Bleisure Travel

We’re noticing an increase in ‘Bleisure Travel’ with business owners blurring the line between tax deductions for a business trip and a personal trip overseas or interstate.

You are allowed to claim tax deductions for a trip you take that includes both business and personal activities. However, you do need careful planning and documentation.

Here are the 4 things you’ll need to consider.

1. Understand the rules for ‘bleisure’ travel

The Australian Taxation Office (ATO) permits deductions for business-related travel, but it’s important to have a clear business reason for your trip.

The business part must be significant and well-documented, with expenses directly linked to income-generating activities. The personal, leisure side of your trip isn’t deductible. 

There are a couple of things you need to think through.

– Primary purpose: The ATO will examine if the primary purpose of your trip was business. Make sure to keep records of meetings, conferences, or other business-related activities that justify your travel.

– Direct connection to income: Your travel must contribute directly to your business.

If you choose to go to Noosa to work remotely for a week but don’t visit clients or do any work-related activities, you’ll struggle to claim this as work related travel.  So if were hoping to claim your flights and accommodation you’ll struggle convincing the ATO that these costs are work related.

2. Plan business activities when you travel

A complete and well though out itinerary with planned business activities can help justify your tax deductions. Here are a couple of examples:

– Schedule meetings and conferences: Plan face-to-face meetings with clients or partners or attend relevant industry conferences. Keep your invitations and emails.

– Conduct research: Visit current or potential suppliers, visit your competitors, or even look for workspace locations. 

3. Record and separate your expenses

When travelling, it’s essential to separate business and personal expenses, as only those directly related to your business are deductible. Keep a detailed record of:

– Accommodation and meals: If you stay in a hotel for a week but only spend three days doing work-related activities, you can’t claim the full cost of the hotel.

– Transport: Flights and other transport can be deductible, but only if the trip’s main purpose is business. If you add personal stops, only claim the portion relevant to business.

4. Keep documentation for all business-related expenses

The ATO is more likely to allow deductions when claims are well-supported with documentation. Here are some of the key records you’ll need to keep.

– Itinerary and booking details: A clear itinerary that shows the business purpose of each day helps substantiate your claim.

– Receipts and invoices: Keep receipts for all deductible expenses, from flights to meals associated with business meetings.

– Proof of business activities: Retain evidence of business engagements, such as emails confirming meetings or conference tickets.

With careful planning you can potentially claim some of the cost of a business trip combined with a holiday by evidencing it with relevant work-related tasks. If you need greater clarity and understanding please reach out to me paul@congdonfuzi.com.au