GRA Blogs

Articles by Anna Loginova.

Is travelling overseas tax deductible?

AUTHOR: Anna Loginova
Partner

POSTED: 29 September 2022

If you have to travel overseas for business (given you can do so now with the borders finally open), the question of tax deductibility of travel expenses will arise: which expenses can you claim, if any?

It is important to understand the purpose of the trip in order to decide how the treatment of these expenses will be applied. In a nutshell, travel expenses are income tax deductible to the extent that there is a direct connection in generating assessable income. I give a brief overview below, but you should call your accountant before you leave, as it is much more complicated than it first appears.

There are three main categories:

1. Work-related trip and incidental holiday

Let’s say you are away for 14 days on a business trip and take a free half day to visit a museum. In this case, the ‘holiday’ portion of your trip is incidental, and so your travel expenses are 100% tax deductible.

Note that if the business is run via a company, travel costs that the employer pays for which are not business related could be subject to PAYE or fringe benefit tax.

2. Business and private trip

In this scenario, you are away for 14 days, of which 7 days are for business and 7 days are spent driving around the countryside. The apportionment of costs needs to be made between deductible and non-deductible expenses depending on which costs are business related and which are private in nature. In this case, the percentage will be split 50/50.

3. Private trip with incidental work

What about if you are away on holiday for 14 days and take a half-day trip to drop in and say hello to a few business clients? In this case, none of the travel expenses are tax deductible.

But wait, there’s more

On the face of it, seems fairly simple. However, the phrase “but wait, there’s more” certainly applies here, and it can get very complex. Can you claim meal expenses? That depends on a number of factors. What about accommodation? Again, not as cut and dried as is it may seem on the surface. What if you were going to make the overseas trip regardless (e.g. for a family event)? In this case there could be an argument that your travel expenses are not tax deductible.

This is why you need to talk to your tax adviser before you leave about what you can and can’t claim with regard to business travel. Please contact us as soon as you have talked to your travel agent, as we will need to have a discussion about the expenses related to your trip. Then all you need to do is have a safe journey and enjoy the freedom open borders provide!

Request a Meeting

Anna Loginova
Partner

09 522-7955

anna@gra.co.nz

© Gilligan Rowe & Associates LP

Did you like this article? Subscribe to our newsletter to receive tips, updates and useful information to help you protect your assets and grow your net worth. We're expert accountants providing expert advice to clients in NZ and around the world.

Disclaimer: This article is intended to provide only a summary of the issues associated with the topics covered. It does not purport to be comprehensive nor to provide specific advice. No person should act in reliance on any statement contained within this article without first obtaining specific professional advice. If you require any further information or advice on any matter covered within this article, please contact the author.

Comments

Testimonials

I would like to say thank you for the opportunity for allowing me to come to the property school at Gilligan Rowe + Associates. Im in my early stages of becoming a property investor in New Zealand and to able to come to the property school has enabled to me gain very valuable information and knowledge which will help me be successful in property investing. The property school itself is one like no other because there is so much value given and from experts that practise what they are teaching. This in property school was one of the main highlights because being able to meet experts through the property school was my first time and gave me more confidence in general about property investment. Having combined reading the books (Property 101, Tax structures 101) at home and attending property school, the breath of valuable information and knowledge I have attained is substantial. - Tesfalidet, December 2019

Seminars and workshops for property investors, business owners and anyone seeking to create and protect their wealth.

View all our upcoming events

Learn More

Investing in residential property?

Put this at the top of your reading list.

If you're investing in residential property, seeking to maximise your ability to succeed and minimise risk, then this is a 'must read'.

Matthew Gilligan provides a fresh look at residential property investment from an experienced investor’s viewpoint. Written in easy to understand language and including many case studies, Matthew explains the ins and outs of successful property investment.