How Can I Make a Holiday a Tax Deduction?

Written by

Jason Robinson

FCPA, Director & Co-Founder

Enthusiasm so infectious you’ll accidentally start a business after one chat.

Not sure about you… But it seems every person and their dog are either soaking up some QLD sun or sipping on an Aperol in Italy at the moment. We know a lot of you are wondering, can you claim flights on tax in Australia? Or put another way, can I claim flights on tax Australia-wide if I’m mixing business with pleasure? Or if holidays are a strictly personal expense. Here’s the answer to those questions, and how to turn your next business trip into a work travel tax deduction opportunity.

Key Highlights

• Business vs. Holiday Travel: Work trip tax deduction rules come down to purpose; travel is only deductible if it’s mainly for business. Travel is tax-deductible only if it’s primarily for business—like meetings or conferences. Holidays or remote work from the beach don’t count. Split costs clearly if combining both.
• What You Can Claim: You can claim flights, transport, accommodation, and meals may be claimed as part of your business travel tax deduction, but only for the business portion. Leisure activities, family expenses, and personal add-ons are not deductible.
• Keep Records: Track everything—receipts, itineraries, and proof of business purpose. Mistakes or missing records can lead to penalties, so check with your accountant before booking.

What is a tax deduction?

A tax deduction is a reduction in income that is allowed or sanctioned under the tax laws. Deductions reduce the base amount of income on which an individual is taxed. Certain expenses, sometimes called itemized deductions, have been known as deductions for many years. However, tax law changes have broadened the term “deduction” to include eliminated income, such as credits and exemptions; these create revenue offsets for government bills.

When you claim deductions, it directly impacts your taxable income, ultimately lowering your overall tax liability. The ATO guidelines on tax deductions are clear: to qualify, expenses must be ordinary and necessary for your trade, business, or profession. By carefully tracking your deductible expenses, you can maximise your tax-saving strategies and keep more profit in your pocket. 

What defines a business expense?

A business expense is incurred for the purpose of generating income or profit. It’s an expense you deduct from your taxable income, and therefore lowers your tax liability. You can claim expenses associated with running your business, like hiring staff, buying equipment, marketing materials, travel costs, and more.

There are some restrictions on what counts as a legitimate expense, though… and listing those would take far more than a blog post. A simple example, however, is if you were a delivery driver and you use your car 90% of the time for work. Then 90% of your fuel expenses would be a tax deduction.

What’s a holiday and what counts as a business trip tax deduction?

This is the foundation of a valid business trip tax deduction. If it’s work-first, there’s a tax case.

The answer here is pretty simple: if your travel (or parts of it) is undertaken to produce business revenue – whether that’s landing a new client or maintaining an existing relationship, for example – then it’s deductible. 

If you’ve booked flights to lie on a beach somewhere – even if you’ll be working remotely – that’s a holiday. The travel (sadly) isn’t necessary to perform those standard work tasks, so the cost is entirely on you. 

The following table gives an in-depth look at what distinguishes holidays from business trips.

Another helpful tip is to plan a holiday alongside your business trip to maximise your tax deductions. For combined trips, only the business-related expenses are deductible. If you add a holiday, make sure to separate costs. However, suppose you enjoy an incidental holiday at the end of your trip without significantly increasing costs. In that case, the trip is still considered business, and most of your travel expenses remain deductible.

Keep those business and personal costs separate, and you’ll be all set for a tax-friendly trip!

What kind of travel can be claimed as a holiday tax deduction?

Want to turn your travel expenses into tax savings? It’s possible if you know which business trip deductions are allowed:

• Airfares
• Train, tram, bus, taxi, or ride-sourcing fares
• Car hire fees and the costs you incur (such as fuel, tolls and car parking) when using a hire car for business purposes
• Accommodation
• Meals, if you are away overnight.

And if you’re asking, “can I claim my vacation on my taxes?”—only the business-related portion qualifies.

Similar to our first example of a general tax deduction, the same rule applies here. If you’re going on a 10-day trip, and only two of those days are spent at a conference, then only 20% of your accommodation expenses are deductible, for instance.

It’s important (and fun) to note that the entire flight is deductible. So, yes, can I claim flights as a business expense? In many cases, absolutely. Though, because you need it to fly to that conference, no matter how long you end up spending over there.

Other examples include…

• A research trip: you’re an importer of homewares and you’re flying to Bali to tour some different production facilities, gathering information and seeing how they operate with your own eyes. This is a legitimate business activity that will directly affect your future income
• Meetings: this one is less common in the post-COVID (or mid-COVID?) days because there’s a thing called Zoom, but sometimes face-to-face meetings are still needed. If Jase and Greg fly to Perth to meet Shelley and chat about Future Advisory business financial planning, that’s clearly a business expense. If they choose to stay another three nights and hop on the Rottnest ferry for a Quokka selfie, that’s on them
• Conferences: probably the most common kind of business trip. It’s about networking, upskilling… all the good things that ultimately add to your bottom line. Deductible!

If you’re managing travel expenses as a tradie, it’s critical to separate work and personal expenses accurately. For tailored advice and tips, check out this guide on accounting for tradies.

What kind of travel can not be claimed as a holiday tax deduction?

You can only deduct the costs directly related to your work trip. That means no personal expenses like a vacation tacked onto your business trip, bringing your family along, souvenirs, sightseeing, visas, travel insurance for personal reasons, moving costs, or any travel before you even started your business.

What if you’ve got an employee who’s always on the move?

Managing deductible operating costs like flights, meals, and accommodation for businesses with employees travelling frequently becomes part of routine expense tracking. Employers should ensure their team maintains clear documentation to meet tax compliance standards.

Proper training on recording travel-related expenses can help employees understand which costs are reimbursable, ensuring smooth operations and accurate tax reporting.

How do you claim tax deductions on work-related travel?

Navigating tax deductions can be confusing. But don’t worry; we’re here to simplify the process. Learn how to claim deductions for your work-related travel expenses easily.

Receipts and Records: What You Must Keep

Two words: keep records. Going to a meeting? You need the correspondence of the organisation and confirmation of the other attendees. Conferences are easy with proof of ticket purchase. Accommodation receipts, taxis, food – all of it. If you don’t keep the records to prove what you were doing over there, then the ATO might have a few choice words for you. An itemised travel diary or itinerary is also required. 

Filing Your Tax Return with Business Travel Deductions

Is tax time coming up? Don’t let those travel expenses slip through the cracks! Make sure you have all your receipts and records organised. Using accounting software can make your life much easier – it’s like having a super-organised travel journal that does the math for you.

And if you’re feeling overwhelmed, don’t hesitate to talk to a tax expert. They can help you navigate the tax code and ensure you get all the deductions you deserve. You worked hard for your money, so let’s ensure you keep more of it!

Avoiding Common Tax Traps

It’s easy to make mistakes when claiming tax deductions, like exaggerating how much you use your car for work or losing track of necessary receipts. Misclassifying travel expenses can also cause problems. To avoid penalties and maximise your deductions, ensure you’re always up-to-date on the latest tax laws and guidelines.

As with anything finicky and tax-related, ask us first! Before you hit the book, let us know what your plans are so we can make sure you’re going about it in the most tax-effective way with our accounting and tax service.

Planning a trip and wondering if it’s deductible? Ask us first to maximise your business trip tax deductions and avoid any ATO surprises.

Frequently Asked Questions About Business Travel Tax Deductions

Can I claim flights on tax in Australia?

Yes, you can claim flights on tax in Australia, but only if the travel is primarily for business purposes. Suppose you’re flying to attend a conference, meet clients, or visit potential suppliers. In that case, the entire flight cost is deductible as a business trip tax deduction, even if you tack on a few holiday days afterwards.

However, if you’re flying to Bali for a week on the beach and happen to check emails poolside, that’s a holiday, mate, and the ATO won’t accept it as a legitimate business expense. The key test is whether the trip is necessary to generate income for your business. Keep all your receipts, booking confirmations, and proof of the business purpose (like conference tickets or meeting invitations) to back up your claim.

Are business flights tax deductible if I add a holiday to the trip?

Absolutely, business flights remain tax-deductible even if you extend your trip for personal reasons. Here’s how it works: if your primary purpose for travelling is business, say, a three-day conference in Sydney, the entire flight cost qualifies as a work travel tax deduction. Adding a weekend holiday at Bondi afterwards doesn’t change that, as long as the holiday doesn’t significantly increase your travel costs.

However, you’ll need to split other expenses, such as accommodation and meals. The three business nights at your hotel are deductible; the weekend leisure nights are on you. Think of it like this: the ATO is happy to cover your work costs, but they’re not paying for your weekend margaritas. Keep your business and personal expenses clearly separated in your records.

Can I claim flights as a business expense if I work remotely while travelling?

No, you generally can’t claim flights as a business expense just because you’re working remotely from a different location. If you decide to answer emails from a beachside café in Queensland or take Zoom calls from an Italian villa, that’s still considered a holiday for tax purposes. The ATO’s position is clear: the travel needs to be necessary to perform your work, not just convenient or enjoyable. 

However, if you’re flying somewhere specifically to meet clients, attend an industry event, or conduct business that can’t be done from your regular office, then you’ve got a legitimate business trip tax deduction on your hands. The difference is all about necessity versus choice, working from the Gold Coast sounds lovely, but unless there’s a business reason you need to be there, the flight isn’t deductible.

What business travel expenses can I claim besides flights?

Beyond flights, you can claim a whole range of work travel tax deductions when you’re on a legitimate business trip. This includes all transport costs, train tickets, taxis, Ubers, car hire fees, fuel, tolls, and parking. Accommodation is deductible for the nights you’re conducting business. Meals are claimable if you’re away overnight for work purposes.

What you can’t claim are the fun bits: sightseeing tours, family members’ expenses if they tag along, travel insurance for personal coverage, souvenirs from Chapel Street, or that extra night you stayed to catch the footy at the MCG. The golden rule is that expenses must be directly related to earning your business income. Keep itemised receipts for everything and maintain a travel diary showing what business activities you conducted each day.

Can I claim flights to work on tax for my daily commute?

Unfortunately, no, you can’t claim flights to work on tax for regular commuting, even if your commute involves catching a flight. The ATO treats travel between home and your regular place of work as a private expense, whether you’re driving, taking the train, or flying. This applies even if you live in Melbourne and fly to Sydney every week for work at the same office.

However, there are exceptions: if you’re travelling directly from home to meet a client at a different location, or if you’re carrying bulky work equipment that can’t be stored at your workplace, you might have a claim. Similarly, if your work requires you to travel between multiple work sites during the same day (not just home to work), those trips are deductible. For most people, though, the morning commute is on their own dime, regardless of the mode of transport.

How do I prove my travel was for business to the ATO?

Proving your business trip tax deduction is legitimate comes down to solid documentation. You’ll need correspondence showing the business purpose, like emails confirming meetings, conference registration confirmations, or invitations to industry events. Keep all your receipts for flights, accommodation, meals, and transport (the ATO loves receipts almost as much as Melburnians love coffee).

Maintain a detailed travel diary or itinerary showing what business activities you conducted each day, who you met with, and what was discussed. If you attended a conference, keep the program showing which sessions you participated in. Bank and credit card statements help, but itemised receipts are better. Take photos of paper receipts as backup in case they fade. The more documentation you have showing the trip was genuinely work-related, the easier your life will be if the ATO comes knocking for an audit.

What happens if I get my business travel deductions wrong?

Getting your work travel tax deductions wrong can land you in hot water with the ATO, ranging from having claims rejected to copping penalties and interest charges. Common mistakes include claiming the entire cost of a trip that was mostly personal, losing receipts, or exaggerating the business portion of combined trips.

If the ATO audits you and finds you’ve overclaimed, you’ll need to repay the incorrectly claimed amount plus interest, and potentially face penalties of up to 75% of the shortfall for deliberate disregard of tax laws. Even honest mistakes can result in administrative penalties. The best approach is to be conservative with your claims and keep meticulous records.

If you’re unsure whether something qualifies as a business trip tax deduction, chat with your accountant before you book. It’s much easier to get it right from the start than to fix it later when the ATO comes asking questions.

Can I claim a percentage of my flight if the trip is partly business and partly personal?

Not quite, flight costs work differently from other travel expenses when it comes to mixed-purpose trips. If your primary reason for travelling is business, you can generally claim the entire flight cost as a work travel tax deduction, even if you extend the trip for personal reasons.

This is because you needed to take that flight to conduct the business anyway. However, if you’re genuinely splitting the trip 50/50 between business and leisure from the outset, it gets trickier; the ATO might argue the flight isn’t wholly deductible. For other expenses like accommodation and meals, you absolutely must split them proportionally based on business versus personal days.

For example, on a seven-day trip with three business days and four holiday days, you’d claim 3/7 of your accommodation and meal costs. The key is determining the primary purpose of the trip and keeping detailed records to support your claim.

Do I need to tell my accountant before booking a business trip?

Yes, and your accountant will thank you for it! Having a quick chat before you book can save you headaches and maximise your business trip tax deductions. Your accountant can advise on structuring the trip to optimise tax benefits, confirm what records you’ll need to keep, and flag any potential issues with your planned itinerary.

For instance, they might suggest timing your trip differently, clarifying which expenses will and won’t be deductible, or recommending how to document the business purpose properly. It’s much easier to set things up correctly from the start than to scramble for justification come tax time.

Think of it like planning a renovation, you wouldn’t start knocking down walls without checking with a builder first. The same principle applies here. A five-minute conversation now can prevent a very uncomfortable audit conversation later. Plus, good accountants (like us!) actually enjoy helping you legally minimise your tax bill.

Can sole traders and companies both claim the same travel deductions?

Yes, both sole traders and companies can claim work travel tax deductions, but the mechanics differ slightly. As a sole trader, you claim business travel expenses directly in your individual tax return, reducing your taxable income. The expenses must be incurred in earning your business income, and you’ll need receipts and records to prove it.

For companies, the business pays for and claims the travel expenses as a company deduction. If a company director or employee travels for work, the company claims the expense, and there’s usually no fringe benefits tax (FBT) if the travel is genuinely for business purposes.

However, if a company pays for someone’s holiday disguised as business travel, that could trigger FBT obligations. Regardless of your business structure, the fundamental rule remains the same: the travel must be primarily for business purposes to be deductible. Whether you’re a sole trader tradie or running a company, keep those receipts and maintain clear documentation.

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