Tax Deductions for Travel Agents

If you work as a travel agent or travel consultant, here is a checklist of tax deductions you may be able to claim on your personal tax return.

Travel Industry Promotions

It is a common practice for travel agents and travel consultants to be invited to view presentations of new tours and destinations. The cost of travel to attend the function would generally be allowable unless entertainment is provided.

• Example – Jana attended a promotional function by African Safari Tours to promote the company’s tours. No food or drinks were provided at the function. Jana is entitled to a deduction for her travel costs.

However, if something more substantial than light refreshments is served, entertainment is provided, and the travel costs are not deductible. \

Educational, Familiarisation and Similar Travel

It is a common practice within the travel and tourism industry for sales staff to be provided with discounted holiday packages and trips, often referred to as ‘educationals’ or ‘familiarisations.’

The ATO considers that, whilst the knowledge and experience gained on any overseas, interstate, or local trip undertaken by a travel consultant could benefit and may be utilised in their employment, that alone is not sufficient to make the expense deductible. The 2008 decision in the Sanchez case shows that if you claim a deduction for some or all the expenses of the trip, you need to be able to demonstrate that the trip was something more than a holiday.

The examples below give some guidelines in this regard. However, the ATO considers taking a photo journal, recording the trip in a diary, and making some accommodation inspections unlikely to result in the travel being other than a private expense.

• Example – Candice went on a 14-day self-drive tour of Tasmania. Her employer provided her with some educational leave and requested that she attend a meeting in one town to obtain some information which would take up one day. Candice agreed to the meeting. She made her own travel arrangements. The trip is basically a holiday. However, Candice can claim the travel expenses associated with the day she attended the meeting: that night’s accommodation and meals for that day.
• Example – Alphonso applied for three months long service leave to visit Europe and see all those places he recommended to clients. His employer encouraged his holiday as it would provide him with some real-life experience to discuss with clients. To show their support Alphonso was granted an extra week’s leave on full pay. In the absence of further information to demonstrate that the trip was something more than a holiday, Alphonso would not be allowed a deduction for his trip.

Passport Fees and Travel Insurance

The expenses associated with acquiring passports relate primarily to your personal right to travel to any overseas destination. So, passport expenses are generally private in nature and not deductible.

Travel insurance policies invariably cover generally private items, such as illness, loss of baggage, and theft or damage to belongings. So, travel insurance costs are generally private in nature and not deductible.

Training

• The cost of work-related short training courses (for example, first aid, OH&S, industry training) that are not run by a University or TAFE. You can claim for the cost of any course fees, books, stationery, Internet connection, telephone calls, tools or equipment, and traveling to and from the course. You can also claim any accommodation and meal expenses you have to pay if you are required to stay away overnight for your course.
• The cost of self-education courses run by a University (not including HECS/HELP fees) or TAFE directly relates to your current work. If you are studying, you can also claim the cost of books, stationery, equipment and travel required for your course.

Example – Sylvia attended a one-day course designed to update travel consultants on changes in electronic ticketing. Sylvia can claim a deduction for course fees and travel costs as it is a training course to update or improve her skills, enabling her to work more efficiently in her current employment.

See this post for details on claiming a Tax Deduction for Self Education.

Car Expenses from Home to Work

The cost of travel between home and your place of employment is usually considered private and not deductible.

However, there are several cases and circumstances where travel between home and employment is an allowable deduction:

• Travel between home and work – A deduction is not allowable for the cost of travel between home and the normal workplace as it is generally considered to be a private expense. This principle is not altered by the performance of incidental tasks en route.
• Travel between home and work – transporting bulky equipment – A deduction is allowable if the transport expenses can be attributed to the transportation of bulky equipment rather than to private travel between home and work. A deduction is not allowable if the equipment is transported to and from work by the cleaner as a matter of convenience. A deduction is not allowable if a secure area for the storage of equipment is provided at the workplace – see this post for more details Travel Between Home and Work with Bulky Tools or Equipment.
• To the second job – A deduction is allowable for the cost of traveling directly between two workplaces – from one employer to another second job. This also applies to travel from work to a place of business where you are engaged in work-related activities.
• Between Work Places – A deduction allows the cost of travel from your normal workplace to other workplaces. The cost of travel from the alternative workplace back to the normal workplace or directly home is also an allowable deduction.
• Home to Alternative Work Place – A deduction is allowable for the cost of travel from home to an alternative workplace. A deduction is also allowable for the cost of travel from the alternative workplace to the normal place of employment or directly home.
• Between Home and Shifting Places of Employment – A deduction is allowable for the cost of travel from home where you: (a) do not work to any regular pattern; (b) there is no long term plan by which you can predict what will be required of you in the future; (c) there is no certainty as to the range of work locations you will attend over a period.

For a checklist of when travel is not an allowable tax deduction and different claiming methods see our post Claiming Work-Related Car Expenses.

Home Office Expenses

If you perform any employment activities from home, there are some expenses that taxpayers can claim on your tax return. Ideally, you should have a room set aside as a home office.

Home office expenses for an employee are intended to account for “running” costs, which relate to using the facilities in the home.

Method of claiming home office expenses:

Although the diary method that records actual running expenses relating to performing work in your home office may give a more accurate calculation of home office expenses, our clients almost always choose the Tax Office set rate per hour method.

Using this method, you can apply a fixed rate per hour based on the number of hours you use the home office. This method is intended to account for the cost of electricity and depreciation of office furniture, equipment, and computers.

For the rate applicable to home office expenses and more information on claiming a tax deduction see our post Claiming a Deduction for Home Office Expenses.

Work Clothing

A deduction is allowable for the cost of buying, renting, or replacing clothing, uniforms, and footwear (‘clothing’) if:

• the clothing is protective in nature
• the clothing is occupation-specific and not conventional in nature
• the clothing is a compulsory uniform and satisfies the requirements of Taxation Ruling IT 2641 – for example, corporate wardrobe
• expenditure on shoes, socks, and stockings is essential and of a private nature. Even when these items are worn at the employer’s request, their cost will only be deductible in limited circumstances. To qualify for the deduction, the items must first form an integral part of a distinctive and compulsory uniform, the employer’s components in its expressed uniform policy or guidelines. In addition, the employer’s uniform policy or guidelines should stipulate the characteristics of the shoes, socks, and stockings that qualify them as a distinctive part of the compulsory uniform, e.g., color, style, type, etc. The uniform wearing must also be strictly and consistently enforced, with breaches of the uniform policy giving rise to disciplinary action. In strict compulsory uniform regimes, expenditure on shoes, socks, and stockings is likely to be regarded as work-related rather than private. In nature, the clothing is a non-compulsory uniform or wardrobe that has been entered on the Register of Approved Occupational Clothing of the TCFDA. Taxpayers can obtain details of registered corporate wardrobes either from your employer or from the Department of Industry directly on 03 9268 7944. NOTE, there is no longer a public register available on the web. See our post on Non-compulsory Corporate Uniform for additional information.

A deduction is allowable for the cost of cleaning, laundry, and maintaining clothing that falls into one or more of the categories of deductible clothing above.

Meals and Travel

• The cost of buying meals when you work overtime, provided you have been paid an allowance by your employer (you can claim up to a maximum of $27.10 (2013 rate) per meal without having to keep any receipts, provided you can show how you have calculated the amount you spent)
• The cost of meals and incidental expenses when you are required to stay away from home overnight for work (if you receive an allowance from your employer, you can claim the full amount of that allowance provided it is shown on your PAYG payment summary). If you didn’t receive an allowance, you should keep receipts to prove the amount you have spent on all meals and accommodation.
• The cost of parking, tolls, taxis, and public transport if you are required to travel to attend seminars, meetings, and training courses not held at your usual place of work (if you need to stay away overnight, you can also claim for the cost of all meals and your accommodation)
• The cost of parking fees, bridge and road tolls paid while driving the truck between your depot and your client’s depot (but NOT while driving to and from work)
• The cost of using your own car for work, including travel to attend meetings, attend training courses, pick up supplies, and driving between or around job sites (to claim for care costs, it is usually best to keep a diary record of the number of kilometers you travel during the year for work purposes and then we can calculate the amount of your tax deduction at the end of the year)

Other Allowable Work Expenses

• Parking – A deduction is allowable for parking fees (but not fines) and tolls if the expense is incurred while traveling:
  (a) between two separate places of work;
  (b) for self-education purposes (if the self-education expenses are an allowable deduction);
  (c) in the normal course of duty and the traveling, expenses are allowable deductions.
• The cost of annual memberships or union fees
• The cost of professional accreditation
• Computers, calculators, and electronic organizers – A deduction is allowable for the work-related portion of depreciation on the purchase price of these items
  The cost of work-related books, magazines, and journals
• Conferences, seminars, and training courses – A deduction is allowable for the cost of attending conferences, seminars, and training courses to maintain or increase your knowledge, ability, or skills in the travel agents and travel consultant industry. There must be a relevant connection with your current work activities
• First aid courses – A deduction is allowable if it is necessary to undertake first aid training to assist in emergencies. If the cost of the course is met by the employer or is reimbursed, no deduction is allowable
• Self-education expenses – A deduction is allowable for the cost of self-education if there is a direct connection between self-education and the current income-earning activities. Self-education costs can include fees, travel, books, and equipment
• The cost of work-related mobile or home telephone calls and rental (you should keep a diary record of the number of phone calls you make for work for one month, and then we can use that to estimate your usage for the whole year)
• The cost of work-related internet connection fees (you can only claim the proportion of your monthly fees related to work use, including emailing, research relating to your job, and research for your training courses).

General Expenses

There are some tax deductions that all employees can claim on their personal tax returns, which include:

• The amount of any donations to registered charities (as long as you haven’t received anything in return for your donation, such as raffle tickets or novelty items)
• The cost of bank fees charged on any investment accounts
• The cost of income protection or sickness and accident insurance premiums (this type of insurance covers you if you hurt yourself (including when you are not at work) or become sick and unable to work. It will pay you your normal wage until you are fit to return to work – if you don’t have this insurance, you should see a financial adviser or ask us, and we will refer you to someone who can organize it for you. It is definitely worthwhile)
• Your tax agent fees (the amount you pay to your accountant to prepare your tax return each year)
• The cost of traveling to see your tax agent (you can claim the cost of traveling to see your accountant have your tax return prepared. You should record the number of kilometers you travel and any other incidental costs such as parking, meals, accommodation, etc.)

We suggest that you keep receipts for all purchases that are work-related, even if they are not listed above. That way, when we prepare your tax return, we can decide whether you are allowed to claim a tax deduction for them or not.

Reimbursements

If an employee travel agent and travel consultant receive a payment from his or her employer for actual expenses incurred, the payment is reimbursement, and the employer may be subject to Fringe Benefits Tax. Generally, if an employee travel agent and travel consultant receive reimbursement, the amount is not required to be included in his or her assessable income, and a deduction is not allowable (see Taxation Ruling TR 92/15).

However, if an employer reimburses motor vehicle expenses on a cents per kilometer basis, the amount is included as assessable income of the employee travel agent and travel consultant. A deduction may be allowable for the actual expenses incurred.

If the reimbursement by an employer is for the cost of a depreciable item (e.g., tools and equipment), a deduction is allowable to the employee travel agent and travel consultant for depreciation.

Suppose a payment is received from an employer for an estimated expense. In that case, the amount received by the employee travel agent and travel consultant is considered to be an allowance (not a reimbursement). It is fully assessable to the employee travel agent and travel consultant.

See this post for details on Tax deductions, Employer Reimbursements, and Allowances.

For further details on what travel agent and travel consultant can claim as a tax deduction, see this ATO summary.