduction of travel expense in Australia tax return, you must have written evidence which meet the following requirements:
- Explanations for each eligible trip detailing the work-related purpose and activities undertaken
- Travel dates and times, including start and finish of work duties as well as any private activities or detours
- Trip destinations and locations of work tasks or meetings
- Itemized receipts for public transport fares like trains, buses and taxis showing payment amount and date
- Vehicle logbook (if claiming car expenses) outlining total and work-related kilometers over a representative period
- Receipts for any parking fees, tolls or vehicle hire costs incurred while traveling for work
If one’s employer provides a payment intended to cover transport costs incurred for work purposes, this amount must be disclosed as assessable income when filing the annual tax return. Normally, the employer will document it on the income statement or payment summary at the end of financial year. While such allowances constitute taxable income that boosts assessable totals, individuals may be able to claim as a deductions for actual transport expenses to offset this amount.
Read More: Trips you can and can’t claim, ATO, https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/deductions-you-can-claim/cars-transport-and-travel/trips-you-can-and-can-t-claim