Can I tax deduct my trip home?
Posted on November 28, 2016
Question: I have an investment place in Sydney which I visit each year. Can I tax deduct my travel costs for my trip home?
Answer: If you’re an Australian expat with a portfolio that has property at home you may often find yourself going back to back to Australia to carry out inspections and maintenance, as well as visiting friends and family. The ATO allows you to claim a range of travel expenses when flying internationally and although most things can be considered expenses, there are a few rules and intricacies that you should know and be aware about.
What won’t the ATO let me claim on?
The Australian Tax Office has the approach of anything is allowed, provided it is not of a ‘capital nature’ and provided it’s done in order to aid the gain of assessable income. This means that anything that changes the base value of your property like travelling to go monitor a loft conversion can’t be claimed and anything like going to collect rent or deal with maintenance issues is claimable. Another good example of where this extends to is a claim for a plane ticket to go and rent your property versus a plane ticket to go and sell your property; the former being claimable and the latter not.
Duality of purpose
The ATO also looks at whether or not you can prove what is called ‘no duality of purpose’, i.e. if you visiting the property is only incidental to your trip to Australia. So claiming an airline ticket to go to Australia to go on holiday and to inspect your property on the side is not deductible.
So does that mean I can only claim on flights specifically to go see my property?
If your visit does happen to be of a dual nature, worry not as deductions directly related to the property can still be made. This now falls under the category of domestic claims and is treated like any other normal claim you’d make on ‘income costs’. This means that if you visit Sydney but your property is in Perth, you can claim travel expenses from Sydney to Perth. This holds if you travel by aeroplane, motor vehicle, or camel (a joke of course).
So then how are my deductions calculated and how do I prove these claims?
There are a few methods for the calculation of these by car costs, such as the cents per kilometre method or the logbook method. Details can be found here.
In order to prove this the ATO requires documentation in the form of either receipts or a written travel diary (if your travel domestically is more than 6 days) that logs your daily activities. This diary should include the date, time, duration, and a brief description of your activities. It’s also advisable to keep all receipts and invoices throughout your visit, even receipts for items used in your property maintenance as small as paint.
Great. Anything else I should know?
Yes. Accommodation where it would otherwise be unreasonable to not stay on your visit is claimable. This means hotel accommodation, but try not to push the taxman’s buttons and go all out at a 5 star with your family as this deduction only applies to whoever actually owns the property. If this is you and your partner both have joint ownership, you both can claim half the expenses each.
You should also know that food expenses are deductible, from a bottle of water on the way, to a restaurant meal(s). Again, it’s important to keep a record of these events in the form of receipts and some sort of travel log should the taxman decide to audit you and your claims.
About Caterer Goodman Partners
Caterer Goodman Partners is a Shanghai based wealth management firm established with a clear vision to provide a new level of personalized financial planning services for expatriates in Asia. Our financial advisors provide guidance for our clients in all areas of investment, specialising in managed accounts, money-market funds, retirement planning and alternative investments. At Caterer Goodman Partners, we offer our advice and experience to provide low cost, tax-effective and simple solutions to match our clients’ interests.
About Owen Caterer
Since graduation Mr Owen Caterer has worked with the Queensland Premier's Department in Trade Facilitation and then as a financial adviser in Shanghai from 2005 until 2010. He then rose to Senior Adviser, then Business Development manager and then to Chief Investment Officer responsible for portfolios to a value of US$280 million across Asia. Following that Mr Caterer left to found his own firm with a partner in the financial advisory and wealth management area. This focused on developing China and Asia's first fee-based financial advisory (rather than commission-based). This has grown to now have 8 staff and and managing almost US$35 million for clients throughout Asia. This business success was recognized as a finalist in the 2013 ACBA in the Start Up Enterprises category and are one of a small number of foreign managed firms to have a full asset management license in China. Owen has also been active in the community volunteering for the Australian Chamber of Commerce in Shanghai and acting as the Vice-Chair of the Small Business Working Group (2012-2014) and as the Co-Deputy Chair of the Financial Services since 2013 until the present. They have continued to grow their business and have now been selected as a small group of companies who are platinum members of the Australian chamber of commerce. The achievement they are most proud of is their efforts to reform the financial planning industry in China and push it away from a hard-sales commission driven model to a more ethical management fee and long term customer service model. Owen has a Graduate Diploma of Applied Finance from the Securities Institute of Australia of which he was a member as a Fellow of Finance for many years and also has an undergraduate degree from Griffith University in International Business. Owen's interests are tennis, running and his wife and two children. He speaks fluent Chinese, first arriving in China in 1997.
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